Your guide to doing business in Norway
Norway lies at the northernmost tip of the Scandinavian peninsula, sharing portions of its eastern border with Sweden, Finland and Russia respectively. Modern Norway is one of the world’s most prosperous countries, boasting a stable economic and political system, and, at $78,000, the second-highest GDP per capita amongst European countries. Norway’s financial prosperity is founded on the historic strength of its oil industry, which accounts for around 12% of GDP, and 37% of the country’s exports. Beyond oil, important industries in Norway include hydroelectric energy, aluminium, telecommunications and financial services. With access to the Atlantic Ocean, Europe and the Americas, Norway has strong global trade connections - the country has a healthy merchant shipping fleet, a highly developed transport network, and 97 airports. Norway is a member-state of EFTA, the WTO and the OECD, and is part of the Schengen Area. In 2018, the World Bank ranked Norway ‘8’ on its Ease Of Doing Business Survey.
Why invest in Norway ?
There are numerous reasons for investors to target Norway. These include:
The Government welcomes inward investment in Norway that will contribute to the economy. Various financial incentives exist to encourage investment within key industries, particularly those supported by Government Research and Development grants.
Every foreign company needs to have a Norwegian Organization Number with 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:
All employees need to be registered in the AA register (employees register) at NAV which takes two weeks. Exemption may apply if the employee is a member of a foreign Social Security system and can provide documentation to support this membership. 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 a RF 1199 form. Some exemption can apply on a case by case basis.
It is not mandatory to make payments of salaries 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 3rd 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 1 day. International transfers can take between 3 – 4 working days.
The working week in Norway is Monday to Friday. The legal duration of work is 40 hours per week. The duration can be annualised 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.
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.
Full Name: Kingdom of Norway
Population: 5.258million (Statistics, Norway, 01/01/2017)
Primary Language: Norwegian
Monetary Unit: 1 Norwegian krone = 100 ore
Internet Domain: .no
International Dialing Code: +47
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 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.
The tax year runs from 1st January to 31st December.
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. Tax card’s can be downloaded from WWW.Altinn. If the employee is holding a d-number and working onshore the employee has to perform an ID check at the tax office prior to receiving a tax card. Employees working on vessel’s 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, https://skort.skatteetaten.no/skd/trekk/trekk
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 24% of net wages, but if the income exceeds NOK 164 100. There is progressively higher tax to pay depending on which bracket your salary is considered to be within.
If there is no tax card available, 50% tax is withheld for the employee. As a general rule all employees registered with the Central Office of Foreign Tax Affairs receive the tax card with tax table 7150.
Tax is withheld and reported every month but paid out to the authorities around 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 fixed NOK 133 per employee per day.
As an example, an employee with a tax table 7150 and a gross monthly salary of NOK 50,000 will be deducted NOK 14017 in tax.
If an employee receives a percentage card it is a simple calculation.
As an example, if an employee has a percentage card of 36% and a gross monthly salary of NOK 50,000 they would be deducted NOK 18,000 in tax.
Social security deductions are 8.2% of an employee’s salary. This 8.2% is already included in the tax withheld for the employee (both tax percentage and tax table). 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.
A-melding Reporting (A02)
A-melding Payment (A03)
The employees need to register with the Population Register if moving to Norway and intend to stay for more than 6 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 (passport and employment contract) and perform an ID check (if holding a D-number).
All employees working offshore are exempted from the ID check and will be issued a tax card when they are reported by completing the part 2 of RF1199 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 time scale regarding an employee’s final payment is as per the employee’s contract.
The employee needs to be taken off the AA register (employee register) at NAV and the new address should be registered with the population register.
A new RF 1199 Form needs to be completed to report the leaver, if the initial form completed had a different date.
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.
Foreign employers operating in Norway, or those with an employee population in Norway, should take steps to ensure compliance with the country’s tax legislation when administering payroll. It may be worthwhile for expat businesses to engage a global payroll provider to handle their payroll solution for Norway - at least until they are familiar with the country’s tax and social security requirements.