Norway’s tax incentives for business angels / Columns / The Foreigner

Norway’s tax incentives for business angels. A British scheme influences the Scandinavian country’s incentives for early-stage investments. The term angel originally designated an investor in a theatrical production. They made their investments out of an interest in the theater, but most of the time they lost their money. Today a business angel is someone who invests money and knowledge in someone else’s company. Unlike theatrical angels, however, they are looking to get a good return on their investment. In general this type of investment is good for the economy, and angels need to be encouraged so that they take the necessary risks. Business angels play an important role in the economy. In many countries, they constitute the second-largest source of external funding in newly established ventures, after family and friends. They are increasingly important in providing risk capital, as well as contributing to economic growth and technological advances.

investment, seedmoney, incentives, schemes, businessangels, paywall



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Norway’s tax incentives for business angels

Published on Wednesday, 22nd February, 2017 at 19:59 under the columns category, by Rasmus Falck.

A British scheme influences the Scandinavian country’s incentives for early-stage investments.

Seed money
Norway hopes its new scheme will encourage investors to spread more of it around.Seed money
Photo: Photo: 401(K) 2012 / Wikimedia Commons


The term angel originally designated an investor in a theatrical production. They made their investments out of an interest in the theater, but most of the time they lost their money. Today a business angel is someone who invests money and knowledge in someone else’s company. Unlike theatrical angels, however, they are looking to get a good return on their investment. In general this type of investment is good for the economy, and angels need to be encouraged so that they take the necessary risks.

Business angels play an important role in the economy. In many countries, they constitute the second-largest source of external funding in newly established ventures, after family and friends. They are increasingly important in providing risk capital, as well as contributing to economic growth and technological advances.

The European Business Angel Network (EBAN) presents an annual mapping of incentives available to business angels in Europe; most countries have introduced such incentives. EBAN argues that incentives encourage private investors to diversify their portfolios towards unquoted equity investments in high-growth innovative companies. This can significantly increase the pool of private individuals ready to make an equity investment in a startup.

The Committee on Finance and Economics Affairs at the Norwegian Parliament, Stortinget, has decided that the government must include models for tax incentives for early-stage investments in the Revised National Budget for 2017. The model should be operative for 2017 and based on the UK Seed Enterprise Investment Scheme (SEIS), where business angels receive a 50-percent tax reduction.

SEIS was introduced in the UK in 2012 to recognize the particular difficulties that companies in very early stages face in attracting investments. The scheme offers tax relief as an incentive for investors to make seed investments in early-stage companies. Investors can receive initial tax relief for up to 50 percent on investments up to GBP 100,000. When they sell their shares after three years, any profit is free from capital gains tax. To qualify, the business must have been trading for less than two years and raising less than GBP 150,000. The startup must have fewer than 25 employees and no more than GBP 200,000 in gross assets, and it must individually apply to be SEIS eligible before investors will receive tax relief.

The investor can be a board director but cannot control more than 30 percent of the shares or be employed by the company. The investor must also hold the shares for a minimum of three years. The SEIS also has a service where startups looking for investors can present their profiles. This makes it easy for potential investors, as the advanced listing and filter system allows investors to find exactly what they want, fast.

In the U.S., more than 20 states have angel tax incentives. For example, North Dakota has had a 45-percent tax credit for investing in pooled angel funds or individuals since 2005. Incentives work!

Rasmus Falck is a strong innovation and entrepreneurship advocate. The author of “What do the best do better” and “The board of directors as a resource in SME,” he received his Master’s degree from the University of Wisconsin-Madison. He currently lives in Oslo, Norway.

This article originally appeared in the Feb 24, 2017 issue of the Norwegian American. Click here to subscribe.



Published on Wednesday, 22nd February, 2017 at 19:59 under the columns category, by Rasmus Falck.

This post has the following tags: investment, seedmoney, incentives, schemes, businessangels, paywall.





  
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