The Supreme Court partially upheld the claimants’ case in a dispute concerning the interpretation of the so-called offshore provision in Norway’s tax treaties with Belgium and Spain.
The claimants were all seafarers residing abroad. They had worked on board a vessel that transported a platform deck from an offshore oil installation on the Norwegian continental shelf to a shipyard on land, where the deck was to be dismantled and scrapped.
Most of Norway’s tax treaties with other countries contain a specific provision governing the taxation of work performed “offshore” in connection with the exploration for or extraction of resources on or beneath the seabed. Under this provision, Norwegian taxing rights depend on the work having been performed “offshore.” In addition, the number of working days must exceed 30 within a twelve-month period.
The Supreme Court held that the Norwegian tax authorities had correctly interpreted the provision in concluding that “offshore” work also included work performed on board the vessel while it was located in Norway’s internal waters, inside the so-called baseline that, under the law of the sea, serves as the starting point for measuring the territorial sea. However, the Supreme Court found that the tax authorities had erred in including compensatory leave days earned under the seafarers’ work rotation system as a result of active offshore workdays when applying the 30-day rule.
The judgment provides guidance on the interpretation of the offshore provision in Norway’s tax treaties with other countries. Although the wording may vary somewhat from treaty to treaty, in practice the language used in many of Norway’s tax treaties is substantially the same as that found in the treaties with Belgium and Spain.
Source: Supreme Court
Atle Melø
amelo@melo.no
+47 951 80 979
