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Regulations On The Tax Treatment Of Rental Of Portable Production Facility On The Continental Shelf

Original Language Title: Forskrift om skattemessig behandling av leie av flyttbar produksjonsinnretning på kontinentalsokkelen

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Regulations on the tax treatment of rental of portable production facility on the continental shelf Date FOR-1998-08-18-819 Ministry Ministry of finance published in the 1998 1130 (Remarks) 18.08.1998 entry into force with effect from 01.01.1997 last edited by-2015-06-30-828 from 01.07.2015 Change applies to Norway Pursuant LAW-1975-06-13-35-section 3 Announced short title regulations on equation of rent for flyttb. innretn.

Chapter overview: in (§ § 1-9) II notes on the regulations of 18. August 1998 No. 819 on the tax treatment of rental of portable production facility on the continental shelf Comments to regulatory change of 4. October 2000 No. 997. The legal authority: established by the finance and customs Ministry (now the Ministry of Finance) 18. August 1998 under the legal authority of the law of 13. June 1975 No. 35 about taxation of undersea petroleum occurrences, etc. § 3 letter i).
Changes: modified by regulations 4 Oct 2000 Nr. 997, June 29, 2007 # 837, 30 June 2015 Nr. 828. In section 1. The scope of the Forskriftens taxable by the petroleum tax law § 5 may require the rental of portable production facility to follow the rules of this regulation on the conditions specified. Claims about the equation after the regulation must be brought in the tenant's income tax return for the year the rental period starts, possibly earlier under section 7 the second paragraph, and is binding for the entire rental period.
There are several tenants to the same device, judged each of them separately after regulation.
The tenant can only claim the deduction after this Regulation as long as the lease goods.

§ 2. Requirements for the facility rental agreement must apply removable production facility. With removable production facility is understood that is used for removable device extraction of petroleum deposits, and who would qualify for depreciation after the petroleum tax law § 3 b if it was owned by a company that is taxable after the petroleum tax law § 5.
The device can only be used in the rental period in the business that is taxable by the petroleum tax law § 5. The device can not be owned in business as mentioned with the landlord.

§ 3. Requirements for the lease rental agreement must be entered into in writing for a fixed period of at least 3 years, and must be limited to pure rental of the facility. Additional benefits from the landlord, eg. maintenance, in case is based on the separate agreement.
The lease between the Parties shall also contain an indication of:-the rental period for the lease and agreed to rent amount.

-exact cost reversing for the device on the landlord's hand, and the market value the parties that the appliance has when renting forholdets initiation.

-the treatment of påkostninger in the rental period.

-the individual participant in the leietakeres share the production licence where the device will be used.

Påkostninger on the installation in the lease term with any corresponding increase of the rent amounts will not be processed according to the rules in this regulation.

§ 4. Tax deduction for depreciation and uplift the tenant can claim a tax deduction for depreciation after the petroleum tax law § 3 b and uplift after the petroleum tax law § 5 fourth paragraph calculated by the basis as set out in the second paragraph.
The basis for calculating depreciation and uplift after the first paragraph is determined to the facility's cost price on the landlord's hand is reduced by 4 per cent straight-line annual until the tenancy commenced, including proportionately reduced depreciation for acquisition year and rental year round. If the taxpayer pays the market price at the time mentioned by the rental of used gadgets undoubtedly differ from the basis after this replacement first sentence, such market price rather than be added to reason. If the tax authorities will make the market price at the time mentioned by the rental of used gadgets differs from the Foundation after this replacement first sentence, such market price rather than be added to reason.
At the request of the potential tenant to Oil tax office cast binding prior statement about market price after the second paragraph, second sentence. If the requirement of substantiation are met, the statement set the facility's market price. The statement to apply the facility's market price at the time of the decision. Prior statement as mentioned in this paragraph are binding if the final agreement on the lease entered into within two months of that statement are the responsibility and the tenant has not given incorrect or incomplete information. By the way, applies the provisions of the regulation of 22. November 1991 No. so far the 752 corresponding fit, with the exception of sections 2 and 3 other and third paragraph.

