TAXES IN NORWAY

TAXES IN NORWAY

Norwegian entrepreneurs are obliged to comply with the regulations and deadlines set by the tax authorities, and failure to comply with the formalities may lead to serious consequences including the need to pay a financial penalty. On this page we have gathered detailed information related to the applicable taxes in Norway, their characteristics, scope and deadlines, which will enable you to familiarise yourself with the current tax regulations.

TAX ALLOWANCES

[Infographics] [TYPES OF ALLOWANCES

  • pendler,
  • ordinary settlement,
  • standardfradag.

The standardfradag has been abolished in 2019!]

In Norway, it is possible to reduce the tax base. To do so, specific deductions attributed to the taxpayer’s tax allowances must be made in the annual return.

[Infographic] [PENDLER STATUS DEDUCTIONS:

  • travel costs (airline tickets, bus tickets, tolls),
  • costs of renting accommodation in Norway (lease agreement),
  • electricity bills (bills issued),
  • daily allowance (rate determined each year).]

Pendler status makes it possible to write off expenses related to food, accommodation in Norway or travel to the place of permanent residence for foreign employees who regularly commute to their place of permanent residence.

Pendler status allows for the deduction of expenses that are incurred by the commuter, i.e. the Pendlerutgifter. A person is entitled to the Pendlerutgifter deduction if:
– visits his/her home country at least once a year,
– does not have independent accommodation in Norway,
– has accommodation in his or her home country, or is under 21 years of age and is visiting his or her parents.

In 2019, the 10% relief has been abolished. From January 2019, this relief is only available to foreign seafarers and workers on oil production platforms.

Standardfradrag, otherwise known as the 10% allowance or standard deduction, allows for a 10% deduction from employment income understood as gross salary and taxable allowances (benefits in kind, cash bonuses and excess reimbursement of expenses). The deduction may not exceed NOK 40,000.

Deductions related to the 10% allowance:
– deductible expenses (minstefradrag),
– tax-free amount (personfradrag).

Persons who are permanently resident in Norway, and thus not entitled to other deductions, may make deductions on the basis of the ordinary settlement. The ordinary tax settlement allows for deductions for actual expenses, e.g. deductible expenses (minstefradrag), tax-free personal allowance (personfradrag) and contributions to an individual pension fund (IPA).

Deductions related to ordinary settlement:

– interest on debts,
– parental relief,
– IPA contributions,
– deductions for donations to charities,
– deductible expenses.

TAX LIABILITY

Tax liability applies to all enterprises and self-employed persons who live and work in Norway, including owners of subsidiaries of foreign companies (NUF). Doing business in Norway involves paying tax – the type and amount of tax depends on a number of factors such as the nature and type of business and the employment of employees.

The income tax that Norwegian entrepreneurs should pay is 22% on the company's profit, while social security contributions are another 11.4% on the company's profit.

The Authority calculates income tax based on the amount of company profit declared by the entrepreneur. Income tax is paid in the form of advance payments, which must be paid on the prescribed dates:
– by 15 March,
– by 15 June,
– by 15 September,
– by 15 December.

Any company whose turnover has exceeded NOK 50,000 in consecutive 12 months should be entered in the VAT register as a VAT payer.

VAT is settled by means of a tax return, and the amount depends on the tax rate assigned to the goods or services.

[Infographic] [VAT IN NORWAY:

25% standard rate,

15% reduced rate,

12% low rate.]

Business owners with employees are required to pay additional charges – so-called employment taxes. Arbeidsgiveravgift is the employer’s tax – its rate depends on zone affiliation, while Forskuddstrekk is the employee’s advance income tax.

Norway’s membership of the EEA, or European Economic Area, allows for the exchange of goods between Poland and Norway. Imports and exports involve the payment of customs duty and VAT – businesses in the VAT register should account for import charges in their tax return (excluding customs duty and shipping documents).

