Stay in Norway - EEA/EU citizens
EU/EEA citizens who will be working in Norway must register with the police and document their working relation if their stay in Norway will exceed 90 days.
The employee must bring a valid identity card or passport and an employment certificate or employment contract for the registration.
Reporting of the assignment and workers
All contracts and subcontracts awarded to a foreign company, resulting in an activity in Norway or on the Norwegian continental shelf, must be reported to the Tax Administration. The obligation does not apply if the value of the assignment is less than NOK 20 000.
The entity awarding the contract shall fill out a form called RF-1199 to report its own contract with the contractor. The form shall include information about the contracting parties, place of work, contract period, contractual amount, etc. The form must be submitted as soon as possible after the contract has been entered into, and no later than 14 days after the work has commenced.
The foreign contractor is obliged to report the employees that work on the assignment in Norway, using the form RF-1198. An official identification paper which contains the employee’s name, date of birth, gender, picture and nationality should be filed together with the form. Information about the employees must be submitted within 14 days of the employee's first working day on the assignment.
If the contractor has engaged a subcontractor resident abroad, the subcontract should be reported on the form RF-1199.
RF-1199 and RF-1198 may be submitted electronically via the portal for the Assignment and employee register or by post. Failure to comply with the obligation to submit information about the contract or the employees can result in sanctions in the form of enforcement fines, or penalty charges.
The Tax Administration will issue D-numbers and tax deduction cards according to the information given on form RF-1198.
Norwegian tax liability for employers
Foreign employees are subject to limited tax liability to Norway for income originating from sources in this country. Salary is currently taxed at rates up to 38,2 % (ex. notional insurance contributions).
If you are become tax resident in Norway, all income and wealth will be taxable here. Under internal law foreign employees that stay in Norway for more than 183 days during a twelve-month period, will become tax resident in Norway. The employee will be deemed tax resident from his first day in Norway. The employee will also become tax resident in Norway if he stays for more than 270 days during a thirty six-month period. He will then be deemed tax resident from 1 January of the year in which the stay exceeds 270 days.
Employees can stay an average of 90 days per year in Norway without becoming tax resident in Norway.
Through tax treaties, Norway may have waived the right to tax income that normally would have been considered taxable in accordance with the rules just mentioned. The general rule in most of the tax treaties, is that salary income can be taxed in the contracting state which the work is performed, cf. NSA Art. 15(1). However, the tax treaties Norway has entered into regularly contain an exception from the general rule for employees with shorter stays in Norway. This exception generally applies if the employee stays in Norway for less than 184 days over a twelve-month period, the employee hasn’t worked at a permanent establishment that the employer has set up in Norway, and the employer aren’t hired out to an enterprise in Norway.
PAYE – the new tax scheme for foreign employees
From 2019, a new and simplified tax scheme called PAYE (Pay As You Earn) has come into effect. PAYE is meant for foreign workers who have time-limited work stays in Norway. Most new foreign workers will fall under this scheme the first year they work in Norway.
In the PAYE scheme, the employees pay 25 % tax on their employment income. The tax rate also includes the obligatory payment to the national insurance contributions currently at 8,2 %. The taxpayer’s employer deducts the tax directly from the workers salary, and the employer’s tax is settled when the salary is received. This also means that the employer cannot claim deductions, and that no tax return has to be submitted.
The new PAYE scheme does not apply for the following employees:
- employees with other taxable income that are not covered by the PAYE scheme, see “PAYE and other income
- foreign seafarers and offshore workers
- workers who have business income or income from letting property in Norway
It is important to note that the PAYE scheme is not obligatory. If the employer does not want to be taxed under the PAYE scheme, he can opt out the scheme. The consequence of opting out the PAYE scheme, is that the general tax rules apply. Whether the PAYE scheme will be advantageous, will, among other things, depend on the amount of deductions available. For certain workers, e.g those who regularly travel back home and therefore meet the terms for commuter deductions, the PAYE scheme might not be the most favorable option available.
Social security membership in Home Country/ Norway
The public social security system in Norway is called the Norwegian National Insurance Scheme (folketrygden). The membership is the key to eligibility for rights to services from NAV (the Norwegian Labour and Welfare Administration). In Norway, the membership can be based on residence or employment. If you are not a member of the National Insurance Scheme, you have no rights pursuant to the National Insurance Act. This also means that you do not pay a national insurance contribution.
Even if the employee does not live in Norway, he has a compulsory membership in the National Insurance Scheme if he for example work in Norway or on the Norwegian continental shelf.
Membership in the National Insurance scheme means that the employee has to pay a national insurance contribution if he has an income from work. The current rate is, as a starting point, 8,2 % of the employee’s salary, but depends on:
- whether he pay tax to Norway and on whether the Norwegian Tax Administration collects the national insurance contribution together with his taxes
- whether his employer is required to pay the employer's contribution to the National Insurance Scheme
- which parts of the National Insurance Scheme he is a member of if he is not a compulsory member
A foreign employee that work in Norway will receive a tax return the next year, showing a summary of the employee’s income, wealth and debts for the last calendar year. The tax return contains a preliminary calculation of whether the taxpayer has paid too much or too little tax.
Even though the taxpayer is exempted from income tax based on a relevant tax treaty etc, the tax return has to be filed. The Norwegian tax report system is, however, based on a “silent accept principle”, meaning that the pre-completed tax return that the taxpayer receives automatically is considered filed even in cases where the employee does nothing. The tax return is only preliminary and may also leave out relevant information or even contain errors. Filing a pre-completed tax return may therefore result in missing out on important deductions; this is especially true for foreign employees that may be entitled to commuter travel deduction.
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