Tax incentives for startups in Norway: expanded share option scheme took effect from 13 March 2025

The share option tax regime for startups and growth companies offers significant advantages for both employees and qualifying companies:​

• Tax deferral: Employees are not taxed at the time of option grant or exercise. Instead, taxation occurs upon the sale of the shares, aligning tax liability with actual financial gain.​

• Favorable tax treatment: Gains realised from the sale of shares acquired through the option scheme are taxed as capital income. The current tax rate on capital gains and dividends on shares for personal shareholders is 37.84%, being significantly lower than the tax rates on salary (47.4%).​ Furthermore, the employer is not liable to pay employer's social contribution of 14.1% on the option grant or exercise, or when the employee sells the shares.

• Enhanced employee incentives: By offering tax-advantaged share options, startups can attract and retain skilled employees, fostering growth and innovation, while at the same time limiting the liquidity burden associated with salary and bonuses.

The changes significantly broaden the scope of the scheme, and include the following key adjustments:

• Increased employee threshold: Eligible companies may now have up to 150 employees in the year preceding the option grant (up from 50).

• Higher balance sheet limit: The balance sheet cap has been increased to NOK 200 million (up from NOK 80 million).

• Extended company age limit: Companies up to 12 years old (previously 10 years) may now qualify.

The changes apply to qualifying share options granted on or after 13 March 2025.

In addition, a technical update to Section 5-14-12 (1)(f) of the Tax Assessment Regulation has been made to align with Statistics Norway’s updated industry classification standard. This amendment will take effect from 1 September 2025.

The extended scheme is expected to improve access to skilled labour for startups and scaleups by making employee incentives more attractive under a simplified and deferred tax model. There are several requirements to qualify for the scheme related to the company, the relevant employee and the share options. Schjødt has extensive experience in advancing and implementing schemes fulfilling the requirements of the scheme.

For further details, please refer to the Government’s announcement (in Norwegian).