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Norway, formally the Kingdom of Norway, is a Nordic nation in Northern Europe, occupying the western and northernmost parts of the Scandinavian Peninsula. Norway also includes the isolated Arctic island of Jan Mayen and the Svalbard archipelago. Bouvet Island, in the Subantarctic, is a Norwegian dependency; it also claims the Antarctic territories of Peter I Island and Queen Maud Land. Oslo is Norway's capital and biggest city.
Norway has a total area of 385,207 square kilometers (148,729 square miles) with a population of 5,425,270 people as of January 20, 2022. The nation has a 1,619-kilometer-long eastern border with Sweden (1,006 mi). It is bounded to the northeast by Finland and Russia, and to the south by the Skagerrak strait, which is shared by Denmark and the United Kingdom. Norway has a long coastline that borders the North Atlantic Ocean and the Barents Sea. Norway's climate is dominated by the marine influence, with warm lowland temperatures on the seashores; the interior, although colder, is also much milder than locations elsewhere in the globe at such northerly latitudes. Temperatures over freezing are frequent on the seashore even during polar night in the north. The oceanic impact causes heavy rain and snowfall in several parts of the nation.
The current King of Norway is Harald V of the House of Glücksburg. Since 2021, Jonas Gahr Store has been Prime Minister, succeeding Erna Solberg. Norway, being a unitary sovereign state with a constitutional monarchy, shares state authority among the parliament, cabinet, and supreme court, as established by the 1814 constitution. The kingdom was founded in 872 as a union of many small kingdoms and has been in continuous existence for 1,150 years. Norway was a member of the Kingdom of Denmark–Norway from 1537 to 1814, and it was in a personal union with the Kingdom of Sweden from 1814 to 1905. Norway was neutral throughout WWI and remained so until April 1940, when it was invaded and controlled by Nazi Germany until the conclusion of WWII.
Norway is divided into two administrative and political levels: counties and municipalities. Through the Sámi Parliament and the Finnmark Act, the Sámi people enjoy some self-determination and authority over the traditional territory. Norway has strong links with both the European Union and the United States. Norway is also a founding member of the United Nations, NATO, the European Free Trade Association, the Council of Europe, the Antarctic Treaty, and the Nordic Council; a member of the European Economic Area, the World Trade Organization, and the Organization for Economic Cooperation and Development; and a member of the Schengen Area. Furthermore, the Norwegian languages are mutually intelligible with Danish and Swedish.
Norway adheres to the Nordic welfare model, which includes universal health care and a robust social security system, and its principles are based on egalitarian ideals. The Norwegian government owns a major portion of important industrial sectors and has vast deposits of petroleum, natural gas, minerals, timber, seafood, and freshwater. The petroleum sector contributes around a quarter of the country's GDP (GDP). Norway is the world's greatest producer of oil and natural gas per capita outside of the Middle East.
According to the World Bank and IMF, the nation has the fourth-highest per-capita GDP in the world. Norway is ranked eleventh on the CIA's GDP (PPP) per capita list (2015 estimate), which includes autonomous territories and regions. It boasts the world's biggest sovereign wealth fund, at $1 trillion USD. Norway has achieved the world's top Human Development Index score since 2009, a position it also held between 2001 and 2006; it also has the greatest inequality-adjusted ranking as of 2018. Norway rated top in the World Happiness Report in 2017 and continues to lead the OECD Better Life Index, Index of Public Integrity, Freedom Index, and Democracy Index. Norway also boasts one of the world's lowest crime rates.
Although ethnic Norwegians constitute the majority of the Norwegian population, immigration has accounted for more than half of population growth in the twenty-first century; in 2021, the five largest minority groups in the country were the descendants of Polish, Lithuanian, Somali, Pakistani, and Swedish immigrants.
Employees in Norway are entitled to 25 unpaid workdays under the Holidays Act, though it is more customary for them to get 5 weeks. Employees receive holiday compensation instead of paid time off.
Holiday pay is accrued the year before the vacation is taken. It is paid to the employee on the payday preceding to the vacation or, at the very least, one week before the vacation. Alternatively, it is conceivable and popular to pay out holiday pay once a year on a certain month. Employees who were not employed the previous year are allowed to take vacation time, but they are not eligible to holiday pay.
In Norway, the employer is required to set away 10.20% of the employee's pay. If the employee is paid on a commission or bonus basis, the bonus or commission must be factored into the holiday pay calculation.
The amount should be set away for employees over the age of 60 is 12.50 percent.
Norway recognizes ten public holidays.
An employee is not obliged to present a doctor's certificate for the first three days of an illness. This is necessary after the fourth day.
The employee must have worked for at least four weeks to be eligible for sick leave and benefits. The maximum benefit period is 52 weeks, beginning on the first day of the sickness and must be supported by a medical certificate.
The employer is responsible for paying the employee's sick pay for the first 16 days of the sickness. The Norwegian National Insurance program takes over after 16 days.
Mothers in Norway have the right to up to 54 weeks of maternity leave.
