Regulations that apply to commuters who travel between home abroad and Norway. The rules apply to employees with temporary stay in Norway, tax liable pursuant to section 2-1(1)/2-3(1d) and 2-3(2) of the Tax Act, and who may choose between the standard deduction and deductions based on actual expenses.
- The standard deduction is 10 %
- The deduction is limited to NOK 40 000
- The right to claim the standard deduction is limited to the first two assessments a person is considered resident in Norway.
- If the standard deduction is chosen, the same choice also applies to the spouse.
The right to claim personal and family related deductions for taxpayers with limited tax liability
A person resident in another EEA-state may be regarded as resident in Norway for tax purposes. This requires that the entire (or almost the entire - 90 %) of the taxpayer’s income from work, pension or other activity is taxable to Norway. For married persons the total family income is to be taken into account to establish that the requirements are met. Persons with general tax liability to Norway as resident (cf. the Tax Act section 2-1 (1)) do not have to prove the income limit.
Personal- and family-related deductions:
- Documented expenses in connection with care of children (for example kindergarten). Max NOK 25 000 for one child born in 2000 or later. Is to be increased by NOK 15 000 per additional child
- A special deduction for old age and disability
- A special deduction for excessive medical expenses. Documented expenses in excess of NOK 9 180
Deduction for interests on dept
Persons with limited tax liability to Norway can on certain conditions claim deduction for interests on dept. For more information, see Tax topic number 17.
Employees resident in another EEA-state, who commute between residence in the home country and residence in Norway, are entitled to deductions for costs incurred when working away from home.
Married persons with family resident abroad are required to document family relations and address of joint residence abroad. The same applies for persons living in cohabitation, with children in common with the cohabitant.
Single persons, 21 years of age or younger, can claim expenses incurred when working away from home. This only applies if he/she can prove connection to own residence abroad. Single persons of 22 years of age or more in the income year, can not deduct commuter-expenses if they have at their disposal a self-contained house/flat in Norway.
A self-contained house/flat is a house or a flat of at least 30 square metres, and the residence has to be at the employee’s disposal for at least one year. If more than one person share a housing unit, further 20 square metres must be added per person. Housing-unit with 7 persons or more, is not considered to be a self-contained house/flat. Documentation on the property’s square metres will be required.
Married persons with family resident abroad and single persons of 21 years of age or younger, are required to visit their home abroad regularly. The same applies for persons living in cohabitation, with children in common with the cohabitant. Single persons of 22 years of age or more, are required to visit their home abroad at least every third week.
Distinction between taxable commuting travel and business travel
The distinction between commuting travel and business travel will be significant for the taxation aspect regarding the employer’s payment of travel expenses. Business travel can be covered completely tax-free by the employer, provided that the payment does not exceed the real costs. This applies whether the payment is made directly (reimbursement against original vouchers) or through an expense allowance provided by the employer. This is independent of the employee being granted the 10 % standard deduction.
The employer’s coverage of expenses related to commuting travel is, on the other hand, fully taxable if the taxpayer chooses to claim the 10 % standard deduction.
The travel is mainly made in the interest of the employer, which means that the travel is connected with the profession and is for the purpose of carrying it on.
For those who meet the conditions that apply to commuter status, the first and last travel between the home abroad and Norway are regarded as business travels. Which travels that are regarded as «the first» and «the last», must be considered in each case.
A travel between home abroad and home in Norway. The travel is mainly made in the interest of the employee.
The employer must decide whether the travel is a commuting travel or a business travel and withhold taxes accordingly.
Choice of gross-deal or net-deal method
All expenses paid by the employer covering board, lodging and travelling to a home abroad, are liable to taxation. If the employee has had free board and lodging at his/her disposal while working in Norway, the taxable benefit is NOK 79 per 24 hours (board) and NOK 31 per 24 hours (lodging).
The employee may choose between the 10 % standard deduction and a deduction based on actual expenses which also includes personal and family related expenses – see above. With regard to travelling expenses, the deductible amount will be reduced with NOK 13 950.
Expenses paid by the employer covering board, lodging and travelling are not liable to taxation with the exception of any surplus from allowances received. If the employee has had free board at his/her disposal while working in Norway, the taxable benefit of saved food expenses at home is NOK 79 per 24 hours.
The employee can claim a deduction for expenses covered by himself/herself. In addition he/she can claim personal and family related expenses, as explained above. With regard to travelling expenses, the amount deductible will be reduced with NOK 13 950. When applying this method, the 10 % standard deduction is not applicable.
Employee resident within the EEA
Employees resident in the EEA, staying temporarily in Norway and tax liable as resident, may choose between the gross-deal method and the net-deal method. If the gross-deal method is chosen, the taxpayer may choose between the 10 % standard deduction and a deduction based on actual expenses that also include personal and family related expenses – see above.
Employees with limited tax liability to Norway, may also choose between the gross-deal and the net-deal method. When choosing the gross-deal method, the employee may either claim the 10 % standard deduction or a deduction for expenses incurred from commuting. In addition he/she can, on certain terms, claim personal and family related expenses as explained above – see above.
Employee resident outside the EEA
For employees resident outside the EEA, staying temporarily in Norway and tax liable as resident, only the gross-deal method is applicable.
Employees with limited tax liability to Norway may choose between the gross-deal and the net-deal method. When choosing the net-deal method, the employee can not claim the standard deduction but this method can be used on allowances received from the employer. Expenses paid by the employee himself/herself are not deductible.