On 4 June 2026, Norway's Ministry of Finance published draft legislation implementing the OECD Pillar Two Side-by-Side package, introducing new safe harbour mechanisms – the Side-by-Side safe harbour and the UPE safe harbour – into the Norwegian framework. The draft is currently at consultation stage, and final national rules, including precise thresholds and deadlines, remain subject to the legislative process. International groups with a Norwegian presence or a Norwegian Ultimate Parent Entity should assess their exposure now, before final rules are enacted.
What the Draft Legislation Covers
The OECD's Pillar Two Side-by-Side package is a set of agreed administrative simplifications designed to sit alongside the existing global minimum tax framework. Norway's draft legislation, published by the Ministry of Finance on 4 June 2026, proposes to incorporate both the Side-by-Side safe harbour and the UPE safe harbour into domestic law. These mechanisms are intended to reduce compliance burdens for qualifying groups by allowing them to rely on certain financial data to satisfy top-up tax obligations, rather than performing full Qualified Domestic Minimum Top-up Tax (QDMTT) or Income Inclusion Rule (IIR) computations in every case.
Because the legislation is still in draft form, specific numerical thresholds, filing deadlines, and penalty amounts have not yet been confirmed under Norwegian national rules. Groups should monitor the progress of the bill through the Storting and review guidance from the Norwegian Tax Administration (Skatteetaten), which will be the competent authority responsible for administering the enacted rules.
Who Is Affected
The Pillar Two framework applies broadly to large multinational enterprise (MNE) groups. Under the global architecture, the rules target groups whose consolidated revenues meet the relevant threshold established by the OECD model rules. Norwegian entities within such groups – whether constituent entities, intermediate parent entities, or an Ultimate Parent Entity (UPE) headquartered in Norway – will each face distinct obligations depending on their role in the group structure.
In practical terms, affected parties include:
- Norwegian subsidiaries of foreign-parented MNE groups, which may be subject to QDMTT obligations under Norwegian law;
- Norwegian UPEs, which may be required to apply the IIR to low-taxed constituent entities across the group;
- Intermediate parent entities and partially-owned parent entities resident in Norway that may carry secondary IIR obligations;
- Groups using country-by-country reporting data as a basis for safe harbour eligibility assessments, including transfer pricing documentation that feeds into the computations.
Foreign investors structuring Norwegian holding or operating vehicles should review how the draft rules interact with existing tax treaty positions and any arrangements that rely on current domestic anti-avoidance rules. The interaction between the Side-by-Side package and Norway's existing anti-avoidance rules is an area of particular complexity that the final legislation may address.
The Side-by-Side and UPE Safe Harbours: A Summary
The Side-by-Side safe harbour allows groups to use data from their consolidated financial accounts – prepared in accordance with an acceptable financial accounting standard – to determine whether a top-up tax liability arises, rather than recomputing effective tax rates from scratch under the model rules. The rationale is to bring greater alignment between financial reporting and tax compliance, reducing duplicated work.
The UPE safe harbour is directed at groups whose Ultimate Parent Entity is located in a jurisdiction that has enacted a Qualified IIR. Where the UPE jurisdiction's IIR is accepted as equivalent, constituent entities in other jurisdictions – including Norway – may benefit from a simplified treatment. For groups with a Norwegian UPE, the safe harbour could affect how obligations flow across the group's global structure.
Both safe harbours are subject to eligibility conditions that the draft Norwegian legislation is expected to specify. Until those conditions are confirmed in final text, groups should avoid assuming eligibility without a careful review of their specific facts.
If you would like to discuss how the draft rules may apply to your group's Norwegian structure, our team is available to assist. Please reach out at info@ferrazwhitmore.com or visit our contacts page.
Immediate Action Items for International Companies
Given that the draft was published on 4 June 2026 and the legislative timeline remains pending, there is a practical window for groups to prepare. The following steps are advisable at this stage:
- Map your Norwegian footprint. Identify all Norwegian constituent entities, their roles in the group structure, and whether any Norwegian entity functions as a UPE or intermediate parent. Registration details held at the Brønnøysund Register Centre (Brønnøysundregistrene) can assist in confirming entity status and ownership structures.
- Review existing transfer pricing documentation. The safe harbour computations rely heavily on financial data and transfer pricing positions. Ensure that documentation is current and consistent with the group's global reporting. Weaknesses in transfer pricing can create tax risk management exposure under Pillar Two as well as under existing Norwegian rules.
- Assess safe harbour eligibility in principle. Even before final rules are enacted, groups can undertake a preliminary analysis of whether they are likely to meet the conditions for the Side-by-Side or UPE safe harbour, based on the OECD model guidance and the draft text as published.
- Consider the interaction with Finanstilsynet-regulated entities. Groups that include Norwegian financial institutions under the supervision of Finanstilsynet Norway should consider whether Pillar Two obligations affect regulatory capital or reporting positions, and engage relevant advisers accordingly.
- Monitor the legislative timetable. The draft has not yet completed the Storting legislative process. Track formal consultation responses, any amendments to the draft, and the expected enactment date. The OECD Pillar Two tracker maintained at oecdpillars.com provides ongoing updates on Norway and other jurisdictions.
Tax Disputes and Audit Risk
The introduction of the Side-by-Side package does not reduce the Norwegian Tax Administration's powers of enquiry. On the contrary, the Pillar Two framework introduces new layers of reporting – including GloBE Information Returns – that will give Skatteetaten additional data to use in risk assessment. Groups that are unprepared for the new reporting obligations face heightened tax audit exposure in the transition period.
Coordinated tax structuring review is advisable before the rules take effect. A group that has undertaken thorough tax structuring analysis in advance will be better placed to respond to any queries from Skatteetaten and to substantiate positions taken under the safe harbour. Our team can assist in identifying structural issues and aligning Norwegian positions with the group's broader Pillar Two approach: see our tax structuring services for Norway.
Where disputes do arise with Norwegian authorities, whether in the context of Pillar Two or the existing framework, having a clear record of the analysis underpinning filed positions is important. Our tax disputes practice for Norway can assist groups facing audit queries or formal assessments.
Cross-Border Context: Portugal and Other Jurisdictions
For groups with structures spanning multiple jurisdictions, it is worth noting that Norway's draft legislation is part of a broader wave of national implementations of the OECD's Pillar Two framework. Other countries – including Portugal – have also been taking steps in this area. Groups reviewing their overall Pillar Two exposure may find it useful to consider the position across all relevant jurisdictions simultaneously. For reference on related developments, our earlier alert on Portugal's Pillar Two filing relief sets out a comparable analysis in that jurisdiction.
To discuss your group's cross-border Pillar Two position or to obtain advice on Norwegian tax matters more broadly, please contact the Ferraz & Whitmore team at info@ferrazwhitmore.com or through our contacts page.
Sources
- OECD Pillar Two Developments Tracker 2026, oecdpillars.com – https://oecdpillars.com/pillar-two-developments-tracker-2026/
Facts verified as at 22 September 2026. This alert reflects publicly available information at that date. Legislative developments after that date are not covered.
For questions about how this alert applies to your specific situation, our team is ready to assist. Write to us at info@ferrazwhitmore.com or visit our contacts page.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.