IT Contracting in Norway: Money & Tax
Profile written by Matt Walters of Capital GES (updated September 2016).
Norway as a contract destination is a challenge if not correctly set up from the outset. Correct registration and reporting are essential but if the rules are followed things move very smoothly. There is a requirement for not only the individual but also the employer to register the consultant’s presence and show the chain of contracts to the authorities. The employer also needs to be registered in Norway.
If you want to stay for more than 3 months in Norway you need to register at the local police station within 3 months of your arrival and ask them for your personal ID number (fødselsnummer). You also need to obtain a tax deduction card at the tax office and give it to your employer. In Oslo there is a Service Centre for Foreign Workers where you can do both.
II. Taxation in Norway
The Norwegian tax year is the calendar year, and tax returns must be filed by the end of April of the following year. There are national and municipal income taxes which are levied at a combined rate of 28% on net income. There is a further national income tax, called “top tax”, which is levied on gross income (no deductions) from certain sources including salaries and pensions. The top tax rate varies from 0 to 12%.
Deductions and allowances:
i. Minimum allowance
The minimum allowance is a standard deduction to cover expenses connected with the generation of income. It is calculated on the basis of salaries and other types of income. For employees it is 38% of the base subject to a minimum of NOK 40’000 and a maximum of NOK 75’150 (for 2012). The taxpayer can claim actual expenses if they are higher.
ii. Personal allowance
Jointly assessed married couples and single persons with dependents can benefit from an allowance of NOK 90’700. For other persons the allowance is of NOK 43’350.
iii. Expatriate tax allowance
For expatriates working in Norway, there is a tax allowance available of 10% for the first two years, up to a maximum of NOK 40’000 per year.
III. Social Security
Social security must be paid on your salary in Norway unless your employer can detach you from another EU country by means of an E101 certificate.
Care must be taken here, and it is worth taking advice, as detachment by means of an E101 may not be the best solution in all cases due to either a) the duration of your intended stay in the country, b) the level of cover provided, or c) the cost of said contributions. It is also worth noting that, under the EU social charter, social security contributions made within an EU country will count towards your time stamp for the UK.
IV. Work permits
Nationals of the EU/EEA Member States and Switzerland are able to work without restriction in Norway, except for citizens of the most two recent members Bulgaria and Romania.
Bulgarian and Romanian citizens still need a work permit to be able to work in Norway according to transitional rules.
How to obtain a work permit
The procedure for citizens of the new EU Member States has been simplified. They can either apply for the permit at Norwegian embassies and consulates in their home States or by going to a police station in Norway in person. Employers may also apply on behalf of the worker. They have to have full-time employment and their pay and employment conditions must be the same as for Norwegian workers in the same type of job.
For all other nationalities, a work permit must be acquired before they start work and conditions vary according to the type of work and the qualifications of the applicant. Procedures are simplified for highly skilled workers
Capital GES is an international payroll and contract-management company providing tailor-made tax planning services to contractors working overseas. For more detailed information on your personal situation, please contact Capital on +41 32 732 97 00.