If the mother decides to take all 54 weeks of maternity leave, national insurance is liable for paying her at a rate of 80% of her usual income, or 100% if she decides to take only 44 weeks of maternity leave.
Paternity leave is enclosed in the parental leave provisions.
Maternity leave can be divided between the mother and the father, although the mother gets 3 weeks before the projected due date and 6 weeks following the delivery. After maternity leave, a parent can take an extra year of unpaid leave.
Workplace injury leave: In Norway, employers are required to purchase occupational injury insurance for their employees.
If an employee is wounded at work, they must report the incident to the Norwegian Labour and Welfare Administration (NAV) along with documentation that the accident occurred on the job.
Due to a work-related injury, an employee is eligible to compensation of up to 72,662 NOK each year.
Employees are entitled to disability pay if they are unable to work. This remuneration is based on the proportion of time the employee is able to work despite his or her disability.
In Norway, employers are not obligated to offer a warning prior to dismissing an employee. However, the Working Environment Act contains stringent regulations that must be followed. In Norway, there is no such thing as at-will employment, and hence the employer must have a valid, just reason for terminating an employee, as well as the ability to substantiate the grounds for termination.
Prior to terminating an employee, the employer must communicate with the employee to discuss the termination possibility.
Employees are required to give at least one month's notice before terminating their employment. If an employee is terminated and has worked for the company for more than five years, the employee will receive two months' notice. If the employee has worked for the company for more than ten years, the notice period will be at least three months. Employees who are over the age of 50 are entitled to a four-month notice period. If the employee is over the age of 55, a five-month notice period will apply. If the employee is over the age of 60, a six-month notice period will apply. The notice period commences on the first day of the month following the date of receipt of the notice.
The probationary period in Norway usually lasts for 6 months.
There is no statutory severance pay in Norway.
In Norway, the standard workweek is 40 hours spread over five days. Numerous employees are covered by collective bargaining agreements that limit their weekly work hours to 37.5 hours. Between the hours of 8 a.m. and 4 p.m. are the most common working hours. Many employees, however, work flexible hours and report to work earlier or later than 8 a.m.
Employees are legally permitted to work up to nine hours per day. Overtime is permitted only when a specific, urgent need exists and may be for a limited period of time. Overtime is permitted up to ten hours per week, 25 hours in four consecutive weeks, and 200 hours per year. An employee may not work more than 13 hours per day or more than 48 hours per week on average over eight weeks.
Employers and employees may agree in a collective bargaining agreement to allow up to 20 hours of overtime per week, 50 hours in four consecutive weeks, or 300 hours in a calendar year. Additionally, an employer may petition the government Labor Inspection Authority to permit employees to work longer periods of overtime if they agree.
Overtime is compensated at a rate of at least 140 percent of the employee's standard hourly rate.
Norway has no minimum wage. However, in most industries, minimum salaries are determined through collective bargaining.
All Norwegians have a right to free treatment in public hospitals. The patient bears the whole expense of treatment at a private clinic that does not have an agreement with the public health system. EU nationals have the same right to care as Norwegian citizens. Private health insurance is expanding, but it only covers approximately 5% of healthcare treatments, and the overwhelming majority of them are elective. The quality of treatment is good, but there may be lengthy wait periods, which can lead to people seeking out-of-pocket care in other nations.
Stock options are often granted to salaried workers in higher-level jobs, consultants, and those in management. In general, we suggest budgeting 20% of the gross pay for benefits in order to distribute the entire employer's cost including benefits in Norway.
Taxes on corporate taxable earnings (ordinary income) are levied at a fixed rate of 23%. The tax base is calculated as the total of operational profit/loss, financial revenues, and net capital gains, less tax depreciation. Furthermore, profit is taxed on the owner's hand through dividend and capital gain taxes.
The exemption method (Norwegian: fritaksmetoden) states that limited businesses are free from tax on dividends and capital gains from the alienation of shares; as a result, the ability to deduct losses on shares has been eliminated. Dividends and profits on shares will be taxed on extraction from the business sector, and only to the extent that such income exceeds a risk-free rate of return, when combined with the suggestion of a model for taxation of individual shareholders (the shareholders model).
Petroleum operations are taxed in accordance with the principles that regulate regular business taxes. The exploitation of oil and gas generates a significant surplus return (resource rent). As a result, in addition to the regular income tax of 23%, a special tax of 51% on revenue from petroleum extraction has been imposed. As a result, the marginal tax rate on excess return in the petroleum industry is 78 percent.
Power plants are taxed in accordance with the laws that regulate regular business taxes. The generation of hydropower generates a significant surplus return (resource rent). As a result, in addition to the regular income tax of 23%, a special tax of 30% on revenue from hydropower plants has been imposed. As a result, the marginal tax rate on excess returns in the electricity industry is 58 percent.
Shipping firms are free from income taxes on their shipping revenue, but they must pay a tonnage tax on the boats they own and, in certain instances, the vessels they lease. The tax is calculated depending on the net tonnage of the vessel (tons). Regardless of whether the vessel has been in service or not, this tonnage tax must be paid.