IMPORT AND EXPORT

The duty rates in Norway are determined by Norwegian Customs (toll.no) - duty rates and tariffs or exemption from duty are assigned to individual categories of goods and services.

Norwegian VAT on imports is 25% and 15%. Amongst others, electric cars, ships and their parts or electric windmills (energy sources) are not taxed.

Export is understood as the export of goods produced in Norway. The sale of goods is considered to be export if the entrepreneur declares the export of goods outside the EU to a customs office.

The export of certain groups of goods requires special permits. This applies to:
– medicines (legemiddelverket.no),
– arms (politi.no),
– food and food supplements (mattilsynet.no),
– alcohols,
– seedlings (mattilsynet.no).

A company that intends to export goods to Norway should:
– invoice the recipient with zero VAT,
– notify customs of its intention to export goods outside the EU,
– notify the Norwegian Customs Service of the entry of goods into the country.

Please note that it is the recipient’s responsibility to pay the tax due on the exported goods.

A SAD must be presented at the border. The transport documents should contain all information about the goods being transported and the purchase invoice. The attached invoice must include the correct VAT rate – standard or zero VAT. The trader may request a correction of the input tax – to do so, a request for a correction of the invoice must be submitted to the office together with a confirmation of the export of the goods. The preparation of the SAD can be outsourced to a customs agency, which has all the information on current procedures and customs duties.

EMPLOYMENT TAXES

[Infographics] [EMPLOYMENT TAXES

  • Arbeidsgiveravgift,
  • Forskuddstrekk.]

Business owners with employees face an extended employment tax obligation. Arbeidsgiveravgift is the employer’s tax – its rate depends on zone affiliation, while Forskuddstrekk is the employee’s advance income tax. In addition, employers incur costs related to employees’ sickness benefits or training necessary for them to perform their work.

The fixed costs that employers incur in relation to hiring employees amount to a minimum of 26.3 per cent of the employee’s gross salary.

[Infographic] [FIXED COSTS:

  • employment levy (14.1% on gross salary),
  • pension insurance (min. 2% on gross pay),
  • feriepenger (min. 10.2% on gross salary).]

The variable costs that an employer incurs in connection with hiring employees are mainly related to sick pay (sykepenger – a benefit paid by the employer for the first 16 days of sick leave), accident insurance, employee training or work clothes. It is estimated that variable costs amount to an average of 5% of the employee’s gross salary.

INCOME TAX

In 2019, the income tax rate in Norway is 22% on the company’s profit. To the base amount must be added the corresponding tax percentage depending on the tax threshold in which the profit made by the entrepreneur in the year closes.

The amount of tax to be paid increases together with the company's income.

[Infographic] [TAX THRESHOLDS FOR 2020:

first – NOK 180 800 – 254 500 (taxation of the excess is 1.9%),

second – NOK 254 500 – NOK 639 750 (taxation of the surplus is 4.2%),

third – NOK 639 750 – 999 550 (taxation of surplus is 13.2%),

fourth – above 999 550 NOK (taxation of the surplus is 16.2%)].

An entrepreneur is required to submit a declaration of the company’s expected profit to the authorities upon opening a business and then at the beginning of each year. On the basis of the profit declaration, the Norwegian Tax Authority determines the amount of advance payments of income tax that must be paid on the prescribed dates.

[Infographics] [DEADLINES FOR REPAYMENT OF INCOME TAX DEPOSITS:

  • by 15 March,
  • by 15 May,
  • by 15 September,
  • by 15 November.]

By 31 May, business owners should submit an annual tax return – Selvangivelse for næringsdrivende – which shows the company’s actual profit in the previous year. On this basis, Skatteetaten calculates the correct amount of income tax refund or surcharge, which is detailed in the Skatteoppgjør.

REGISTRATION IN THE VAT REGISTER

Any company whose turnover exceeds NOK 50 000 in the following 12 months should be entered in the VAT register as a VAT payer. If the company’s turnover does not exceed a certain amount after 12 months, the limit of NOK 50 000 is reset to zero.

