Norway

Occupying the western side of the Scandinavian Peninsula, on the shores of the North Atlantic Ocean, Norway is one of continental Europe’s most northern territories.

Civilisation has been present in Norway since the 10th century, and the country ruled an empire at the peak of its expansion from the 13th to the 14th centuries.

Modern Norway is officially known as the Kingdom Of Norway, and is one of the most prosperous countries in the world, successfully exploiting abundant natural resources and reserves of oil.

Norway’s coastline is rugged and stretches for over 25,000km - not including the hundreds of fjords and inlets which break up the landscape. Those fjords form a huge part of Norway’s tourist appeal, and visitors from across the world travel to the country each year to enjoy its spectacular mountains, lakes, rivers, and forests.

Norway’s climate is mild along its coastline and southern regions, but the northern parts of the country do experience extreme winters and exceptionally cold, freezing winters.

General Information

• Full Name: Kingdom of Norway
• Population: 5.54 Million (World Bank 2022)
• Capital: Oslo
• Primary Language: Norwegian
• Monetary Unit: 1 Norwegian krone = 100 øre
• GNI Per Capita: US $106,149 (World Bank 2022)
• Internet Domain: .no
• International Dialing Code: +47

How Do I Say in Norwegian?

• Hello: Hallo
• Good morning: God morgen
• Good evening: God kveld
• Do you speak English?: Snakker du engelsk?
• Good bye: Farvel
• Thank you: Takk
• See you later: Ser deg senere

Dates

Dates are expressed numerically as follows: 26.06.1985 with the day first, month second and year third, separated by decimals.

Norway does not use commas to separate thousands, millions etc. Instead, they use spaces, for example 5 033 952

Money is expressed with commas, i.e. 77, 00 NOK would be 77 Norwegian kroner.  87,10 NOK would be 87 Norwegian kroner and 10 øre.

Norway is a European country at the northernmost tip of the Scandinavian peninsula, sharing portions of its eastern land border with Sweden, Finland, and Russia respectively and meeting the Norwegian Sea at its western coast.

Norway is noted for its impressive business environment, characterised by high productivity levels and marked technological advancement. At the core of its commercial success lies a dedication to knowledge development, innovation, and the advancement of sustainable practices. This robust entrepreneurial environment is instrumental in fostering growth and driving forward the Norwegian economy.

Equally impressive is the breadth of market opportunities that Norway provides. Diverse sectors ranging from energy and maritime to seafood and ICT offer fertile ground for businesses looking to harness the potential of the Norwegian market. This, coupled with a well-established welfare system, accords the Norwegian market a strong purchasing power.

Despite Norway boasting a conducive taxation environment for business, with corporate tax rates that stand competitive within Europe, the importance of understanding the intricacies of the Norwegian tax framework cannot be overstated.

While Norway is not an official member of the European Union, it has access to the European market via the European Economic Area (EEA) agreement. This agreement serves as a driving force in facilitating trade and fostering economic cooperation between Norway and the EU nations.

Investing in Norway is an opportunity to be part of a robust, dynamic, and thriving economic landscape. With its mix of natural resources, technological innovation, and political stability, Norway offers an enriching environment that's ripe for investment. Let me explain why your company should consider investing here.

Norway enjoys a well-functioning, transparent, and flexible economy enhanced with an effective government system. Such socio-political stability creates a reliable platform for business operations, allowing for an increased predictability that can yield sustainable returns on investment.

Known worldwide for its natural wealth, Norway possesses a vast array of natural resources including oil, gas, minerals, and seafood. These sectors remain vital growth drivers in the economy and offer lucrative opportunities for investors. Their continuous development is further backed by the government through its significant investments in infrastructure.

The Norwegian workforce, globally recognised for its high levels of education and productivity, is another compelling reason to invest. With a strong emphasis on innovation and knowledge development, businesses benefit from a rich talent pool that embraces new technology and understands the essence of evolving business processes.

Norway's leading position in sectors such as green and sustainable energy, maritime and marine operations, and information technology isn't accidental. Norway’s focused nurturing of these sectors stem from both governmental and private sector investment, and their path towards innovation often paves the way for greater global advancements.

Norway's robust emphasis on research and development (R&D) and conducive innovation environment complete the circle of investment attractiveness. Businesses will find a range of incentives designed to encourage research and development activities, such as the Skattefunn R&D tax incentive scheme, making innovation not just possible, but highly rewarding.

