NorwayTax Obligations Detailed

As of today, February 5, 2025, employers in Norway have several tax obligations related to their employees. These primarily involve payroll withholding tax, social security contributions, and reporting requirements. Please note that tax laws and regulations are subject to change, and it's essential to stay updated with the latest information from official sources.

Payroll Withholding Tax (Advance Tax)

• Employers are responsible for deducting advance tax directly from employees' salaries based on their tax cards. This tax is a prepayment of the employee's income tax liability and includes both municipal and national taxes.
• The general income tax rate is 22%. However, additional bracket taxation applies to personal income with marginal rates ranging from 1.7% to 17.6%, resulting in a top marginal rate of 39.6% (22% + 17.6%).
• Tax deductions must be reported and paid to the Norwegian Tax Administration every two months. Payment deadlines are the 15th of March, May, July, September, November, and January. If the deadline falls on a weekend or public holiday, the payment is due the next business day.

Social Security Contributions

• Employers must contribute to the National Insurance Scheme on behalf of their employees.
• The employee's contribution is 7.8% of their gross income.
• The employer's contribution rate is regionally differentiated, ranging from 0% to 14.1% of the employee's gross income.
• An additional 5% employer's contribution on wages exceeding NOK 850,000 has been abolished as of January 1, 2025.

Reporting Requirements

• Employers must submit a monthly report called "a-melding" to the Norwegian Tax Administration and the Norwegian Labour and Welfare Administration (NAV).
• This report details employee information, including salary, tax deductions, social security contributions, and as of 2025, the type of employment (hired, permanent, or temporary).
• The information required for tax payments is provided in the feedback from the a-melding submission, which includes the account number and KID number for making payments.

Pay As You Earn (PAYE)

• Norway offers a simplified tax scheme called Pay As You Earn (PAYE) for foreign workers under certain conditions.
• Under the PAYE scheme, a flat tax rate of 25% is applied to employment income, inclusive of the 7.8% social security contribution. For those exempt from social security contributions, the rate is 17.3%.
• The tax is withheld at the source, and PAYE participants generally do not need to file an annual tax return.

Additional Information

• The tax year in Norway is the calendar year (January 1 to December 31).
• Further information and guidance on tax obligations can be found on the websites of the Norwegian Tax Administration (Skatteetaten) and Altinn, the online portal for public services. Always consult official sources for the most current regulations and specific requirements.

In Norway, employers deduct taxes from employee salaries based on a progressive tax system and various deduction rules, as of February 5, 2025. This information is current as of today's date and may be subject to change.

Tax System Overview

Norway employs a dual-income tax system, consisting of general income tax and bracket tax on personal income. Additionally, employers withhold social security contributions. A Pay-As-You-Earn (PAYE) system exists for some non-resident workers.

General Income Tax

This tax applies a flat rate of 22% to all forms of income, including employment, business, and capital gains. Various deductions can reduce the taxable general income amount.

Bracket Tax on Personal Income

Personal income is taxed progressively across different income brackets. As of 2025, proposed rates are:

• 1.7%: Income between NOK 208,051 and NOK 292,850
• Up to 47.4% (maximum): For higher income levels, with specific rates for each bracket. The exact rates for brackets above NOK 292,850 need official confirmation for 2025.

Social Security Contributions

As of 2025, the proposed social security contribution rate is 7.7% of gross salary income. This rate may be subject to change. There's a separate proposed rate of 10.9% for other business income.

Deductions

Several deductions can reduce the taxable income amount. These include:

• Standard Deduction: A percentage of gross income. The specific percentage and maximum deduction amount may vary based on residency and income type (e.g., standard deduction for foreign employees has specific rules). The exact figures for 2025 need to be confirmed.
• Minimum Standard Deduction: This has proposed limits of NOK 92,000 for wages and social security income, and NOK 73,150 for pensions for 2025. These figures may change.
• Personal Allowance: A proposed amount of NOK 108,550 for 2025, reducing taxable income. This figure may be adjusted.
• Commuter Deduction: A deduction per kilometer traveled for work commutes. The proposed rate is NOK 1.83 per kilometer for 2025. This may be subject to change.
• Pension Income Deduction: A deduction for pension income. The maximum proposed deduction is NOK 35,600 for 2025, which is subject to change.
• Other deductions might exist for specific circumstances (e.g., long-haul drivers).

PAYE (Pay As You Earn)

This scheme applies to some non-resident workers. It involves a fixed tax rate deducted directly from the salary, simplifying the tax process. Eligibility criteria exist (e.g., income thresholds, exclusion of certain worker categories). The flat rate for PAYE in previous years was 25% (including social security contributions). Confirmation is needed for the 2025 rate. Workers under PAYE typically do not file a tax return. Recent changes impact eligibility for PAYE, particularly for those taxable under newer legislation.

Tax Deduction Card

Employers use a digital tax deduction card to determine the correct tax withholding amount for each employee. Employees must obtain a tax deduction card. Without it, employers withhold 50% of the salary as tax. New cards are issued annually.