§ 5. Tax deduction for calculated interest costs the tenant can annually claim a tax deduction for the petroleum tax law § 3 d second paragraph for the interest expense calculated according to the provisions below.
The deductible interest cost for the tax year is set equal to 50 percent of the tax written down value under section 4 of the mobile production facility per 31. December in the tax year, multiplied by a norm interest rate. Norm interest rate arising as an average of the interest rate on Government bonds with 3-year maturity for the tax year and the two previous income years, with an addition of 1 pst.
Interest rate costs calculated according to the preceding paragraph are included in net financial costs after the petroleum tax law § 3 d second paragraph.
For the purposes of the petroleum tax law § 3 d second paragraph to an amount that is set equal to 50 percent of the tax written down value under section 4 of the mobile production facility per 31. December in the year of income, are considered as interest-bearing debt.

section 6. Tax treatment of rental amounts the total rent amount each year are allocated on a capital cost part calculated by the second paragraph and a residual payment part.
Capital cost section is set to the basis for the calculation of depreciation and free income under section 4, reduced by the sum of the payment sections of the rental amounts calculated under section 6 the first paragraph of the previous income years, multiplied by the total rate of return. The total rate of return is determined to norm interest rate attributed to 4 pst. The individual annual capital cost part cannot be set lower than zero, or exceed the actual rental cost.
When this Regulation apply, provided there is no tax deduction for rent amounts with the tenant beyond what follows from the forskriftens provisions.

section 7. Time for deduction Deduction after the regulation may be required from the income year the device is handed over to the tenant or the tenant's set disposition.
If the lease comes to gadgets to be built or is under construction, the tenant can claim a deduction for depreciation and uplift after the regulations from the income year the expense is incurred the owner, jf. the petroleum tax law § 3 litra b. Expenses must be documented.
Criteria for deduction after the second paragraph is that the tenant has signed a binding lease for the facility. Of the lease, it must be stated that the device will be set to the tenant's disposal as soon as it is completed and that it will be used in the business that is taxable by the petroleum tax law § 5. It can not be paid in rent during the construction phase.

section 8. Termination of the lease upon termination of the lease for the individual tenant, the petroleum tax law § 3 f and section 5 fifth paragraph of corresponding application on its rent object.
By the calculation of the gain or loss is set input value for the device similar to the tax written down value under section 4. The starting value is set equal to the basis for the calculation of depreciation and uplift after § 4 less the sum of the payment sections of the rental amounts calculated under section 6 until the termination time of the lease. The starting value is set no lower than zero.

§ 9. Violations of the terms of the regulations By violating the terms of this regulation after it has been used for tenant in an income year, it carried out a profit and loss statement, as described in section 8 the second paragraph. This also applies to breaches that the tenant does not even have dominion over.

II Regulations take effect immediately with effect for lease agreements entered into as of 1. January 1997.

Notes on the regulations of 18. August 1998 No. 819 on the tax treatment of rental of portable production facility on the continental shelf Introduction draft regulations regarding the tax treatment of rental of portable production facility on the continental shelf was attached UROt.prp.nr. 36 (1997-98). In the URInnst.O.nr. 36 (1997-98) have financial Committee come with annotations to the draft. The regulations the Ministry has laid down is mainly in accordance with these documents, but it made some minor adjustments. The background for these adjustments noted in comments to the individual provisions.
During the work with the ratification of the regulations has the Ministry become aware of, however, some weaknesses of the regulatory draft that was attached UROt.prp.nr. 36 (1997-98), including when it comes to determining the payment section of the annual rent payments, which in turn affect the size of the annual interest rate deduction and the starting value at the termination of the lease. If a not correct those failings, the regulations go further than provided by the introduction of the scheme, in that the rental of portable consumer electronics tax sets are more beneficial than owning. A has reached the conclusion that amendments that might be desirable in this context, it should be submitted at the hearing. The Ministry aims to provide a consultation note about these changes in the fall of 1998. The duration time of the changes can then possibly be from and with the tax year 1998.

