Accounting & Tax

The set of assumptions and rules that govern how a set of accounts is prepared and presented.

Accounts prepared under different standards can look very different, so understanding each standard's characteristics is essential when comparing the performance of two companies. Markets would arguably be more efficient if everyone reported on the same basis - but legislators have not agreed, and US GAAP differs from IFRS on a number of points.

The amount by which the value of an investment exceeds, or falls short of, its acquisition cost.

The gain or loss may be realised or unrealised. Realised generally means the asset has been sold and the transaction value is known; an unrealised change is the difference between acquisition cost and value at the time of valuation.

In Norway, subject to certain conditions, capital gains realised by a company are tax-exempt (sktl. § 2-38).

Usually preceded by a national code - US GAAP, Norwegian GAAP - referring to the generally accepted accounting principles of that jurisdiction.

First published in 2001 by the International Accounting Standards Board, replacing the older IAS standard. IFRS aims to set a single international standard, which is especially valuable for companies operating across borders that need to align accounts between jurisdictions, and which lets analysts compare companies more easily.

IFRS is often associated with fair-value accounting, but IFRS accounts may also be presented on a historic-cost basis.

A company incorporated outside Norway that is not itself a tax subject; instead each shareholder or partner is individually liable for their share of the company's annual taxable result. A limited partnership is a typical example.

Tax reporting for such investments is often complex, because different elements of income may be taxed at different rates in the investor's country. The accounts of the UDLS must be analysed thoroughly to arrive at the correct taxable result for each investor.

A general consumption tax on the value added to goods or services at each production or trade stage of the domestic supply chain.

At each stage, inputs are purchased with VAT added; suppliers receive payment including VAT and remit it to the state, while recovering the VAT they paid further down the chain. Ultimately the consumer bears the full VAT. In Norway the general rate is 25 percent, with lower rates for some goods and services.

The obligation of an employer paying salaries, or a company paying dividends, to "hold back" an estimated amount of tax and pay it to the tax office on behalf of employees or shareholders.

Withholding tax may be refunded if the recipient's actual liability turns out to be lower. In some cases it is treated as discharging the liability entirely, with no further return required.

It may be levied on income from securities owned by a foreign shareholder - deducted before distributions leave the country - so that domestic profits are taxed domestically. Whether it applies, and at what rate, depends on the recipient's status and on double-taxation treaties; typical rates of 25-30% are often reduced to 15% or less. In Norway, corporate shareholders resident in the EEA may be entitled to a full refund under the participation exemption method.