The tax withholding agreement is an agreement between the Nordic countries concerning the payment of withholding tax and the transfer of the tax paid. The agreement applies to tax on income from employment, pensions and National Insurance benefits and the transfer of corporation tax.
The purpose of the agreement is primarily to clarify the relationship between the tax authorities in the Nordic countries so that payroll withholding tax is only deducted by one state, either the state where the person in question lives or the state where the person works. It has been endeavoured to assign the right to deduct withholding tax to the state that will most probably be entitled to tax the income pursuant to the tax treaty.
If, during a stay for work purposes in Norway, an employee is to continue to have withholding tax deducted in his or her home country, the employer must fill in the form NT 1 (Nordic Withholding Tax Agreement) – confirmation that withholding tax is paid in the country of residence. The form must be signed by the employer and the tax authority in the municipality in which the employee lives in his or her home country. The tax authority in the home country will send the form to the competent authority in Norway. The form must have been received by the competent authority in Norway when the work starts for the employer to be exempted from responsibility for deducting tax in Norway.
The Central Office - Foreign Tax Affairs is the competent authority in Norway and can provide more detailed information about the withholding tax agreement.