Norway

Registrations and Establishing an Entity

Every foreign company needs to have a Norwegian Organization Number with The Central Coordinating Register for Legal Entities (Brønnøysund) in order to operate and process a payroll in Norway. The application process can take around three to eight weeks for a NUF and less time for an AS.

In order to obtain an organization number for a NUF in Norway, the following is required:

• Application form
• Information about the Director or contact person, power of attorney if necessary
• Registration certificate from the home country
• All employees working on a construction site or building site are required to have a Building ID Card.

The employer is obligated to report the contract as well as the employees working on a contract to the authorities by completing RF 1199/98 forms. Some exemption can apply on a case-by-case basis.

Working Week

The working week in Norway is Monday to Friday. The legal duration of work is 40 hours per week. The duration can be annualized to 1607 hours or 218 days. In that case, the time at work can be modulated depending on high or low seasons.

Along with the annual rules, employees are granted RTT (working time reduction days) and extra hours are paid or “Recovery Days” are granted. It depends on the collective agreement or a corporate agreement.

Tax & Social Security

The tax year runs from 1st January to 31st December.

The year-end process in Norway is required to be completed by 31st January. At the end of each tax year, a mandatory annual wage report must be completed and sent to each of the employees. The report is a summary of all figures reported in the a-message during the year. The report is the end of year certificate and confirmation to the subcontractor of earnings in Norway.

When an individual starts working in Norway, they receive a tax table or tax percentage card based on their annual salary, housing and family situation. The tax card can be downloaded here. If the employee is working onshore, the employee must perform an ID check at the tax office prior to receiving a tax card. Employees working on vessels do not need to have an ID check.

If an individual receives a tax table card, they can calculate their tax using an online tax calculator.

Income Tax

All employees pay tax based on a tax card. Tax rates vary depending on income levels, level of debt/wealth, number and age of children and if their spouse works or not.

Income tax is 22% of net wages, but if the income exceeds NOK 180 800, there is progressively higher tax to pay depending on which bracket your salary is considered to be within.

• Income between NOK 0 and 180 800 = no bracket tax
• Step 1 - Income between NOK 180 800 – NOK 254 500 = 1,9% bracket tax
• Step 2 – Income between NOK 254 500 – NOK 639 750 = 4,2 % bracket tax
• Step 3 – Income between NOK 639 750 – NOK 999 550 = 13,2 % bracket tax
• Step 4 – Income from NOK 999 550 = 16,2 % bracket tax

If there is no tax card available, 50% tax is withheld for the employee. Since 2019, a new and simplified tax scheme is available for foreign workers in Norway, the PAYE (Pay As You Earn) scheme. If the employee meets the criteria, they will be taxed under the PAYE scheme. If the employees prefer to be taxed under the general tax rules, employees can opt out of the PAYE scheme by changing their tax card at any time during the tax year.

Tax is withheld and reported every month but paid out to the authorities by the 15th of every second month (termin).

The typical penalty awarded for the late submission and payment of tax contributions is a percentage of the amount that is payable, depending on the number of days the payment is delayed for. A penalty will also be imposed for late submission of the monthly tax reporting (A-melding). The fee is NOK 115 per income recipient with errors per days. The fine will continue to accrue until the information has been submitted or the error has been corrected. The fine can be up to a maximum of 1000 x NOK 1,150 (one court fee) = 1,150,000.

Calculation Example

• As an example, an employee with a tax table 7150 and a gross monthly salary of NOK 50,000 will be deducted NOK 13 807 in tax.
• If an employee receives a percentage card or is being taxed under the PAYE scheme, it is a simple calculation.
• As an example, if an employee has a percentage card of 36 per cent and a gross monthly salary of NOK 50,000 they would be deducted NOK 18,000 in tax.
• As an example, if an employee is being taxed under the PAYE scheme and a gross monthly salary of NOK 50 000 they would be deducted NOK 12 500 in tax.

Social Security

Social security deductions are 8.2% of an employee’s salary, unless an exemption is granted according to a relevant social security agreement. This 8.2% is already included in the tax withheld for the employee. The employer’s contributions are 14.1% (Zone 1).

As with the tax deduction, social security contributions are withheld every month but paid out every second month to the authorities. The payment dates are the same as mentioned above for tax.

The typical penalty awarded for the late submission and payment of social security contributions is a percentage of the amount that is payable, depending on the number of days the payment is delayed for.

Reporting

• Monthly
  
  • A-melding Reporting (A01):
  • Every month
  • This represents the gross salary inclusive benefits in kind
  • It needs to be submitted by the 5th of the following month
  • This is filed electronically on Altinn
• Bi-Monthly
  
  • A-melding Payment (A03)
  • Every second month
  • This represents the amount of NI and tax payable
  • It needs to be submitted by the 15th of the Month following the end of the Term in (Jan/Feb due 15th March)

New Starts

The employees need to register with the Population Register if moving to Norway and intend to stay for more than six months.

Each employee must apply for a tax card. In order to apply for a tax card, the employee has to go to the tax office in person with the required documents (a valid passport and employment contract or a written confirmation of work assignment(s) in Norway) and perform an ID check. At the ID check, the employee needs to submit an application for a tax deduction card (form RF-1209).

All employees working offshore are exempted from the ID check and will be issued a tax card when they are reported by completing the RF1198 form.

To set up a new starter for payroll, the employer will need to complete a new hire form and provide this along with a copy of their tax card and an A1 form (if necessary).

Leavers

The timescale regarding an employee’s final payment is dependent on the employee’s contract.

