Foreign employees working in Norway or on the Norwegian continental shelf must navigate specific tax regulations that differ from those of their home countries. Understanding Norwegian tax return requirements, available deductions, and reporting obligations is crucial to avoid penalties and ensure compliance with Norwegian tax law. This article provides essential information about tax return preparation for foreign workers, highlighting key deductions and special considerations that may affect your tax liability in Norway.
Who Must Submit a Tax Return in Norway?
All individuals employed in Norway or on the Norwegian continental shelf who are not enrolled in the Pay As You Earn (PAYE) scheme must submit an annual tax return to the Norwegian tax administration. The Norwegian tax year runs from January 1 to December 31, with tax returns due by April 30 of the following year.
If you are properly registered with Norwegian tax authorities and your employer has submitted correct information, you should receive your tax return between mid-March and early April. As a taxpayer, you are responsible for verifying that all information in your tax return is accurate and complete.
Important Deductions for Foreign Workers
Deductions reduce your taxable income and consequently lower your tax liability. These deductions are typically not pre-filled in your tax return and must be claimed manually. Here are key deductions foreign employees should consider:
Commuting Expenses
Working in Norway while living abroad often involves significant travel and accommodation expenses. If your employer covers these costs, you need to determine whether any covered expenses are taxable benefits or if you can claim deductions.
For employees working on the Norwegian continental shelf, a standard deduction of 10% of gross employment income (up to a maximum of NOK 40,000) may be available. Carefully reviewing commuting-related expenses can help avoid penalties for unreported taxable benefits and prevent overpayment of taxes by missing applicable deductions.
Childcare Deductions
If you provide for children under age 12, you may qualify for childcare expense deductions. Eligible expenses include day care, childminders, childcare services, after-school supervision programs, and transportation to these services if it requires a detour from your workplace.
The maximum deduction is NOK 25,000 for one child, with an additional NOK 15,000 for each subsequent child. Spouses share a joint maximum deduction amount, but the deduction can be distributed freely among family members if you prefer not to split it equally.
For Norwegian day care facilities, the paid amount is typically pre-filled in your tax return, as these institutions must report payments to tax authorities. Always verify these amounts for accuracy.
While you don't need to submit documentation with your return, keep records showing who received the payments, the amounts paid, and proof of payment for expenses exceeding NOK 10,000 annually, which must be paid via bank or salary deductions.
Mortgage and Debt Interest Deductions
Norwegian residents can deduct interest paid on debts. As a foreign employee, you may also qualify for deductions on interest paid abroad under certain conditions.
Foreign personnel who reside in another EU/EEA country can deduct interest paid abroad only if more than 90% of their global income originates from work performed in Norway. If interest is paid through a Norwegian bank, these amounts are normally pre-filled on your tax return.
Required documentation includes confirmation of debt and interest from your credit institution, proof that you haven't claimed the same interest deduction in your home country (for property in another EEA state), and evidence that 90% of your total income is taxable in Norway.
Seaman's Deduction
Seafarers with at least 130 days at sea during the income year can claim a special seaman's deduction. This deduction equals 30% of income earned onboard a ship in service, with an upper limit of NOK 80,000.
Documentation requirements include information about your employment period on the vessel, the type of ship, the vessel's name and operating area, and income earned during the relevant period. For seafarers employed on service vessels, this documentation must be issued by the shipping company.
Sick Pay Considerations
Sick pay received from an employer or the Norwegian national insurance scheme generally constitutes taxable income in Norway. However, exceptions exist for temporary residents.
If you stay in Norway for less than 183 days or work offshore, sick pay is only taxable in Norway if you physically remain in Norway while receiving benefits. If you receive sick pay while outside Norway, this income is not subject to Norwegian taxation, but you must claim this exemption on your tax return.
Norwegian National Insurance Scheme
When working in Norway, you typically become a member of the mandatory Norwegian National Insurance Scheme from your first day of employment. European Economic Area (EEA) citizens working on Norwegian vessels must pay National Insurance contributions.
Exceptions may apply based on bilateral agreements between Norway and other countries. If you work onshore for a foreign employer, you might maintain membership in your home country's insurance scheme and receive an exemption in Norway. Similar exemptions may apply if you work on vessels under foreign flags.
Tax Considerations After Leaving Norway
If you lived in Norway for ten or more years but moved abroad between 2019 and 2021, you likely remain liable for submitting a Norwegian tax return for subsequent tax years. Failure to submit can result in estimated income assessment and potential surtaxes.
If you discover errors in your tax assessment, you can file a corrected return. However, Norwegian law requires payment of the original tax amount by the specified due date while waiting for the new return to be processed. If approved, you'll receive a tax refund, though this process may take several months.
Norwegian Tax Residency Status
As a Norwegian tax resident, you must report worldwide income and assets. You're considered a Norwegian resident for tax purposes if you:
Live in Norway for more than 183 days during a 12-month period, or
Stay in Norway for more than 270 days during a 36-month period
If you've paid taxes abroad on foreign income or assets, you may qualify for deductions under tax treaties or Norwegian tax law. These deductions must be claimed on your tax return and properly documented if requested by tax authorities.
A-Message Reporting Requirements
All employers with staff working in Norway or on the Norwegian continental shelf must report income and remuneration to tax authorities through the A-message system. This obligation applies regardless of tax liability.
Foreign employers might lack complete knowledge of Norwegian tax requirements, potentially resulting in incorrect or incomplete information being transmitted to tax authorities. As an employee, you remain responsible for ensuring your tax return contains accurate information, even if your employer has provided incorrect data.
International Information Exchange
Since late 2017, Norwegian authorities have increasingly requested financial information from countries worldwide through bilateral information exchange agreements. Tax authorities globally now have streamlined access to financial data of resident individuals.
Norwegian tax residents should declare all worldwide economic information to avoid investigations that could lead to penalties or fines. These penalties are difficult to waive if information is provided only after an investigation begins rather than voluntarily with your tax return.
Conclusion
Understanding Norwegian tax regulations is essential for foreign employees working in Norway or on its continental shelf. Properly claiming available deductions and accurately reporting all required information will help you fulfill your tax obligations while avoiding unnecessary tax liabilities and potential penalties.
Given the complexity of international taxation, professional guidance may be beneficial to navigate specific situations and ensure compliance with all Norwegian tax requirements.
