Payroll Guide Norway
As American businesses expand overseas, one favorite country within which to do business is Norway. Getting a handle on hiring and payroll in Norway requires research. This guide is intended to help you acclimate to payroll law in Norway.
Ease of Doing Business in Norway: An Overview
The United Nations identified Norway as one of the best places to live in the world. As such, it is a coveted country from which to work and live.
Instead of the dollar or euro, Norway uses Krone (NOK) as their currency. 1 USD is worth a little over 9 NOK, and 1 EU is worth about 10 NOK.
To do business in Norway, you must create a Norwegian business entity from which you can run your payroll and file taxes. Any employees (foreign or citizen) planning to reside in Norway for longer than 3 months must apply for a tax deduction card. Both companies and employees pay taxes. Corporate taxes are always a flat 27% on profits, while employee tax rates vary on their income level.
Recent Developments in Norway Payroll Laws
Beginning January 2019, all workers that at any time worked for a Norwegian company in Norway on a temporary basis (less than 3 months) must pay a flat 25% tax out of their paycheck. Technically, this worker does not need to be on Norwegian soil, as a video conference technically counts as working in Norway on a temporary basis. For foreign workers that establish residency in Norway, they are liable for the standard tax code as listed in the chart below.
Basic Facts about Payroll in Norway
There are some similarities between payroll in the United States and Norway. For example, paychecks are typically issued twice each month and income taxes are withheld from each paycheck via standard deductions.
But one major difference is that the tax rates are quite a bit more straightforward with standard tax rates based on income levels. Also, Norway has national insurance, and as such, national insurance taxes are also withheld from an employee’s paycheck.
Any tax deductions are permitted only in accordance with Norway tax law as defined by the employee’s tax deduction card. Also, there is no set national minimum wage. However, most industries define their own minimum wages based on age, the job description, and an employee’s experience.
Instead of the IRS, employers and workers of Norway pay taxes to an organization known as the Skattelistene (Skatt, for short). All employers and employees regardless of their country of origin must adhere to Norwegian tax law.
Rates and Thresholds
Depending on one’s income, the standard tax rate spans from 22% to 38.2%. Incomes 174,500 NOK or less enjoy the 22% tax rate while incomes above 964,801 NOK pay a tax rate of 38.2%. For a more in-depth look at rates and thresholds, see the Tax Rate Chart below.
Taxes that pay for national insurance are 8.2% on normal incomes and 5.1% on any pension income. Instead of state taxes, Norway has municipality taxes in order to fund public services therein.
How Withholding Works
Every employee has a tax deduction card (like the United States’ version of a W-4) indicating how much in taxes are to be withheld every paycheck. The company issues payment to Skatt monthly, then records its monthly payments on a document known as an A-Melding declaration.
Returns and Remittance
As mentioned above, an employer files a return each month with an A-Melding declaration. At the end of the year, the employer files a final return, pays any remaining taxes owed, and also issues tax certificates (like W2/1099s in the US) to their employees.
Employee Stock/Share Plans
There are variations of how employee stock options are taxed. Pretty much all stock option returns are discounted or tax-free altogether (until an employee chooses to cash out). For detailing stock options to Norwegian employees, employers should consult the Skatt website or a local tax professional.
If an employee does not have a tax deduction card, employers are required to withhold at a tax rate of 50%. Once an employee acquires a tax deduction card, they can go back to their normal tax rate and receive a tax refund at the end of the year.
Naturally, employees and employers alike will be held accountable for any tax evasion or fraud. Depending upon the severity of the offense, the offender is susceptible to criminal or administrative charges which includes fines and/or incarceration. There are also surcharges associated with late tax filings.
Tax Rate Chart
|USD Comparison||Income Range||Standard Tax Rate||NI Tax on Income||NI Tax on Pensions|
|$1 – 19,195||1 – 174,500 NOK (living in municipalities Finnmark or Nord-Troms)||18.5%||8.2%||5.1%|
|$1 – 19,195||1 – 174,500 NOK||22%||8.2%||5.1%|
|$19,196 – 27,022||174,501 – 245,650 NOK||23.9%||8.2%||5.1%|
|$27,023 – 67,925||245,651 – 617,500 NOK||26.2%||8.2%||5.1%|
|$67,925 – 106,128||617,501 – 964,800 NOK (living in Finnmark)||33.2%||8.2%||5.1%|
|$67,925 – 106,128||617,501 – 964,800 NOK||35.2%||8.2%||5.1%|
|$106,129 and above||964,801 and above||38.2%||8.2%||5.1%|
*Chart above does not include municipality taxes.
Compensation and Benefits
Norway has national insurance for all its inhabitants. Unlike the United States, all tax-paying Norwegians (as well as foreign workers and employers) are entitled to medical benefits. Therefore, it is not necessary for employers to subsidize a healthcare plan.
As noted above, there is no set national minimum wage. But each industry sets their own minimum wage rates. Third shift workers are required additional pay of 26 NOK on top of their standard payroll.
In addition to a normal work week, Norwegian employees are permitted 200 hours of overtime every 6 months.
Hours of Work
The standard work day in Norway is 8am-4pm local time. As a general rule, Norwegian workers do not take their work home after hours, on weekends or holidays. Labor law stipulates a maximum 40 hours of work a week (overtime as described above being the exception) over a 6-day workweek (Monday through Saturday).
Holiday & Sick Leave
Paid annual leave is known as holiday leave, which employees are encouraged to take between June and September. All employees are entitled to 25 days of annual, holiday leave, and senior citizen employees are granted a minimum 31 days of leave.
Employees are granted 16 paid sick days by their employer (so long as they’ve been employed at least one month). If an employee is sick for longer than 16 days, then the Norwegian Labour and Welfare Administration assumes compensation for that sick employee.
If a couple is expecting a child, the mother must be allowed to attend all doctor’s appointment during the workweek. Both the mother and father are entitled to at least 14 weeks of maternal/paternal leave. The father may combine part-time work hours with his paternal leave. Both parents may take up to 46 weeks (combined) at 100% pay or 56 weeks (combined) at 80% pay. Parents are subsequently permitted to take 10 days paid leave if one of their children are ill (this increases to 15 days if parents have 3 or more children).
Norway frequently hires foreigners. Instead of work visas, official permission to work and reside in Norway is granted through residence permits. Before a foreign national can acquire a residence permit, they need to obtain a formal job offer, or be categorized as a permanent labour immigrant, asylum seeker, or family immigrant.
Once residency has been established, the foreign employee needs to acquire their own tax deduction card. Payroll taxes are filed just as they would be for Norwegian citizens.
How Employees File Taxes at the End of the Year
In Norway, employers typically file taxes for their employees. Some companies can authorize a local tax professional to file their employees’ taxes, while others simply take care of tax filings in house.
Norway is a thriving member of the global economy. A global leader in industries as diverse as maritime, energy, technology and communications, Norway is an attractive place to do business. In fact, around 35,000 new businesses are registered in Norway every year.
If you’re thinking of expanding into Norway, you’ll find an enterprise-friendly administration with simple and well-supported process requirements.
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