When preparing the regulations have a little experience with how the market for mobile production facilities will evolve, and how agreements on the rental of mobile production facilities will actually be designed. The Ministry will, therefore, follow the development in the market and the agreements, and if necessary come back with changes in the regulations to ensure the greatest possible tax equality between owning and renting of mobile production facilities and equality with the other petroleum tax policies.

To § 1 scope Of Forskriftens: § 1 the first paragraph first sentence stated that the only taxpayers who are taxable after the petroleum tax law § 5 may require the rental of portable gadgets to be processed after the terms of the regulation. This also implies that it is the tenant who can claim that the regulation should apply if the conditions are met. For the landlord has no tax consequences if the lease covered by the regulation or not.
For that regulation to apply, it must first be entered into an agreement for the lease of a removable production facility. About the deal in place is termed the leasing, etc. have no meaning. On the other hand, it must at the outset be released an agreement that after general private-law rules is considered as rent. Also, it must not be a particular relationship that involves that the tenant still has claims on income tax depreciation, etc., eg. because he is considered as the owner for tax purposes.
The tenant must make claims about the equation after regulation in the tax return for the year the rental period starts, cf. § 1 the first paragraph, second sentence. If it be filed claims for equation after regulation, is binding for the entire claim rental period. This means that the tenant can not choose whether the lease is to be treated after the regulation the individual years in the term of the lease.
The second paragraph of section 1, it follows that if there are several tenants to the same gadgets (rights holder group), to each tenant be judged separately by the application of the regulation. This implies that each participant in the rights holder group can choose whether his share of the lease to be processed after the regulation or not.

To section 2 requirements for the facility: in section 2 the first paragraph is the object of the lease specified. With removable production facility is meant for the first a facility that is used for the extraction of petroleum. In normal cases it will not be a problem to determine if the device is used for the extraction of petroleum. To make a more precise delineation, it is, however, set as a condition that the facility would have been covered by the rules in the petroleum tax law § 3 b if it was owned by a special tax liability company. The scope of the regulation on this point is congruent with the scope of depreciation rules in the petroleum tax law § 3 b, cf. § 5. About the facility of different causes is inactive for a period, is not crucial for the question of whether it is being used to recovery (or would have been covered by the petroleum tax law § 3 b). The assessment is assumed initially to be the same here as at assessing whether a device is taken out of the special tax liability business.
With the production facility is meant in this context any gadgets that would have been written off after the petroleum tax law § 3 b, with the exception of pipelines. This means that also e.g. removable housing platforms and storage facilities, in principle, covered by the regulation. When it comes to certain types of devices, such as the multi-purpose ship, is the refinement in practice something unresolved.
According to § 2 the first paragraph is it on a condition that the device is removable. It will be appropriate to build on the delimitation between the fixed and removable devices in the petroleum law, cf. including sections 5-6 and 10-12. This refinement is featured in UROt.prp.nr. 43 (1995-96) s 53. It is stated there that a removable device is characterized in that it is constructed with a view to the exploitation of multiple fields, and that the facility's technical design makes removal with the aim of continuing use in the petroleum activities technically and economically foreseeable and likely. Further stated that that one of the design requirements will be that the facility should be able to be moved from one field to another with only minor modifications. Finally appears that it is not decisive whether the facility has its own propulsion machinery.
Pursuant to section 2 the second paragraph first sentence, it is a condition that the tenant using the device in business that is taxable by the petroleum tax law § 5. Other business, eg. the rental of the facility, will not satisfy this criterion. Of the second paragraph, second sentence stated that the facility in the rental period cannot be owned in distinguishing taxable business on the landlord's hand. The landlord will, however, be able to claim depreciation after tax the general balance rules, jf. tax law § 44A.

