Employers calculate the amount of payroll withholding tax to be deducted on the basis of the employee’s tax deduction card and withhold this amount when paying the employee’s wages.
The basis for calculating the amount to be deducted includes all kinds of pay and cash remuneration, including supplement for working abroad, standby supplement, holiday pay and bonuses. Pay for a work-free period spent abroad that is related to work carried out in Norway or on the Norwegian Continental Shelf shall also be included in the basis for the deduction of withholding tax. Benefits in kind, such as free board and lodging, and the value of free housing and a free car, will also be included in the basis for the deduction of withholding tax, see Regulation of 21 December 2005.
The deduction table that accompanies the tax deduction card will normally be based on even deductions throughout the year, and exemption from deductions shall therefore not be granted during holiday periods and before Christmas
If an employer has agreed a net pay arrangement with an employee during his or her stay in Norway for work purposes, the net pay must be converted into gross pay in order to arrive at the basis for the deduction of withholding tax. Norwegian tax authorities have developed a conversion calculator for this purpose.
Deducted tax is placed in the employer’s tax withholding account with a Norwegian bank or a Norwegian branch of a foreign bank in Norway, cf. the Tax Payment Act section 5-12. The employer pays the payroll withholding tax to the tax collector from the tax withholding account six times a year.