When an employee leaves the company, the RF 1199 Contract Form and the RF 1198 Employee Activity Form needs to be completed and the employee should be removed from the AA register at NAV. The leaver forms should be submitted via the new online portal for reporting information about assignments, contractors and employees.

Pensions

The Norwegian authority has imposed rules which regulate the employer to operate a mandatory pension scheme with a minimum 2 % contribution for salary up to 12 G. Exemptions may apply, for example, employees who are not a member of the Norwegian Social Security scheme.

The maximum range of pension contribution is capped by the government at different rates, depending on different scenarios.

Payroll

It is legally acceptable in Norway to provide employees with online pay slips. A company is required to have a legal entity established in order to process a payroll, however only a registered number is required.

The implementation of a payroll is dependent on several factors, for example, the number of employees, the pay structure, complexity of the payroll etc. It is advisable to upload files to transfer data as this accelerates the implementation process.

Reports

Payroll reports must be kept for at least 10 years.

Payslip Example

[Note: The original document references a payslip example but does not provide an image.]

Employment Law

Holiday Accrual / Calculations

Holiday entitlement in Norway is calculated based on the Gross salary earned the previous calendar year (excluding the holiday money paid out in the previous year).

• 10.2 % of the gross salary for a vacation of four weeks + 1 day
• 12 % of the gross salary for five weeks
  
  

Maternity Leave

There’s a shared leave entitlement of 49 weeks at 100% salary and 59 weeks at 80%.

The time remaining after the compulsory 15 weeks distribution to each parent can be freely split between the parents at their discretion with the exception of the 3 weeks before the due date, which is reserved for the mother.

Maternity leave entitlement is 15 weeks. The first six weeks after delivery are reserved for the mother.

Paternity Leave

The father has a reserved paternity leave of 15 weeks which cannot be transferred over to the mother. Hence, if the father decides not to take the paternity leave, it is simply lost. The remaining weeks can be shared between the mother and the father in whichever ratio they like.

Sickness

This is a complex system with 4 x 3 days per rolling year payable by the employer without the employee having to present a medical certificate.

Up to 16 calendar days is payable by the employer with a medical certificate. Over 16 days is paid for by NAV (national insurance scheme) at full salary up to a maximum of 6G for the first year, and then this reduces.

NAV pays out ONLY if the employee is a member of the Norwegian National Insurance.

National Service

Norway has mandatory military service of nineteen months for men and women between the ages of 19 (17 with parental consent) and 44 (55 in case of war).

The actual draft time is six months for the home guard and twelve months for the regular army, air force and navy.

Employee Benefits

All government benefits are paid out by NAV.

General Expenses like per diem, travel expenses, phone costs and internet are mostly reimbursed.

Car mileage is reimbursed per km: 0 to 10,000 km is 3,90 kr/km. More than 10,000 km is 3,90 kr/km.

Company cars are taxed depending on the value of the car on a percentage basis. However, the rules vary depending on the amounts of car mileage, phone bills, company cars which are dealt with based on individual cases.

Child Benefit – paid out for each child under 18 years of age staying in Norway if you have been paying taxes.

Parental Lump sum Benefit – paid out instead of maternity if the mother has not been working 6 of the last 10 months of pregnancy but the father has been paying his taxes.

Child care benefit – paid out if any one of the parents takes care of the child at home and they do not send him/ her to the daycare center up to the age of two years.

The EEA agreement secures nationals of the EU and EFTA countries freedom of movement and establishment throughout the area and a work permit is no longer required.

EEA nationals may stay in Norway for a period of three months (90 days) provided they are financially self-sufficient (EEA nationals who are registered at their local job center in Norway (http://www.nav.no/) as actively seeking employment can stay in Norway for up to six months without a residence permit, provided they are financially self-sufficient).

Citizens from the EU, as well as citizens from Liechtenstein and Iceland can work during this period. Citizens from outside EU/EEA countries must apply for and obtain a residence permit before they can commence any employment.

EEA nationals, who wish to stay longer than 90 days, need a residence permit that also covers the right to work. Employees of multinational companies will normally be regarded as “skilled workers”. Applications must be accepted before commencing employment in Norway.

In order to work in Norway, non-EEA citizens need a work permit. The permit must be granted before entry, and as a rule, does not allow you to travel to Norway and wait for a decision. Further information about residence and work permits can be found here.

• Every foreign company needs a Norwegian Organization Number with The Central Coordinating Register for Legal Entities (Brønnøysund) to operate and process payroll in Norway.
• The application process for a NUF can take three to eight weeks.
• Registration forms such as RF 1199/98 must be completed for construction site workers and contracts.
• Workweeks are Monday to Friday. Legal duration is 40 hours per week. This can be annualized to 1,607 hours.
• Dates are expressed as day.month.year (e.g. 26.06.1985).
• Norway does not use commas for large numbers—uses spaces (e.g. 5 033 952).
• Currency is formatted with commas (e.g. 87,10 NOK = 87 kroner and 10 øre).
• It is legally acceptable to issue online pay slips.
• Submissions such as A-melding must be filed electronically on Altinn.
• Payroll reports must be retained for at least 10 years.
• If a tax card is unavailable, employers must withhold 50% of gross salary.
• The National Insurance scheme (NAV) handles most social security payouts and benefits.
  
  

Further Information

For more information, or assistance with Norway Tax enquiries please contact: gi@activpayroll.com

About This Payroll and Tax Overview

Please note that this document gives general guidance only and should not be regarded as an authoritative or complete statement of the law, regulations or tax position in any country. You should always seek specific advice for each specific situation. This document should not be relied upon as professional advice and activpayroll accepts no liability for reliance on its contents.