Contractor’s guide to contracting in Norway
Norway is a highly developed country with a very strong and stable economy – just what many UK contractors are likely to be yearning for right now, writes Nikolas Papageorgiou, EU country manager at overseas contracting solutions firm Access Financial.
Norway for contractors: overview
The per capita GDP of Norway is the fourth highest in the world, and its inhabitants enjoy one of the highest standards of living anywhere, partly thanks to an integrated social welfare system. The economy is centred around the oil and gas industry, in which large numbers of expatriates work, but shipping and fishing are important secondary industries.
Despite the significant foreign earnings generated by the Norwegian oil and gas sector, there is a growing recognition that the country needs to reduce its reliance on natural resources and diversify the economy.
Centred around the capital, Oslo, a tech scene is rapidly developing, with notable successes such as Opera becoming major international companies, meaning that Norway is now vying with Sweden to be Scandinavia’s leading technology hub. This is accelerating demand for IT skills and, due to Norway’s tight labour market (under 4% unemployment), creating opportunities for foreign IT professionals.
What are the benefits of working in Norway as a contractor?
The top four benefits of working in Norway most often cited to us by UK contractors, are:
- It’s one of the strongest economies in the world
- The social security system is highly developed
- English is spoken widely as a second language, partly why Norway is ranked an impressive 6th out of 190 in the World Bank’s Ease of Doing Business Index, with an increasingly lower rate of taxes in recent years.
- It’s the world’s 6th least corrupt country
What about worker take-home pay in Norway?
The maximum salary retention that contractors can expect working in Norway depends upon many factors such as marital status, applicable allowances and deductions, dependents, expenses, and the nature of their business.
It also depends on whether a contractor chooses to work under an employer or through their own Personal Services Company (PSC). For contractors operating via their own PSC, the retention will be between 63% and 75%, whereas under an employment solution (ours included), contractors can expect retention between 56% and 65%.
What are the levels of taxation in Norway?
Norwegian personal income tax is progressive; up to 16.2% for income over EUR 964,800 (£87,676). In addition, there is a flat local municipal tax at the rate of 25%. The tax paid differs slightly dependent upon the municipality in which you live. The corporate tax rate is 24%.
Will I pay UK taxes depending on my stay in Norway?
If you live in Norway for less than six months (183 days), you need only pay tax on your income earned in Norway. If you stay for longer than 183 days, then you will have to pay Norwegian income tax on your worldwide income. This may be affected by the double tax treaties between your home country and Norway.
What are Norway’s social security requirements?
Generally, anyone who is resident in Norway is a member of the National Insurance Scheme. This also applies to persons who are resident abroad but who are working in Norway. Self-employed workers within the European Economic Area (EEA) are also included. There is still uncertainty as to how this will apply to British contractors, given the uncertainties surrounding Brexit.
Employees are required to contribute at a rate of 8.2% based on gross wages, while employers contribute at 14.1% on gross earnings.
There are a number of exceptions to these main rules. For example, some employees through the EEA agreement or bilateral social security agreements are entitled to remain covered by the social security scheme of their homeland.
How do I register locally in Norway?
To live and work in Norway for more than three months, UK contractors must register both at a local police station and the Norwegian tax administration (‘Skatteetaten’).
To receive a Norwegian Identity Number (necessary if you plan to live in Norway for more than six months), you need a local residential address. If you’re in the country for under six months, it is fine to be based in a hotel or similar with no permanent address.
Please note, EU/EEA nationals can move to Norway right away, but they must register no later than three months after their arrival in Norway.
However non-EU nationals must obtain a valid work permit before they can begin the residences registration process. Migration to Norway is regulated by the Norwegian Immigration Authorities (‘UDI’). There are different visa routes for workers, depending on a range of factors. Non-EU/EFTA nationals must apply for and obtain a visa from the Norwegian Embassy in their own home country or country of residence before moving to Norway. Your application can be submitted in person or you can give your employment solutions provider written power of attorney to make the application on your behalf.
What about expenses in Norway? What’s covered?
Norway offers various tax deductions for locals and expatriates. Some of the important deductions are as follows:
- The standard minimum deduction is 43% of earned income, up to NOK 94,750 (£8,570).
- Jointly assessed married couples and single persons with dependents can benefit from a personal allowance of NOK 78,300 (£7,116).
- Expatriates working in Norway for less than two years are granted an additional special 10% deduction from earned income. The maximum deduction is NOK 40,000 (£3,635). Expatriates who cannot benefit from this 10% deduction can still claim various expenses related to commuting, flights, temporary accommodation and similar, simply by submitting their receipts.
Can I just use my own limited company for a contract in Norway?
Working through your own company is definitely possible in Norway and will be the preferred choice for many contractors, depending on the nature of the engagement. Or you may prefer a ‘PSC solution,’ which aims to to simplify the process of setting up in Norway and ensures that you can work legally through your company.
What is the best solution for my circumstances?
The ‘employed’ route may be more attractive to contractors who want to remove the stresses of running a company, which might include managing compliance and corporate tax in multiple countries. For those willing to take on that management risk, the rewards can be well worth it. A PSC gives contractors the flexibility to contract with agencies on an individual basis, to claim deductions both at the company and employee level, and to improve their rate of income retention.
What steps do I need to take to be compliant with Norwegian laws?
If you are a non-EU/EFTA national, you will need a work permit to live and work in Norway. A professional contract management company should will be able to assist with the process.
There are a multitude of benefits to working in Norway. It is a high-income country with a very high standard of living, which enables foreign workers to make a lot of money while enjoying good living standards.
While the cost of living is high (in many cases, significantly higher than the UK), there are other advantages, including world-class public services, a population which is highly proficient in English and it is famously one of the most scenically beautiful countries in the world.
The oil and gas sector dominated the Norwegian economy for decades, but a vibrant technology sector is creating more opportunities for IT professionals. Coupled with low unemployment, Norway is becoming an increasingly appealing destination for foreign workers with high value skills. ‘Just the ticket’ for many a UK contractor in the current climate!