General earnings are taxed at a fixed rate of 22%. The general income tax base includes all types of taxable income (i.e. income from employment, business, and capital). When calculating general income, tax allowances, expenditures, and some losses are all deductible. The county tax, the municipal tax (Norway is split into 11 counties and 356 municipalities), and the state tax are all levied on general income.
Personal income between NOK 184,800 and NOK 260,100 is subject to a 1.7 percent tax rate. The tax bracket rate is 4.0 percent for personal income between NOK 260,100 and NOK 651,250. The tax bracket rate for personal income between NOK 651,250 and NOK 1,021,550 is 13.2 percent. Personal income in excess of NOK 1,021,550 is subject to a 16.2 percent tax rate. The personal income tax base is mostly made up of earnings from work, including benefits in kind and pensions.
Value-Added Tax (Norwegian: merverdiavgift) is a consumption tax that must be paid on domestic sales of taxed products and services at all links in the distribution chain, as well as on imports. The VAT rates are as follows:
25% standard rate
15% on foodstuffs
12% on the supply of passenger transport services and the procurement of such services, on the letting of hotel rooms and holiday homes, and on transport services regarding the ferrying of vehicles as part of the domestic road network. The same rate applies to cultural events, museums, cinema tickets and to the television license.
In general, all sales of goods and services are subject to VAT. However, certain suppliers are exempt (without an input tax credit), which implies they are completely beyond the purview of the VAT Act. Businesses that exclusively make such supplies are unable to file for VAT and are unable to deduct VAT. The VAT Act does not apply to financial services, health services, social services, or educational services.
Some supplies have a zero rating (exempt with a credit for input tax). When a supply is zero-rated, it indicates that it is subject to the VAT Act, but output VAT is not computed since the rate is zero. Newspapers, books, and magazines are all zero-rated.
If you are a citizen of a country other than the EU/EEA, you should contact the Norwegian Immigration Directorate (Utlendingsdirektoratet, UDI) to find out what rules apply to you. Employers of foreign nationals in Norway have numerous alternatives under Norway's immigration system.
Unless they are visa-exempt due to their nationality, business travellers to Norway normally utilize a local version of the Schengen C Visa. The Schengen Area restricts visitors' stay to 90 days in 180 days.
The main work authorization categories are the Residence and Work Permit for Service Providers, which is suitable for highly skilled staff on temporary assignment to a Norwegian subsidiary or client and is available in two-year increments up to a total stay of six years; and the Residence and Work Permit for Skilled Workers, which is suitable for highly skilled staff hired locally by a Norwegian company and is available in three-year increments with no total stay limit.
A residency permit issued in one Nordic nation does not authorize you to dwell in another Nordic country. You must verify with the appropriate immigration authorities to see whether you are eligible to relocate to that nation; a double-entry visa may be necessary.
In Norway, employment contracts must be in writing.
Contracts with indefinite periods are desired, however staff may be hired for temporary employment. This is often done for seasonal or project work, trainees, or the replacement of permanent staff who are out for a lengthy period of time, such as those on maternity leave. Temporary employment contracts are limited to one year. Temporary workers who are engaged in general (as opposed to temporary employees who fulfil a specific job or whose employment is restricted to a single project) may not make up more than 15% of all employees. Employees who have worked consistently in a temporary capacity for four years in a row are eligible for a permanent employment.
There is no set length for assignments. This is usually indicated in the employment contract for fixed-term employments.
Choosing to establish a Norwegian subsidiary is not a choice to be taken lightly. As a result, before deciding to grow to Norway, you'll need to analyze a number of aspects, including the business climate, location, and language. Your kind of company and current business contacts might influence whether you wish to form a subsidiary in Norway and where your headquarters should be located.
Different areas and localities often have their own set of regulations, fees, and microcultures. If you are unfamiliar with the Norway region, it is recommended to deal with a consulting firm or other specialists that can assist you in determining the best location for your company.
Approximately 95% of the population speaks Norwegian, whereas 90% speak English. If you don't speak Norwegian, you should hire a translator or workers who are proficient in the language and can communicate with customers.
The most popular Norway subsidiary structure is an Aksjeselskap, which is a private limited liability corporation (AS). The following is the procedure for establishing a Norwegian subsidiary for an AS:
1. Make a bank deposit for your starting funds.
2. Register with the Business Enterprise Register.
3. Fill out the VAT registration form.
4. In a pension agency, set established mandated occupational pension schemes for workers.
5. Enroll in the necessary workers' compensation insurance.
Norway's subsidiary laws have become less complicated in recent years. The nation lowered the minimum capital requirement for private joint stock firms in 2013. They repealed the need for limited liability businesses to have their balance sheets audited by an external auditor if they pay their capital in cash in 2015. Subsidiary legislation in Norway then made a significant step forward in 2016 with the launch of online government and bank account registration services.
If you want to form a limited liability corporation, you'll need at least 30,000 NOK in share capital. You will also need at least two directors, one of whom must be a Norwegian or European citizen.