ESA approves amendments to the Norwegian tax scheme for employee share options for start-up and growth companies

The EFTA Surveillance Authority (ESA) has today approved amendments to the Norwegian employee share-option tax scheme for start-up and growth companies. The amendments increase the number of eligible employers under the current scheme.

The current tax scheme for employee share options was approved by ESA in 2021 and it replaced a similar aid scheme that was first approved in 2017 and subsequently amended in 2019 and again in 2020.

The objective of the current share-option scheme is to enhance start-up and growth companies’ ability to offer competitive compensation to recruit and retain key employees. To this end, the scheme introduces favourable taxation conditions, making share options a more desirable method of compensation for employees while alleviating the eligible employer of its liability to pay social security contributions on the option benefit. This enables employers that are experiencing capital constraints to offer competitive compensation to that of bigger companies that can offer higher fixed wages.

The measures proposed by Norway increase the number of eligible employers under the scheme through the following amendments to eligibility criteria:

• An increase in the maximum number of full-time employees that eligible employers can have from 50 to 150.
• An increase of the balance sheet cap that eligible employers cannot exceed from NOK 80 000 000 to NOK 200 000 000. 
• An increase of the age limit for eligible employers from 10 years to 12 years at the time the option is granted.

The measures will extend the number of eligible employers from around 60 000 under the current scheme to around 70 000. 

ESA has today approved the new amendments, concluding that they are in line with EEA rules on State aid. 

ESA’s decision can be read here.

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