Tax Return and Assessment

Employees typically receive a tax return the year after the income year. This return summarizes income and deductions. After reviewing the tax return, the tax administration issues a tax assessment notice, indicating any additional tax owed or refunds due.

Deadlines and Procedures

• Tax returns: Submitted annually, typically in the spring following the income year.
• Tax year: The Norwegian tax year aligns with the calendar year.

Specific details on deadlines and procedures for 2025 should be confirmed with the Norwegian Tax Administration closer to the relevant periods.

Value Added Tax (VAT), known as Merverdiavgift (moms or MVA) in Norway, is a consumption tax levied on most goods and services.

VAT Rates

• Standard Rate: 25% (applicable to most goods and services).
• Reduced Rates: 15% (foodstuffs, water, and sewage services), 12% (passenger transport, accommodation, admittance to sporting/cultural events, and amusement parks), and 11.11% (sales of wild marine resources).
• Zero-Rated: Exports, ships, aircraft, books, newspapers.

Registration

• Threshold: NOK 50,000 in annual turnover for both resident and non-resident businesses. Non-residents providing goods or electronic services B2C also have the same threshold. Simplified registrations (VOEC and VOES) are available for non-resident e-commerce businesses.
• Process: Businesses register through the Brønnøysund Register Centre. Non-EU businesses exceeding the threshold might require a fiscal representative.

Filing and Payment

• Returns: Bi-monthly filings are standard. Businesses with annual turnovers below NOK 1,000,000 and those in primary industries (agriculture, forestry, and fishing - under NOK 30,000/year) can file annually. Simplified quarterly returns for VOEC/VOES registered businesses.
• Deadlines: Bi-monthly returns are due on the 10th of the second month following the period. The May-June filing is due August 31st. Annual returns are due March 10th. Quarterly VOEC/VOES returns are due the 20th of the following month.
• Method: Electronic filing via the Altinn portal.

Exemptions

• Exempt Goods/Services: Healthcare, education, social services, financial services, real estate (except accommodations and parking lot rentals), and gambling.
• Zero-Rated Goods/Services: Exports, ships and oil rigs, aircraft, employee canteens, international transport, books, newspapers, and advertising publications.

VAT on E-Commerce (VOEC)

• Simplified Registration: Available to non-resident businesses selling goods to Norwegian consumers where each item's value is below NOK 3,000. Excludes foodstuffs and excisable goods.
• Collection: VAT collected at the point of sale.
• Returns: Filed quarterly.

VAT on Electronic Services (VOES)

• Simplified Registration: For non-resident businesses supplying digital services to Norwegian consumers and exceeding the NOK 50,000 threshold.
• Returns: Filed quarterly.

Other Important Information

• Corrections: VAT corrections are typically made via a corrective VAT return with a covering letter within the past three years.
• VAT Refunds: Input VAT surpluses are automatically refunded within three weeks of filing, or 8% interest becomes payable.
• VAT Grouping: Allowed for related companies, including non-resident members. A single return is filed by a representative member.

Please note that this information is current as of February 5, 2025, and may be subject to change.

Norway offers various tax incentives for businesses and individuals. These incentives aim to stimulate economic growth, promote research and development, and encourage environmentally friendly practices.

Corporate Tax Incentives

• SkatteFUNN R&D Tax Incentive Scheme: This scheme provides a deductible tax credit of 19% on qualifying R&D costs up to NOK 25 million annually. Companies without taxable income in a given year can receive a cash refund the following year. Eligible companies include Norwegian companies and branches with R&D projects.
• Foreign Tax Credit: Norwegian companies that have paid taxes on foreign-source income can offset the Norwegian tax paid against the foreign tax paid, under certain conditions.
• Roll-over Relief: This allows assets and liabilities to be transferred between related Norwegian entities (e.g., group companies, partnerships) without triggering immediate gain or loss calculation.

Individual Tax Incentives

• Share Deposits in Start-Ups: Individual taxpayers can claim a tax allowance of up to NOK 500,000 (NOK 1 million under certain COVID-19 incentives) for share deposits in start-up companies. The minimum deposit for deductibility is NOK 30,000, and each start-up can receive a maximum of NOK 1.5 million (NOK 5 million under certain COVID-19 incentives) annually in deductible deposits.
• Reduced VAT on Electric Vehicles: A reduced VAT rate applies to electric vehicles up to a certain price threshold. This incentive aims to promote the adoption of electric vehicles and reduce carbon emissions. This scheme is confirmed to be in effect until December 31, 2026.

Other Tax Considerations

• Standard Corporate Income Tax Rate: The standard corporate income tax rate in Norway is 22%.
• Individual Income Tax: Residents are taxed on worldwide income, while non-residents are taxed on Norwegian-sourced income. A combined municipal and national tax rate of 22% applies to net income. Capital gains are also taxed at 22%. Various deductions and allowances are available.
• Value Added Tax (VAT): A reduced VAT rate of 15% applies to water and sewage services (reduced from 25% as of May 1, 2025).

Note: The information provided here is current as of February 5, 2025. Tax laws and regulations are subject to change. Always consult with a tax professional for personalized advice.