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Reversal of resolution to pay dividend without triggering taxation

On March 31, 2020, the Tax Directorate issued a statement of principles regarding the fiscal treatment of reversal of resolutions to pay dividend as a consequence of the coronavirus pandemic.

The main legal rule is that a shareholder’s tax liability for dividend is triggered when the General Meeting adopts the resolution to pay dividend. The tax liability remains unaltered, even if the company does not fulfill its obligation to pay the dividend. However, if the dividend resolution is unlawful pursuant to the Public Companies Act, and the resolution is subsequently rectified by the company as soon as it becomes aware of the resolution’s unlawfulness, the shareholder will not be taxed for the dividend. It is a prerequisite that the reversal resolution is not induced by a tax audit.

If paying the resolved dividend distribution would result in payment difficulties, it is according to administrative practice possible to reverse the resolution with fiscal effect, provided that the reversal is made prior to any payment and within the same year as the dividend payment resolution was made.

The Tax Directorate issued a statement of principles on March 31, 2020, where the content of the administrative practice described above is clarified in relation to payment difficulties due to the coronavirus situation. According to the Tax Directorate, the shareholder shall not be taxed if:

  • the company makes a lawful resolution to reverse the previous dividend resolution
  • the reversal resolution is made prior to payment of the dividend and no later than the end of the year
  • the reversal resolution is made in order to fulfill the requirements in the Public Companies Act regarding adequate equity and liquidity as a consequence of the corona pandemic, and
  • the reversal resolution is lawful in respect of the Public Companies Act

It is important to note that the Tax Directorate calls for a lawful reversal resolution. Consequently, the General Meeting minutes should state that the previous dividend payment resolution is reversed due to the company’s equity and/or liquidity.


We are following the situation closely, and work on a daily basis to assist companies needing legal advice in the present situation. Please contact one of our specialists in company law and taxation, Sigve Braaten, if you have questions related to the article.