Employers operating in Svalbard and Jan Mayen have specific tax responsibilities. One of these is the payment of employer's national insurance contributions on the salaries of their employees. The contribution rate is significantly lower in these regions, standing at 5.1% for 2024. Contributions must be paid monthly, with the specific deadline varying based on the size of the company.

Special Payroll Tax

In addition to the employer's national insurance contribution, employers may also be liable for a special payroll tax in specific municipalities in Svalbard. For more information, it's advisable to contact the relevant municipal authority.

Withholding Tax (Income Tax)

Employers are also responsible for withholding income tax from employee salaries. The rates applicable to Svalbard are lower than the mainland, with the current rates being 8% for the low rate and 22% for the high rate. This tax must be withheld and reported on a monthly basis.

Important Considerations

There are different withholding and reporting procedures for non-resident employees working in Svalbard and Jan Mayen. Employers should be aware of these differences and ensure they are following the correct procedures.

In Svalbard, residents are entitled to a special deduction from taxable income of approximately 18% of their gross income in addition to standard deductions. This deduction is designed to compensate for the higher living costs in the region. Employees also receive standard tax deductions similar to mainland Norway, including a personal allowance and deductions related to work expenses.

Calculation of Income Tax Deductions

Tax deductions in Svalbard and Jan Mayen are applied against an employee's gross income to determine their taxable income. The two tax rates used to calculate the final income tax for employees are:

• Low rate: 8%
• High rate: 22%

Employees are usually issued a tax card by the Tax Authorities specifying their deductions and tax rates.

Social Security Contributions

Employees make national insurance contributions for pensions and other social welfare benefits. These contributions are at a reduced rate of 7.8% in Svalbard and Jan Mayen.

Other Potential Deductions

Employees may also be eligible for deductions related to:

• Union membership fees
• Charitable contributions
• Interest expenses on loans
• Home office expenses

Svalbard and Jan Mayen, both Norwegian territories, have a unique status when it comes to Value Added Tax (VAT). They are not part of the Norwegian VAT zone, which means that no VAT is charged on goods and services supplied within these territories. However, Norwegian businesses that purchase taxable services from Svalbard and Jan Mayen are responsible for calculating and paying Norwegian VAT under a reverse charge system.

Reverse Charge Mechanism

The reverse charge system is applicable to Norwegian businesses and public institutions that buy taxable services from Svalbard and Jan Mayen. Under this system, the Norwegian buyer must calculate VAT on the service purchased as if it were supplied in Norway. The standard VAT rate of 25% usually applies, with some exceptions at lower rates.

For VAT reporting, VAT-registered buyers should report VAT as output tax on their VAT return. Non VAT-registered buyers should report via the tax return for VAT for reverse tax liability, but only if the quarterly VAT basis amount is equal to or greater than NOK 2,000.

Exemptions

While the reverse charge mechanism is broad, there are specific services that may be exempt from Norwegian VAT when purchased from Svalbard and Jan Mayen. For clarification on specific service exemptions, it is advisable to consult a tax advisor or the Norwegian Tax Administration (Skatteetaten).

Filing Procedures

Accurate VAT reporting is crucial. Deadlines for submitting your VAT return can be found on the Skatteetaten website. It is important to adhere to these deadlines to avoid penalties and ensure compliance with VAT obligations.

Businesses in Svalbard enjoy a significantly lower corporate tax rate compared to mainland Norway. The current corporate tax rate in Svalbard is 7.8%. Any registered business in Svalbard qualifies, though some limitations may apply based on business activity.

Reduced Corporate Tax

• Benefit: Significantly lower corporate tax rate compared to mainland Norway.
• Rate: 7.8%
• Qualification: Any registered business in Svalbard.

Svalbard boasts a streamlined tax administration system compared to mainland Norway. Businesses can expect simpler tax reporting and fewer administrative procedures. This automatically applies to all registered businesses in Svalbard.

Simplified Tax Administration

• Benefit: Streamlined tax administration system.
• Reduced Compliance Burden: Simpler tax reporting and fewer administrative procedures.
• Qualification: All registered businesses in Svalbard.

Employees working in Svalbard can benefit from reduced income tax compared to mainland Norway. There are two options: an 8% flat tax rate that applies to employees residing in Svalbard for the entire year, and a standard income tax system that applies to employees with stays outside Svalbard exceeding 183 days per year. This applies to employees of registered businesses in Svalbard, based on their residency period.

Special Tax Treatment for Employees

• Benefit: Reduced income tax compared to mainland Norway.
• Details: Two options - 8% flat tax rate for full-year residents, standard income tax system for others.
• Qualification: Employees of registered businesses in Svalbard, based on their residency period.

Businesses in Svalbard are exempt from charging VAT on goods and services supplied within the territory. This translates to lower operational costs for businesses. This automatically applies to all registered businesses in Svalbard.

No Value Added Tax (VAT)

• Benefit: Exemption from charging VAT on goods and services.
• Reduced Costs: Lower operational costs for businesses.
• Qualification: All registered businesses in Svalbard.

Establishing a business in Svalbard generally involves a less complex application process compared to some other jurisdictions. Faster business registration allows companies to start operating sooner. However, fulfilling residency requirements for business owners and obtaining necessary permits may still be necessary.

Limited Application Process

• Benefit: Less complex application process compared to other jurisdictions.
• Reduced Bureaucracy: Faster business registration.
• Important Note: Fulfilling residency requirements and obtaining necessary permits may still be necessary.