Norway has seen a significant increase in Foreign Direct Investment (FDI) over the recent years. According to the World Investment Report 2023, FDI inflows in Norway were at a staggering USD 28.9 billion in 2022, which was a sharp increase from USD 9.1 billion the year before. By 2022, the FDI stock in Norway had reached USD 145.5 billion.

Foreign Direct Investment (FDI) in Norway presents diverse opportunities across various sectors, reflecting the country's dynamic economic profile and its commitment to innovation and sustainability. Here's a list of prominent sectors that are ripe for FDI in Norway.

1. Financial and Insurance Services: This sector, comprising banks, insurance companies, and investment funds, is a major recipient of FDI in Norway, accounting for a significant share of inward investments. Norway’s stable financial environment and strong regulatory framework make it an attractive destination for financial services FDI.

2. Wholesale and Retail Trade: Norway's retail space offers potential owing to its high standard of living and robust consumer market. FDI in this sector can benefit from increased purchasing power and sophisticated consumer preferences.

3. Manufacturing: The country has a reputation for the high-quality production of goods, ranging from marine and offshore equipment to chemicals and metals. Investing in Norway's manufacturing sector means contributing to a tradition of excellence and innovation.

4. Information and Communication: Boasting a highly skilled workforce and advanced ICT infrastructure, Norway’s tech industry is a promising field for FDI, especially for companies focusing on innovative solutions.

5. Real Estate: The real estate market in Norway, including commercial, industrial, and residential properties, offers stable investment opportunities backed by the country’s strong economic fundamentals and a high level of transparency.

6. Mining and Quarrying: With abundant natural resources, Norway attracts FDI in the extraction of oil, gas, minerals, and other raw materials. The sector benefits from the established infrastructure and technological expertise available within the country.

7. Energy: Particularly in renewable energy, where there is considerable government support for transitioning away from fossil fuels towards more sustainable sources. With its focus on hydropower, wind, and emerging marine energy, the energy sector in Norway represents a market-leading FDI opportunity.

These sectors not only demonstrate the breadth of opportunities available in Norway but also underscore the forward-thinking nature of its economy, ready to welcome and integrate global investments.

It is not mandatory to make salary payments from an in-country bank account in Norway. It is mandatory to pay the withholding tax from an in-country bank account and this account should be separate. Employers can provide a bank guarantee (if within the EU) instead of making payments from an in-country account.

Salary payments and third-party payments can be made on the client’s behalf. Bank transfers within the same bank in Norway will usually take place within the same day and for any other bank also in Norway will usually be within one day. International transfers can take between three to four working days.

Expanding a business into Norway involves understanding the different types of business entities available. These include various forms of commercial and non-profit structures, each with their unique principle, characteristics, and requirements. 

Norwegian Registered Foreign Company (NUF)

This type of entity represents a foreign business operating in Norway. The foreign company will typically be the sole shareholder and is liable for the obligations that the NUF incurs in Norway. To establish a NUF, you need to acquire a Norwegian Organisation Number from The Central Coordinating Register for Legal Entities (Brønnøysund). The application process, which typically lasts three to eight weeks, requires:

• An application form
• Details about the Director or contact person, and a power of attorney if necessary
• A registration certificate from the home country

Private Limited Company (AS)

In an AS, shareholders are not personally liable for the company's debts beyond the amount they invested into the company's share capital. A Private Limited Company requires a minimum share capital of NOK 30,000. The process to acquire an organisation number usually takes less time compared to NUF.

Further Requirements

If your employees are working on a construction or building site, they must possess a Building ID Card. This identity card aids in maintaining security and transparency on construction sites and is regulated by The Norwegian Labour Inspection Authority.

As an employer, you are required to report any contracts and the employees working on these contracts to the authorities by completing RF 1199/98 forms. This reporting obligation ensures compliance with Norwegian labour laws and assists the government in effectively managing the labour market.

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 general 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.

The Tax year in Norway runs from 1 January to 31 December.

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 Rates in Norway for 2024

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 124 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 1,243 (one court fee) = 1,243,000.

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 13 133 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 in Norway is a fundamental factor in the country's worker welfare agenda. Both employees and employers contribute to the system.

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 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.

Employee Contributions

The employee contribution is subject to a singular rate, which covers all the contributions for pensions, health insurance, and unemployment insurance. This contribution is deducted directly from the employees' pay. Once the employee's income surpasses a certain threshold, the rate of contribution changes.