Running a joint-stock company means that the shareholders' assets are separate from the company's assets - Aksjeselskap's liabilities are only collected up to the company's share capital

Registration in the Merverdiavgiftsregisteret, i.e. the Norwegian VAT register, can be done at the relevant tax office or via Altinn.no. The registration is done using form BR-1080 – the application consists of two parts. Enterprises listed in the Register of Business Entities (Enhetsregisteret) only complete the second part of the form. Subsidiaries of foreign companies (NUF) may deduct VAT charged by customs when purchasing goods for use in the course of business. NUFs are required to keep sales statements (omsetningsoppgaver) and to calculate and pay sales tax on goods and services on a regular basis. Companies that are not domiciled in Norway (subsidiaries of foreign companies) may have their tax formalities handled by an appointed tax representative. The representative is responsible for representing the company in its dealings with the tax authorities – the representative may only be a person who lives and works permanently in Norway.

VAT

VAT is a tax on goods and services - charged on the sale price of goods and services and, in the case of imports, on the statistical value of the goods in question.

Registration in the VAT register should be done by Norwegian companies whose turnover has exceeded the NOK 50,000 limit in a consecutive 12-month period.

Companies that are VAT payers should add the relevant tax rate to each good or service and include the abbreviation MVA (Merverdiavgift) on their invoices.

Businesses listed in the VAT register are required to pay the tax due. Norwegian VAT is divided into three rates – standard, reduced and low. The standard rate of tax is 25%, the reduced rate applies to food and beverages and is 15%, and the low rate of 12% is charged for passenger transport and culture (cinema, radio, television).

[Infographic] [VAT IN NORWAY:

  • 25% standard rate,
  • 15% reduced rate,
  • 12% low rate.]

VAT in Norway is settled by means of a tax return, in which all information relating to the costs and income of your business must be provided. The tax return is submitted within the deadlines set by the Norwegian authorities via Altinn.no.

[Infographic: VAT RETURN FILING DEADLINES:

  • 10 April (for January, February),
  • 10 June (for March, April),
  • 30 June (for May, June),
  • 10 October (for July, August),
  • 10 December (for September, October),
  • 10 February (for November, December)].

Businesses in the VAT register in Norway should prepare reports for the relevant time period. The VAT report should show the costs incurred by the company (invoices, receipts), statements of the company account (kontoutskrifter) or invoices issued (revenue invoices) and include other paperwork documenting the business (premises lease agreement, vehicle card).

An entrepreneur who paid VAT before the company was entered in the VAT register may recover the overpaid tax. To do so, a supplementary return documenting the tax paid from the period before the company was entered in the VAT register must be submitted.

MVA DECLARATION RULES

Merverdiavgift, the applicable VAT in Norway, is a tax on goods and services.

[Infographic] [VAT IN NORWAY:

25% standard rate,

15% reduced rate,

12% low rate.]

Businesses in the VAT register should prepare reports for a given period of time. The VAT report should show the costs incurred by the company (invoices, receipts), statements of company accounts (kontoutskrifter) or invoices issued (revenue invoices) and include other paperwork documenting the business (premises lease agreement, vehicle card).

VAT in Norway is settled by means of a tax return, in which all information relating to the costs and income of the business must be provided. The tax return is submitted within the deadlines set by the Norwegian authorities via Altinn.no.

[Infographic: VAT RETURN FILING DEADLINES:

  • 10 April (for January, February),
  • 10 June (for March, April),
  • 30 June (for May, June),
  • 10 October (for July, August),
  • 10 December (for September, October),
  • 10 February (for November, December).]

According to the changes to the rules for filing VAT returns in Norway, businesses on the VAT register should settle import charges (excluding customs duties and shipping documents) via a tax return – the value of the goods is shown in the import column for statistical purposes (it does not affect the settlement with the authorities).