Working your way through a foreign tax system can be difficult and it triggers many questions. The most common questions are related to tax liability and level of taxation.
What income is taxable in Norway
The basic rule is that individuals working in Norway become subject to Norwegian tax from day one.
However, a tax exemption may be granted according to a tax treaty between Norway and the home country of the individual. In case the employer is not subject to tax in Norway the individual may be exempted from tax provided the stay in Norway does not exceed 183 days.
Note however, that the employee will always be liable for tax in Norway, when hired out to a Norwegian tax paying principal.
Residency and domicile
When working in Norway, it is important to identify your tax obligations globally, rather than only focusing on the salary earned in Norway.
If you stay in Norway for more than 183 days in any 12-month period or more than 270 days during a 36-month period, you will be become a tax resident in Norway.
This means that you are liable to:
- report global wealth and income
- pay tax on global wealth and income
You can find more information here: Moved to Norway? Moved from Norway? Do I need to report and pay tax to Norway?
If you're not a tax resident, you'll only have limited tax liability for certain types of income and wealth linked to Norway.
This means that you are liable to:
- Report income based on work performed in Norway
- Mobilization/Demobilization for work that will be/have been performed on Norwegian Continental shelf
- Pay tax on income earned in Norway
It is possible to be tax resident in more than one country and thereby applicable to pay tax to both countries on the same income/wealth. To avoid double taxation, The Act of Tax and tax treaties may entitle you to claim deductions for paid tax. The deduction must be claimed in your tax return and is done by filling in forms issued by the tax administrations, for example sheets RF 1147 and RF 1150.
Reporting obligations for the employer
Foreign enterprises with activity in Norway, must report the employees’ salary on monthly basis. Please keep in mind that this obligation also applies to personnel who are non- taxable to Norway.
Norwegian tax rates
The tax percentage in Norway depends on the income. Income tax for 2018 is 23 % of net wages, but if the income exceeds gross NOK 169,000 per year or gross NOK 14,083 per month, a progressive bracket tax is levied. Your tax rate depends on which bracket your income is within.
Check out the bracket tax for 2018: Tax rates Norway – 2018
The tax level will also depend on whether you are entitled to claim deductions in your annual tax return.
Everyone who has income from work performed in Norway must submit a tax return. The due date for filing your tax return 2018 is 30 April 2019.
More information: A brief guide to your Norwegian tax return
Click here for relevant deductions when filing the tax return: 5 tax deductions to claim in your Norwegian tax return
In addition to the income tax, employees working in Norway are obligated to pay national insurance contribution to Norway. For the income year 2018 the rate is 8,2%. Exemptions can be found in the Act. Typical exemptions are A1 or sailing on foreign flagged vessels.
Read here for more information: Norwegian National Insurance Scheme
If you are a tax resident in Norway, you may be imposed to pay wealth tax to Norway. The tax is based on the wealth that you have as of 31 December in each calendar year.
This wealth could for example consist of bank deposits, shares, cars and/or real property. You must pay wealth tax both to the municipality and to the State.
Wealth tax is calculated based on your net wealth. Your net wealth is the wealth you have after debt has been deducted.
The rate for tax class 1 is 0,85 % of the wealth exceeding NOK 1 480 000.
Would you like more information about doing business in Norway? Read a summary of the most important topics here or download our free guide: