Employers in Norway have several tax responsibilities. One of these is withholding income tax from employee salaries based on individual tax deduction cards. These cards are obtained electronically from the Norwegian Tax Administration and determine the deduction amount. If an employee does not provide a tax card, a 50% deduction rate applies. The base income tax rate is 22%, but additional bracket taxes may apply based on income level. Withheld income tax must be paid to the Norwegian Tax Administration six times per year.

Employer's National Insurance Contributions

Employers must also pay employer's national insurance contributions on all employee salaries. The contribution rates vary based on the employer's geographical zone, which is designed to promote economic development in certain regions. These contributions are paid alongside income tax withholdings, six times per year.

Occupational Pension Contributions

There may be an obligation for employers to contribute at least 2% of an employee's gross salary into an occupational pension scheme. The specific requirements for this depend on the industry and company agreements.

Special Provisions for Foreign Workers

Non-resident foreign workers may elect for a simplified 25% flat income tax rate under the PAYE Scheme.

Employers should consider using a specialized payroll provider in Norway to ensure compliance and streamline the tax filing process.

The Standard Deduction, or Minstefradrag, is a deduction from taxable income aimed at offsetting work-related expenses. All wage earners in Norway are eligible for this deduction. The calculation is based on a percentage of gross income, up to 46%, with a minimum limit of NOK 4,000 and a maximum limit of NOK 109,850.

Personal Allowance (Personfradrag)

The Personal Allowance, or Personfradrag, is a fixed deduction from taxable income. All tax residents of Norway are eligible for this deduction. The calculation is a standard amount, currently NOK 73,100.

Interest Expense Deduction

The Interest Expense Deduction is a deduction for interest paid on loans, such as mortgage interest. Taxpayers with deductible interest expenses are eligible for this deduction. The calculation is currently a 22% deduction on your interest expenses.

Commuting Expenses Deduction

The Commuting Expenses Deduction is a deduction for travel costs between home and your regular workplace. Specific criteria apply for this deduction. The calculation is based on distance traveled and mode of transportation.

Other Potential Deductions

There are other potential deductions that employees can take advantage of. These include Union Dues, Charitable Donations, Special Deductions for Seafarers, and Disability-Related Deductions.

Important Notes

Eligibility criteria and deduction limits may change. It's essential to stay updated with the latest information.

In Norway, the standard VAT rate is 25%. This applies to most services unless they fall into a reduced rate category or are exempt.

VAT Rates

• Standard Rate: The standard VAT rate in Norway is 25%. This applies to most services unless they fall into a reduced rate category or are exempt.
• Reduced Rate (12%): Applies to specific services, including:
  • Passenger transport
  • Accommodation services
  • Entry to cultural events (museums, galleries, etc.)
  • Admission to sports events and amusement parks

VAT Exemptions

Certain types of services are exempt from VAT in Norway. Key exemptions include:

• Financial Services (e.g., banking, insurance)
• Healthcare Services
• Educational Services

Even if a service is exempt, the business may still be able to deduct input VAT on related expenses.

VAT Filing & Registration

• Registration Threshold: Businesses with a taxable turnover exceeding NOK 50,000 within a 12-month period must register for VAT.
• Filing Frequency: VAT returns are generally filed every two months. Businesses with annual turnover below NOK 1 million may have alternative filing arrangements.
• Filing Procedures: VAT is filed and paid electronically through the Norwegian Tax Administration's portal.

Norway provides a variety of tax incentives to stimulate business activity and attract investment. These incentives range from tax credits for research and development to income deductions for investments in start-up companies.

SkatteFUNN Research and Development (R&D) Tax Credit

This is a tax credit that reduces a company's tax bill by 19% of eligible R&D expenses. Norwegian companies and branches with taxable income are eligible, provided they are undertaking R&D projects with a clear definition of scientific or technological advancement. To apply, companies must submit an application to the Research Council of Norway before the project starts. Project approval is valid for up to three years, or four in specific cases.

Income Deduction for Investments in Start-up Companies

This incentive allows individual taxpayers to deduct up to NOK 1 million annually from their taxable income for investments in qualifying start-up companies. Eligibility is for individual taxpayers in Norway who invest a minimum of NOK 30,000 in a qualifying start-up company. The maximum annual deduction is NOK 1 million per investor. The start-up company must be less than five years old and meet specific size criteria. There is no formal application process; taxpayers can claim the deduction when filing their tax return.

Special Considerations for Start-up Companies

Start-up companies with high growth potential may benefit from additional support programs offered by Innovation Norway.

Tax Exemptions for Specific Transactions

The Ministry of Finance can grant tax relief on specific business transactions, such as asset transfers within a group or property sales. Eligibility varies depending on the specific transaction. Applications are submitted to the Ministry of Finance.

Tonnage Tax Scheme for Shipping Companies

This scheme provides a final tax exemption on a company's shipping income, including operating profits and gains on sales. Eligibility is for shipping companies engaged in chartering and operating owned or chartered vessels. For application details, companies should contact the Norwegian Maritime Authority.

Important Notes:

Eligibility criteria and application processes can change. Always refer to the official Norwegian Tax Administration website or seek advice from a qualified tax professional for the latest information.