To section 3 Requirements to the rental agreement: pursuant to section 3 subsection rental agreement must be entered into in writing, and have a fixed duration of at least three years. Any options on the extension of the agreement are considered not in the three years. The exercise of the option that gives the right to extension is not considered the termination of the lease under section 7. By the exercise of the option to the regulation be applied without some new valgrett for the tenant, and the written down value after § 4 forms the basis for continued deduction for depreciation and uplift, no new value determination under section 4 and third paragraph.
Furthermore, the lease simply apply pure rental of the facility. An equivalent condition follows from the rules for the new shipping company taxation for the rental of facilities on the shelf to fall within the scheme, cf. tax law § 51A-4 No. 1 and no. 3. by that the lease can only apply printer rental, maintenance, etc. had to påhvile the tenant. The Ministry that the costs of maintenance, etc. will be deductible on the tenant's hand as the operating expenses for the common rules.
In the first paragraph, second sentence, it is specified that the condition that the lease can only apply pure rental of the facility, will not be an obstacle for that tenant in addition agreement maintenance etc with the landlord. Such an agreement must, however, be entered into separately, and the consideration will have to be processed by the Tax Act general rules.
Both at the assessment of whether the regulations apply and by the application of the preferential policies, the tax authorities depending on the details of the lease. In section 3 the second paragraph it is therefore placed certain requirements when it comes to information that must be specified in the rental agreement.
The lease should first contain a specification of the rental period, as well as any options on the extension of the agreement. Furthermore, it must be given information about the original cost price of the device on the landlord's hand, as well as the estimated market value for the facility at the time of rental forholdets beginning. Also, the rental agreement must specify how any påkostninger in the rental period shall be treated by the parties. It is also placed requirement that the individual share of the participant leietakeres production licence and any stake in the landlord should be stated in the lease. About the background of this reference is made to the notes to section 5 the fourth paragraph.
Of section 3, third paragraph, it follows that påkostninger in the rental period paid by the landlord, and which causes increase in the rent amount, shall not be processed according to the rules in these regulations. This means that påkostningen does not affect the cost price of the device, as well as the assumed debt, etc. At the same time are not processed the corresponding increase of the rent payments under the provisions of the regulations, but the expense can be waged by oil company as operating expense after the General rules in the tax law. On the other hand, if påkostningen is added to reason by rent, so that forholdets initiation the affect the rent payments and are included when determining the cost price, it will be processed after forskriftens rules in the usual way.
If the påkostningen is paid by the tenant, it is treated by the General rules. It means that the oil company can get deductions for depreciation and uplift after the petroleum tax law § § 3 b and 5, if the company in the tax sense is considered as the owner of påkostningen.

To section 4 tax deduction for depreciation and uplift: the first paragraph Of section 4 stated that the tenant can claim a tax deduction for depreciation and uplift after the petroleum tax law § § 3 b and 5 fourth paragraph calculated by a closer set out grounds. The rules on the determination of the basis of the second paragraph.
Under section 4 the second paragraph first sentence sets the basis for the calculation of depreciation and uplift to the original cost price of the landlord's hand is reduced by 4 per cent straight-line per year, in line with the regulations of the 8. February 1993 No. 95 to the tax law § 44 B-3.
After the second paragraph and third period can the basis for calculating depreciation and uplift alternatively be set to facility's market price by påbegynnelsen of the lease. Require the taxpayer that the market price should be added to the base, he must prove that the market price is undoubtedly different from the Foundation after the second paragraph first sentence, m.a.o. a sharpened substantiation requirements. Tax authorities can add the market price to because in those cases where it will be made with ordinary probability over the weight that the market price is different from the Foundation after the second paragraph first sentence.

