Employer Contributions in Norway
Social insurance
The social security system is complex and composed of various schemes providing a wide range of benefits. This system includes social security basic coverage, unemployment benefits, sick pay, birth and parental leave pay and pension.
Pension
Apart from the government old age insurance paid by both employers and employees during payroll, companies must also provide employees with a supplementary pension. The standard pension contribution scheme is when a company pays an amount equal to at least 2 percent of each employee’s salary up to 12 G (No.: “Folketrygdens grunnbeløp”, as of July 2022 1 G = NOK 111,477).
Work accident insurance
Employers are required to have in place a work injury insurance for their employees. Apart from this, there is no mandatory insurance covering employees that has to be in place. Many employers also offer group life, health, and travel insurance.
Employee Contributions in Norway
Tax residency
To be considered a resident, the person must spend more than 183 days a year in Norway. The same applies if a person stays in Norway for more than 270 days during a 36-month period.
Residents of Norway are subject to tax for all wealth and income regardless of whether it’s in or earned in Norway or abroad. The general tax liability of residents may be reduced by applicable tax treaty.
Income tax
Personal income tax is assessed on the basis of the taxpayer’s income. For spouses, their respective income and net wealth may be taxed jointly when determining the applicable tax rates, but each spouse is required to fill out and return a separate tax return.
Income tax includes income derived from pensions, annuities (reduced taxes), wages, salaries compensation and emoluments received in consideration of an employment, including any stock option benefits or other bonus scheme benefits. The general income tax rate is 22 percent; however, in addition, employee’s contribution and bracket taxation may apply.
Income tax is withheld at source directly from the employee’s salary by the employer and sent to the Norwegian tax administration (Nw: Skatteetaten).
The applicable payroll tax rates (i.e., employee’s and employer’s social security contributions) are set out above.
Benefits-in-kind
Benefits-in-kind are generally included in income at market value. However, exceptions exist, inter alia, for reimbursements of travel costs incurred by an employee exclusively for business purposes. Specific rules apply to commuters.
Deductions
Costs incurred to accrue, maintain, or secure taxable income are generally deductible.
For ordinary Norwegian tax residents, a standard deduction of 46 percent of all salary income is deductible. The tax-deductible amount is limited to the following range: NOK 31,800 – NOK 109,950. For non-residents working on ships with limited tax liability to Norway, the basis for the standard deduction constitutes 10 percent of gross salary and cannot be higher than NOK 40,000.
Special tax rule for foreign workers
Non-Norwegian tax-resident workers may choose to be subject to Norwegian withholding tax for salary income as opposed to ordinary taxation. The applicable tax rate is then 25 percent, with no available tax deductions. The non-Norwegian tax resident isn’t obliged to file a tax return.
