Tax residents in Norway: are liable to pay tax on their worldwide income,
Non tax residents in Norway: are liable to pay tax on their Norwegian-source income only.
Individuals will be regarded as tax residents:
- if they stay in Norway and do not have the intention to stay only temporarily;
- a stay of at least 6 months is sufficient for the taxpayer to be considered a resident from the date of arrival even if the stay is only temporary;
Losing tax residence:
- a taxpayer is regarded as having terminated his/her residence only if he/she has established a permanent home in another state and is present in Norway for less than 61 days during the tax year;
- neither the taxpayer nor his/her spouse or dependent children may have a permanent home available in Norway.
A taxpayer who has been resident in Norway for 10 years or more before emigration will be regarded as being resident for 3 more years, starting on the date on which the above conditions are met.
Married couples are usually taxed jointly. If both spouses have income they can be taxed separately, though, at the request of either spouse.
Taxable income:
All types of employment income, whether in cash or kind, are normally taxable.
Taxable remuneration in kind includes:
- free housing,
- free car,
- free travel.
Income tax rates for 2012:
The general combined rate of national and municipal income tax is 28% on all taxable income.
A further national income tax, called “top tax” or “surtax”, is levied on gross income:
- 9.00% on income between NOK 490'000and NOK 796'400,
- 12.00% on income above NOK 796'400.
Allowances and deductions for national and municipal income tax for 2012 include:
- a standard deduction (minimum allowance) to cover expenses connected with the generation of income, 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.
The minimum allowance does not cover:
- additional expenses incurred while living away from home,
- travel expenses,
- interest,
- child care expenses and alimony.
Such expenses can be claimed in addition to the minimum allowance, and in all events, the taxpayer may choose to claim a deduction for actual expenses if these are higher than the minimum allowance.
Jointly assessed married couples and single persons with dependents can benefit from a personal allowance of NOK 90’700.
For other persons the personal allowance is NOK 45’350.
Expatriates:
- a special 10% deduction can be claimed by expatriates,staying less than 2 years in Norway; it is applicable to earned income for the national and municipal tax (not for the surtax which is levied on gross income);
- the maximum deduction is NOK 40’000 and replaces all other deductions except the minimum allowance and personal allowances.
In Norway income tax ("inntektsskatt") and wealth tax ("formuesskatt") are direct taxes ("direkte skatter"). Income tax is paid directly as a percentage of income, whereas wealth tax is a tax on things you own, such as a house, bank deposits etc. Taxes are paid both to the state and the local municipality. In addition, a premium is paid to the social security system to finance public hospitals, medical treatment and various social benefits.
The most important indirect tax ("indirekte skatt") is value added tax, VAT, which is a general tax levied on sales within the country and on import. VAT is levied on most goods and some services, and applies to all stages in the chain of production and distribution. Any person engaged in trade or business is required to register and to charge and pay VAT on goods he/she supplies. VAT on inputs purchased by the registrants is deductible in the VAT accounts. VAT is thus not a tax on the registrants but a tax on final consumption.
VAT is presently calculated at a rate of 12 to 24 per cent of net price.
All self-employed persons are obliged to add this tax to sales of goods and services; it is a punishable offence not paying this tax in Norway. Further information on value added tax is available from the Chief County Tax Inspector ("Fylkesskattesjefen").
Your employer in Norway is obliged to deduct tax from you wages before you are paid. Once you have found employment in Norway you must obtain a tax card from you local taxation office as soon as possible. Your employer and the taxation office will provide all necessary information on how to apply and what you must enclose with your application. The tax card states what percentage of your income your employer must deduct in tax.
If you start work without a tax card, your employer is obliged to deduct 50% tax. This is generally more than would be deducted from you wages if you had a tax card, but if you have paid too much tax, you will receive a refund in the spring or autumn of the following year when the tax assessments are completed.
If you live in Norway for a period less than six months, special tax regulations apply. Your local taxation office ("ligningskontor") in Norway will provide more information.
A detailed overview of the Taxes in Norway is offered on the web pages of the Ministry of Finance. A guide to the Norwegian tax system is available here.
The bilateral treaty between the Government of the Kingdom of Norway and the Government of the United Kingdom of Great Britain and Northern Ireland for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital was amended on the 12 October 2000.