After the third paragraph should be oiled cat at the request of the Tribunal potential tenant cast binding prior statement about market price after the second paragraph, second sentence, IE. in those situations where the taxpayer to prove that the market price of the device is undoubtedly different from the stencil value after the second paragraph first sentence. By the way the preview statement should the Tribunal add the same substantiation requirements to reason that when the decision taken as part of the regular tax treatment. The Committee comes to that evidence the claim is true, to set the preview statement market value to be added to reason. The Committee will, however, that the evidence requirement is not met, the statement only go out on this, and not that the stencil value after the second paragraph first sentence to be added to reason.
A prior statement to apply the device market price on decision time. So it's not the opportunity to ask for prior statement about what the market price will be at a given future date, eg. the time of the agreement conclusion or the time of the påbegynnelsen of the lease. It is also not the occasion to ask for advance statement in the cases that are referred to in the second paragraph, third sentence. If the parties put the sjablonmessige cost price after the second paragraph first sentence to reason, the tax authorities, as part of the regular tax treatment, always have the ability to substantiate that the market price was another.
A statement under section 4, third paragraph, is binding in the two months after the decision has been hit. This means that the final lease agreement about the gadgets the statement applies, including with regard to the rent amount, rental period, etc., must be entered into within this time limit.
The start time for depreciation and uplift after the regulation is set to the year the tenancy begins, jf. § 4 the fourth paragraph. This point is also critical in determining the calculation basis for depreciation and uplift. The lease is considered commenced when the device is handed over to the tenant or the tenant's disposal.

To § 5 tax deduction for calculated interest costs: under section 5 the first paragraph can claim interest deduction for tenant costs calculated according to different to the fourth paragraph, cf.. below. The deductible interest costs are allocated between the continental shelf and land after the petroleum tax law § 3 d second paragraph. Of the first paragraph, second sentence, it follows that the proportion of the interest cost attributable to the continental shelf should not be by the district are included the application of petroleum tax law § 3 h (the rule for thin capitalization). This must be seen in the context of that in the second paragraph is assuming a debt level of 80 percent, jf. below. The proportion of the interest costs after the petroleum tax law § 3 d second paragraph attributable to land, are tax deductible by the equation in the usual way.
Basis for the calculation of the interest free portion of the rent amount determined under section 5 the second paragraph. The Foundation is set to 80 per cent of the basis for the calculation of depreciation and free income under section 4, reduced by the sum of the payment sections of the rental amounts calculated under section 6 the first paragraph of the previous income years, see the example in the note to section 6.
In some tenancy it may be the sum of the payment sections of the rental amounts exceeds 80 per cent of the basis for the calculation of depreciation and uplift, so that the basis for the calculation of the interest costs will be negative. It is not intended that this should result in the revenue recognition of (negative) interest amount. To clarify this, it is provided for in the second paragraph, second sentence that the basis of calculation of interest costs should not be set lower than zero.
The interest free portion of the rent amount for the tax year is calculated under section 5, third paragraph. Of this provision stated that the interest free portion of the income is set equal to the Foundation after the second paragraph multiplied by a norm interest rate. Norm interest rate is determined by the Ministry of finance in January of the year following the income year as an average of the interest rate on Government bonds with 3-year maturity for the tax year and the two previous income year. By that the interest rate is determined as an average of the three years, an already at the entrance to the income the year featured two-thirds of the basis for the determination of the norm interest rate.
According to § 5 fourth paragraph to the calculated interest rate deduction after the preceding paragraphs be reduced if oil company has an ownership interest, directly or indirectly, in the landlord. This reduction is related to the additional advantage special scheme would otherwise cause in such cases. The issue is discussed in UROt.prp.nr. 36 (1997-98) point 3.3.2.1.
As a result of the current rules for the distribution of interest payments between the continental shelf and countries can an oil company that owns a shipping company that operates the rental of mobile devices and rent out the facility to the oil company achieve "double interest deduction" for interest payments. First, the oil company will get the deduction for estimated debt interest by hiring of the appliances for special arrangement. If the investment in the shipping company the company is financed with debt at the oil company's hand, the oil company will in addition be able to get a deduction for a large percentage of these actual debt interest rates against the continental shelf revenue. Tax policies would in this case basically clearly favor the rent from the (partial) selveiet line in relation to rent from an independent shipping company. The Ministry warned in the UROt.prp.nr. 36 (1997-98) that a considered look at the issue, and if necessary propose measures which means that oil companies cannot get such a "double" deduction for debt interest.
The Ministry believes that it is necessary to limit the possibility of "double" the interest deductions to achieve greater tax equality between owning and renting of mobile production facilities. Instead of to cut off the ability to use the regulation or not to give allowance for the calculated interest rate deduction, will a more flexible solution be to reduce interest rate deduction when the oil company owns a share of the landlord. Such a solution is added to the basic of the regulations section 5 fourth paragraph.
The reduction in the calculated interest deduction should be greater the larger the proportion of oil company owner in the landlord (cruise line). The reduction should also be seen in the context of the participant share oil company have in the production licence where the device is used. If the oil company has an equal share in the permission that the owner of the landlord, should all the calculated interest rate deduction withdrawn. The oil company has already had the opportunity to get the deduction for funding the costs associated with the facility. In General, the calculated interest rate deduction is reduced by a factor equal to the ratio of its ownership interest in landlord and participant share in production licence. If the interest in the lessor is greater than the proportion of participant in the permit, the reduction factor still not be set higher than 1, i.e.. that the whole of the calculated interest rate deduction, but it falls away determined not a "calculated interest income". In cases where the ownership interest in the landlord is lower than the participant's share in the permit, will be the reduced interest rate deduction after the fourth paragraph: Reduced interest rate deduction after 4. paragraph = calculated interest deductions for 1.-3. Part X (1-stake in the landlord/participant share of permission) if the oil company, for example, owns 10 pst. in the landlord and has 40 pst. in the permit, the reduced interest rate deduction be 75 pst. of the estimated interest rate deduction after the first of the third paragraph, according to the formula. The actual interest rate deduction for a 10 pst. share in the landlord is equivalent to the remaining 25 pst. of the estimated interest rate deduction oil company could have gotten if it did not have ownership interest in landlord. A 10 pst. share of the total interest expenses related to the device corresponds to 25 pst. of the interest expenses for the oil company's usage share of 40 pst. of the rental object.
For that tax authorities should be able to verify that the fourth paragraph is properly applied, the company that require deductions after the regulations provide the participant the proportion in production licence and the direct and indirect stake in the landlord. The Ministry has found it appropriate to require that this information be included into the rental agreement between the parties, jf. § 3 the second paragraph.

