Tax liabilities when staying and working abroad can be rather complicated and tedious. This overview provides you with a useful starting point in coming to grips with this tricky but important topic.
- Taxes most likely to affect an international researcher staying and/or working in Norway are income tax, wealth tax, gift and inheritance taxes, and value added tax (VAT). Income, wealth, and gift and inheritance taxes are levied as direct taxes, value added tax is an indirect tax.
- An international researcher's tax status in Norway depends on personal circumstances and possibly on the provisions of a tax treaty (regjeringen.no) between Norway and the country in which the researcher is or was a resident before arriving.
- The extent to which an individual is subject to direct taxation in Norway depends primarily on the individual's residence status according to Norwegian tax law. A tax-resident individual is subject to tax in Norway on his or her worldwide income and capital. A non-tax-resident is liable to tax on certain Norwegian-source income only, e.g. from employment exercised in Norway and income from real and personal property situated in Norway. Special regulations pertain to gift and inheritance taxes.
- An individual is deemed to be tax-resident in Norway if he or she stays in Norway for more than 183 days in any 12-month period (each day counts), or more than 270 days in any 36-month period. The individual will be regarded as resident from the calendar year when the aggregate stay exceeds 183/270 days.
- The fiscal year is the calendar year.
- Figures and rates quoted on this page refer to 2013.
Who must pay income tax in Norway?
As a rule, anyone who receives a salary from a Norwegian institution is taxable on the same basis as Norwegian citizens.
- Guest lectures who's stay in Norway does not exceed one day, are usually not taxed.
- International researchers who are citizens of the USA, Brazil, China, France, Hungary, Italy, Israel or Turkey, may qualify for tax exemption for up to two years (three for China). Details vary and are specified in the tax treaties (regjeringen.no) with these countries (cf. USA Art. 15, Brazil Art. 20, China Art. 20, France Art. 21, Hungary Art. 20, Italy Art. 20, Israel Art. 20, Turkey Art. 20). For the US, Brazil and Israel it is a condition that the stay in Norway does not exceed two years.
How is income tax calculated?
Calculating income taxes is not a simple matter. A rough estimate may be derived from the following basic information:
- The point of departure is an individual's gross income which includes all payments from the employer, i.e. wages, salary for off-duty periods, vacation pay, bonuses and certain payments in kind.
- The main deductions that may be claimed are for:
- Expenses of employment (minstefradrag, usually claimed as a standard deduction of 40 % of the gross income, minimum NOK 31.800, maximum NOK 81.300, resulting in an individual's net income)
- Personal allowance (personlig fradrag, NOK 47.150 for single taxpayers, NOK 94.300 for married taxpayers, deducted from the net income)
- Parental allowance (foreldrefradrag, NOK 25.000 for the first child, NOK 15.000 for each additional child).
- Standard deduction for foreigners: In addition, most foreigners may claim a standard deduction for foreigners (skatteetaten.no) (10 % of gross income reducing taxes by about 2,8 %) the first two years they are tax-residents in Norway. However, researchers who receive a tax-free stipend covering extra expenses for living abroad, such as an EU mobility allowance, cannot claim the standard deduction for foreigners.
- Commuter deduction: Commuters from EEA countries may claim a special commuter deduction (skatteetaten.no).
- The basic tax rate is 28 % of the net income. The social security contribution is 7,8 % of the gross income. Therefore, the total tax rate rarely exceeds 36 %.
- Surtax: On gross income exceeding NOK 509.600 (relevant as of salary grade 62) a surtax (toppskatt) of 9 % is levied. On gross income exceeding NOK 828.300 (relevant as of salary grade 84) a surtax of 12 % is levied.
- Employers in Norway are obliged to deduct taxes from wages before employees are paid.
- Prior to or upon starting work at NMBU, international researchers must obtain a tax deduction card from the local tax office and submit it to the NMBU Pay Section. The tax card states what percentage of the income the employer must deduct.
- If work is started without a tax card, NMBU is obliged to deduct 50 % which is generally more than would be deducted otherwise. The balance between 50 % and the correct rate will be reimbursed as soon as the tax deduction card has been submitted to NMBU.
- Settlement of income and wealth taxes is finalized by means of a tax return (selvangivelse).
- The tax return is due by 30 April the year following the income year.
- Tax-liable individuals staying in Norway for a maximum of 183 days, may request an advance tax assessment from the local tax office.
- Wealth tax (formuesskatt) is charged on the net wealth of an individual per 1 January every year.
- Resident individuals are liable on their world wide wealth; non-residents on their Norwegian-situated assets only.
- The wealth tax rate for single individuals is 0 % of up to NOK 870.000, and 1,1 % of the exceeding amount.
- The rate for married couples assessed together for wealth is 0 % of up to NOK 1.740.000, and 1,1 % of the exceeding amount.
Gift and inheritance taxes
- Norway levies a tax on inheritances and certain lifetime gifts (avgift på arv og visse gaver).
- Liability to the tax depends on the residence status and nationality of the transferor, although it is the recipient from whom the tax is charged.
- Where the transferor is a Norwegian national and resident at the date of the transfer (the date of the gift or the date of death), tax is payable on all the assets comprised in the transfer, wherever situated.
- The same applies in principle where the transferor is a Norwegian national not resident in Norway, but a wide range of assets are granted exemption under certain conditions in such a case.
- Where the transferor is a non-resident foreign national, only Norwegian immovable property and fixed installations, without preconditions, are taxable.
- The gift and inheritance tax rate is 0 % of up to NOK 470.000, 6 % (children & parents) / 8 % (others) of NOK 470.000-800.000, and 10 % (children & parents) / 15 % (others) of the amount exceeding NOK 800.000.
Value added tax (VAT)
- Value added tax is a general tax levied on sales (i.e. goods and services) within the country and on imports.
- The standard VAT rate is 25 % of the net price.
- Reduced rates apply to certain sales, notably to food (15 %) and to passenger transport, accommodation services, travel agents and cinema tickets (8 %).
Assistance in tax matters
- Tax-related questions pertaining to employment at NMBU may be addressed to the administrative contact person at the host department.
- For matters concerning tax deduction card, tax return, tax assessment and tax settlement the Tax Office East, Ski (skatteetaten.no) or the Service Centre for Foreign Workers (sua.no) should be contacted directly.
- Independant opinion and comprehensive tax assistance may be obtained from the Norwegian Taxpayers Association (Skattebetalerforeningen) (skatt.no). For contact information on taxpayer associations and tax experts in countries around the world, consult the website of the World Taxpayers Association (worldtaxpayers.org).
The following brochures on tax regulations and procedures relevant to foreign employees published by the Norwegian Tax Administration may be of particular interest: