Simpler rules for foreign employees
06 November 2018
In a revised 2018 budget, the Storting adopted new rules for foreign employees. The purpose was to introduce simpler rules for taxing persons who reside abroad but work in Norway. The scheme will primarily apply to foreign employees on short stays in Norway. According to these rules:
- Wage income will be taxed according to a gross method at a fixed rate. It has been proposed that the rate will be set at 25% in 2019.
- Taxpayers are not allowed deductions from the tax base or the calculated tax.
- Tax is assessed on an ongoing basis through the employer’s withholding tax and subsequent tax return to the Norwegian Tax Administration.
- A taxpayer need not submit a tax return for income covered by the scheme.
- Gross employment income (wage income and taxable social security income) is a separate tax base and will not be coordinated with other bases.
- A taxpayer who becomes a resident of Norway may be taxed in accordance with this scheme for the rest of that year.
- Persons with business income cannot be included in this scheme.
- A taxpayer who has an annual income greater than Bracket 3 in the bracket tax will not be eligible for this scheme. Those with earnings above this ceiling will be taxed according to the ordinary rules.
- The scheme is voluntary, which means that a taxpayer can choose to be taxed according to the regular rules.
- The employer will pay the tax 12 times a year.
The Department is proposing that the amendments to the Norwegian Taxation Act, the Norwegian Tax Administration Act and the Norwegian Tax Payment Act shall enter into force immediately, with effect from the 2019 income year.
For the 2019 budget, it has been proposed that the deadline for claiming a refund for overpaid tax shall be set at three years. This 3 year time period commences from the end of the year in which the withholding tax is stipulated. Last year, the proposed deadline was set to six months, which is much shorter than the deadline for sending a normal change notice. Furthermore, the proposal for a tax rate of 25% was maintained.