To § 6 tax treatment of rental amounts: the first paragraph of section 6 stated that the total rent amount is to be distributed on an interest rate and a cost share payment part. Interest free portion is calculated under section 5 second and third paragraph. Payment section arising by subtracting the interest free portion of the annual rental fee, see the example below. The sum of the payment of the rental amounts be drawn sections from 80 per cent of the basis for the calculation of depreciation and uplift in the calculation of interest expense under section 5 other and third paragraph.
Example of calculation of interest costs and installment: prerequisites: calculated cost price: 1,200 Annual rent: 100 Norm interest rate years 1 and 2:5% basis for calculation of interest costs (80 percent of the estimated cost): 960 year 1: Interest free part (originally the basis for the calculation of interest costs multiplied by the norm interest rate): 960 x 0.05 = 48.0 Installments (annual rent less the interest cost section year 1): 100-48 = 52.0 year 2: interest rate cost part (originally the basis for calculation of the interest expense less the payment year 1 , multiplied by the norm interest rate): (960-52) x = 0.05 45.4 Installments (annual rent less the interest cost section year 2): 100-45.4 = 54.6 Clean actually pay the oil company a rental amount that after the common tax policies would be deductible as a current operating expense by the equation. In section 6, second paragraph, it is specified that if the regulations apply, provided there is no deduction for rent amounts beyond what follows from the regulation, IE. deduction for estimated depreciation and free income under section 4 and deductions for calculated interest costs under section 5.
With the landlord treated the rental amounts tax after the common policies.