Employer Contributions

The employer's contribution is differentiated based on regions. The standard rate of the employer's national insurance contribution is 14.1%. There are changes to note for 2024:

• The threshold for the additional employer's national insurance contribution has been increased to NOK 850,000.
• From 2024, the government will begin to phase out the temporary additional employer's national insurance contribution of 5%, which was introduced in the 2023 Budget.
• There is an exemption known as the "contribution-free amount" for which in 2024 it is NOK 850,000 for each enterprise.
  
  

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.

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 16th March)

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

Each employee has to 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).

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.

It is legally acceptable in Norway to provide employees with online payslips. 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 5 years.

Payslip example

Holiday Accrual and Calculations in Norway

In Norway, holiday pay (feriepenger) is accrued during the previous calendar year and is paid out in the year when employees take their vacation. Here’s a summary of the holiday accrual and calculation:

1. The holiday pay must amount to at least 10.2 percent of your salary in the accrual year (12 percent if you have five weeks’ holiday).
2. Employees over the age of 60 are entitled to a minimum of 12.5 percent (14.3 percent in the case of six weeks’ holiday).
3. The basis for the holiday pay is stated on your payslip for the accrual year, reflecting amounts set aside for this purpose.

For those with the legal minimum of 21 vacation days, holiday pay will be at least 10.2% of  base salary. If employees are over 60, the rate is 12.5%.

For those with an entitlement of 25 vacation days, your holiday pay will be at least 12%. If you are over 60, the rate is 14.3%.

It's also noted that many Norwegians take most or all their vacation allowance in July, which is a common practice facilitated by the accumulation of holiday pay throughout the previous year.

Maternity Leave

In Norway, maternity leave is designed with a focus on equitable opportunities and work-life balance. It provides ample time for parents to care for their newborns while ensuring the continuity of their career progression.

Norwegian law mandates a generous maternity leave policy allowing parents to share a total of 49 weeks with full salary, or alternatively, 59 weeks with 80% salary.

This leave can be divided between the parents, but 3 weeks prior to the birth and the first 6 weeks after birth are reserved for the mother. Additionally, 15 weeks are specifically reserved for the mother (mother's quota) and 15 weeks for the father (father's quota), promoting involvement from both parents.

Employers are required to compensate for the first 16 days of the maternity leave, after which the Norwegian Labour and Welfare Administration (NAV) takes over. 

Paternity Leave

The father has a reserved paternity leave of 15 weeks which cannot be transferred over to the mother.

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

Employees in Norway are entitled to receive their full salary during periods of sickness for up to one year. The first 16 days of this leave are the responsibility of the employer, known as ‘employer’s period. Following this, the Norwegian Labour and Welfare Administration (NAV) takes over the payment of sickness benefits, up to 6G (The National Insurance basic amount).

To make the most of these regulations, compliance with due process is key. Employees are required to submit a medical certificate within a stipulated timeframe, and maintaining accurate records of this is vital for employers. 4 x 3 days per rolling year payable by the employer without the employee having to present a medical certificate.

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.

Norway does not have a general statutory minimum wage. Instead, minimum wage levels are typically determined by collective agreements in various sectors.

While it varies across industries, you can expect a minimum wage between 185 to 225 Norwegian Kroner (NOK) per hour for most professions.

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.

There are multiple statutory holiday schedules within Norway. Below are the statutory national holidays in Norway for 2024.

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: 4,48 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 on the basis of 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.

For the year 2024 in Norway, the key regulation and legislation changes concerning personal income tax, social security, and employment law include:

Personal Income Tax Changes

• The personal allowance is proposed to be increased from NOK 79,600 in 2023 to NOK 88,250 in 2024.
• No changes are proposed for the upper limit for the minimum standard deduction for wages/social security and pension from 2023, which are NOK 104,450 and NOK 86,250 respectively.
• The rates for the standard deduction remain unchanged at 46% for wages/social security and 40% for pensions.
• A new tax bracket system is introduced with various rates ranging from 0% to 17.6%, depending on the income level​​.

Social Security Contributions

• A reduction in social security contributions on wages by 0.1%, decreasing it from 7.9% to 7.8%.
• There is also a proposal to phase out the additional employer’s social security contribution introduced in 2023 by increasing the income limit from NOK 750,000 to NOK 850,000​​.

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