Payroll withholding tax must be deducted from pay for all employees who work in Norway. This means that employers shall withhold and pay to the Norwegian tax authorities part of employees’ pay in order to cover their tax obligations. The withholding rate is stated on the tax deduction card issued by the Norwegian tax authorities, see 4.2.2. If a tax deduction card is not submitted, the employer must withhold 50 per cent of pay. The deduction will normally also include the employee’s National Insurance contribution. Special deduction tables have been prepared for employees who are exempt from paying Norwegian National Insurance contributions. The exemption is taken into account in these tables.
During stays in Norway for work purposes, payroll withholding tax must be deducted even if the employee’s tax liability to Norway is limited as a result of a tax treaty.
If an employer has deducted too little withholding tax, underpaid tax will be due after the tax assessment. The tax assessment is usually made public in the autumn of the year after the income year. If underpaid tax exceeds NOK 1,000, it will fall due for payment in two instalments. The first instalment falls due three weeks after the tax assessment has been made public, while the second instalment falls due five weeks after the due date for the first instalment.
Interest on overdue payments is charged on underpaid tax that is not paid on time. The underpaid tax must be paid even if the tax assessment has been appealed or a court judgment is pending, cf. the Tax Payment Act section 10-1 (1).
If the underpaid tax is not paid, the employer will normally be required to make deductions from the employee’s future wages. It will also be considered whether to initiate distraint proceedings in order to establish a charge on assets belonging to the taxpayer. The authorities abroad also assist the Norwegian authorities in connection with the collection of unpaid tax.