To § 7 Termination of the lease:


In section 7, the first paragraph is turned it states that the General rules by realization of fixed asset that use petroleum tax law § 3 b, the corresponding application upon termination of the tenancy after regulation. This means that the tenant income must lead gains by the rules in the petroleum tax law § 3 f and free income on the profit after the petroleum tax law § 5 fifth paragraph. Overall, this should in principle imply that tenant tax sets come in the same position as if the company had owned facility in the rental period.
The closer to the policies on the determination of the gain upon termination of the lease set out in section 7 the second paragraph. Of the second paragraph first sentence it follows that input value should be set to the facility's tax written value after § 4. The determination of the starting value happens after the second paragraph, second sentence. The starting value is set equal to the calculated cost price (i.e., the basis for calculating depreciation and free income under section 4 the second paragraph) by rent less the sum of the forholdets initiation the calculated payment sections of the rental payments of the rental period, cf. section 6.
It could be that the sum of payments upon termination of the lease amounts to more than the tax written down value, so there is a calculated "loss" on the tenant's hand. The Ministry assumes that the termination policies at this point should be symmetrical, and suggest that the General realisasjonsreglene also going to apply at such a loss.
In some tenancy it may be the sum of the payment sections of the rent payments exceeds the calculated cost price. In such cases could a imagine that the tenant was allowed a deduction for the negative starting value. However, it is clear that the tenant has not suffered any loss in that the starting value is negative, and the deduction would have to probably be refused already for this reason. To clarify this, it is still taken a provision in the second paragraph, third sentence that the starting value at the termination of the lease should not be set lower than zero.

To section 8 violations of the terms of the regulations: the General rules on realization etc will also receive the application of one or more of the terms after regulation, eg. by that the tenant begins to make use of the device in other business than distinguishing taxable business (reassignment), cf. § 2 the second paragraph first sentence. This is not unconditional. If your tenant eg. make a reassignment to other uses within the three-year time limit in section 3 the first paragraph, it must as a starting point is made changing the equation for the years tenant has received the deduction after regulation. In the opposite case, would the three-year requirement in section 3 the first paragraph be illusory, in that the parties could enter into lease with fixed duration of three years also in those cases where the oil company already at the conclusion of the rental agreement knew that it only had use of the facility in eg. two years. If the reason that the lease expires or that the appliance for any other use rearranged within three years of the deadline, however, is subsequent conditions, eg. that the reservoir turns out to be less than it was believed by the conclusion of the lease, they should gain the rules of taxation's General section 7 second paragraph apply.

Comments to regulatory change of 4. October 2000 No. 997. introduction the purpose of the regulation is that the rental of portable devices to the production tax likebehandles with own on the tenant's hand, cf. UROt.prp.nr. 36 (1997-1998). Of the comments to the regulations of 18. August 1998 No. 819 shows that the Ministry already by the adoption of the regulation was aware that some weaknesses of this booklet. The Ministry wanted, however, to carry out a consultation round before change suggestions were closer to considered. The changes that are now made, has a background in that the regulation on certain points has made it more beneficial to rent than to own a removable device, while on other points not to a sufficient degree have favored the rental option. The changes therefore takes aim to create greater degree of neutrality in accordance with forskriftens purpose.
By the amendment being introduced it a distinction between deductible interest expense on the tenant's hand and an estimated capital cost part that has significance for the calculation of the payment portion of the rental fee. The deductible interest rates should, as earlier, reflect a fictitious debt relation with the tenant. Capital cost should reflect an independent landlord's ROI requirements and must therefore be determined as a risk-adjusted return on the invested capital. The individual annual installments are equal to the difference between the rent amount and the estimated capital cost, cf. section 6. Cumulative payments for previous years comes to deductions in the calculation base for both tax deductible interest and capital cost. It will be shown to the notes to section § 5 and 6.
The regulation is based on the assumption that the tenancy causes changes in the deferred tax in about the same range as a own conditions. The accounting treatment of these regulations, including the mht. deferred tax, however, is unresolved. The Ministry will follow the developments and consider whether the fiscal effects of the companies ' accounting practices in case provides the basis for adjusting the regulation at this point.

