On 12 March 2025, the EFTA Surveillance Authority (ESA) approved expansions to Norway's startup option scheme, and the Ministry of Finance amended the regulation on 13 March 2025 to implement the changes. The expansions mean that more companies can now make use of the favorable tax scheme.
The most important changes:
- Number of employees: The company can now have up to 150 employees in the year before the grant, up from the previous limit of 50.
- Balance sheet: The company's total balance sheet in the year before the grant can now be up to NOK 200 million, up from the previous limit of NOK 80 million.
- Company age: The company can now be up to 12 years old in the year of the grant, up from the previous limit of 10 years.
These changes apply to options granted on or after 13 March 2025. The other conditions of the scheme, including the requirements on operating revenue and on employees, continue to apply unchanged. For example, the company's total operating revenue in the income year before the grant must not exceed NOK 80 million.
One important, and sometimes overlooked, point in the rules: options under the scheme can only be granted to people who are employed for at least 25 hours per week. That means pure board members, without an employment relationship, are not covered. Companies need to have this under control to make sure the grant actually falls under the favorable tax scheme.
There's also an ownership cap: the employee cannot own more than 5% of the shares in the company at the time of grant, neither directly nor indirectly through a holding company or related parties. The employee must hold the option personally, not through a holding company or other legal entity.
Remember: option grants under the scheme must be reported to the tax authorities by 1 February of the year following the grant.
What does the option scheme actually involve?
The startup option scheme is a tax-incentive scheme that lets qualifying companies grant employees stock options on favorable tax terms. It's especially useful for startups and growth companies looking to attract and retain key people by giving them a share in the company's future success.
Under this special scheme, no tax is triggered at grant or at exercise of the option. Tax only applies at the point the shares are sold (realization), and then as capital income, not as employment income. That means a far lower effective tax rate. In 2025, it's 37.84% (including the upward adjustment under the shareholder model). Compare that to standard options, where the benefit is taxed as salary at exercise, marginal rate up to 47.4%, plus the employer's social security contributions on top.
The option scheme is a deliberate policy tool to help founders build strong teams. It rewards patience and sustained effort, and it lets more people share in the value being created, without triggering tax before there's an actual gain.
Companies still need to do the homework: written agreements, proper documentation, and a real understanding of the rules. But for those who get it right, this is a powerful incentive in Norwegian business policy.