To section 5: Norm interest rate is intended to reflect the production companies ' real interest rate costs of owning. It is made an addition of 1 pst. to the risk-free interest rate is based on government bond interest rates.
The purpose of the restriction rule in the third paragraph is to prevent a tenant who has ownership interest in the lessor achieves "double" interest rate deduction, i.e.,. both the calculated interest rate deduction after regulation and interest rate deduction for funding of the stake in the landlord. So the danger of double recovery is not if the removable device is innleiet by the landlord, and there is no reason to reduce the estimated deduction after the regulation in such cases. Therefore, the phrase "interest in the landlord" changed to "stake in the facility". Thereby the reduction nor will the fraction come fully to the application if the landlord does not own the facility only eg. along with another shipping company.
If the reduction the fraction does not contain an element that is associated with the rental company's capital structure, the fraction will involve an assumption that this company is 100 pst. equity financed. There is something questionable about this is realistic. At the same time it is important to avoid that the regulations are too complex, and a therefore has chosen not to make use of the individual company's actual equity ratio. Instead, it is corrected for a sjablonmessig set out equity ratio of 50 pst. in the landlord. The rationale for this share is a presumption that the relevant landlords will be covered by the shipping company taxation policies in tax law § 8-10 flg. For these companies there are strong incentives to have the highest possible equity financing, and in tax law, this is tried offset through rules on tax revenue recognition if the shipping company's equity exceeds 50 pst. After a sjablonmessig calculation. Even if the shipping company taxation policies contains incentives to discourage an abnormally high equity ratio in line company, an oil company will still be able to see them served with to finance a subsidiary with 100 pst. equity due to the different tax rates within the petroleum tax regime and the regular tax system. If it turns out that oil companies extensively create their own subsidiaries with abnormally high equity ratio, it may be necessary to come back with amendments.

To § 6: determining the payment portion of the annual rental fee has the meaning for the size of the deductible interest costs for future years as well as for the gain or loss upon termination of the lease. The installment part arising as the difference between the rent amount and an estimated capital cost part.
Calculation of capital cost section should build on the same reviews that the landlord will do this by determining the rent amount. This means that it must be calculated capital costs that reflect a risk-adjusted rate of return. The size of the rate of return for this type of activity is an assessment question and must have the character of a stencil rule. The total rate of return is set equal to the norm interest rate with an addition of 4 percentage points. The total return on investment should reflect the total invested capital. It should therefore be calculated on the basis of the capital costs depreciation and uplift after § 4 with the deduction of the accumulated payment amounts for previous years.
Example of calculation of capital cost, installment and deductible interest: prerequisites: calculated cost price: 1,200 Annual rent: 150 Norm interest rate years 1 and 2:7% Total rate year 1 and 2:11% year 1: Capital cost some 1,200 x = 0.11 132.0 Installment 150-132 = 18.0 Deductible rate 1,200 x 0.8 x = 0.07 67.2 year 2: Capital cost part (1200-18) x 0.11 = 130.0 Installment 150-130 = 20.0 Deductible interest rate (1200-18) x 0.8 x = 0.07 66.2 Explanation :-Capital cost part = cost less the earlier cumulative payments, multiplied by the total rate of return.

-Installment = Rent amount deducted capital cost section.

-Tax deductible interest rate = cost less the earlier cumulative payments, multiplied by the proportion of debt and norm interest rate.

To section 7: in the construction period will receive a recovery company deductions for depreciation and free income as the expenses are incurred. In accordance with the purpose of the equal treatment of own and rent such a right should also be released when it is entered into the lease of a facility under construction. When the tenant makes a claim for depreciation and uplift, the owner's pådratte expenses are documented at the revisorbekreftet statement.

It can not be paid in rent during the construction phase. If the regulation would be given application on how to rent payment, this would contribute to reduced neutrality between owning and renting option. Payments to be calculated according to. section 6, first paragraph, is intended to reflect this year's actual impairment, and it must also be added to reason that such an impairment does not take place during the construction phase. The rental period is counted from the time it begins after its purpose, IE. from the device is handed over or set to the tenant's disposal.
It is not granted the right to a tax deduction for calculated interest costs in the development period. For interest rates applies to the main rule in the first paragraph that the deduction can be claimed as of that year the device is set to the tenant's disposal. 
Entry into force: the regulation will take effect as of tax year 2000. From this point, the regulation effect also for deals that have been processed by the regulation for previous years. The individual year calculated payment part of the rent amount is added to reason by the later years of calculations for sections 5, 6 and 8.