Calculation of Norwegian income taxes

Employee’s contribution to the Norwegian national insurance scheme (NIS)

Employees working onshore in Norway and on the Norwegian Continental Shelf are covered by the Norwegian NIS. The National Insurance Office handles applications regarding exemption from NIS.

For further information please contact:
The National Office for Social Insurance Abroad, P.O. Box 8133 Dep, NO-0033 OSLO, NORWAY. Telephone: +47 21 07 37 00, fax: +47 21 07 37 01.

Employer's contribution to the NIS must be calculated when exemption from NIS has not been granted.          

Income
Gross income must include total payment, salary for off-duty periods, vacation pay, bonuses and certain payments in kind (ref. letter of subject no 5, 12 and 13).

Deductions
Minimum deduction
2010 – 36 % on gross/personal income, max. NOK 72 800, min. NOK 4 000

If you work only a part of the year in Norway, the minimum deduction will be as stated below:

Standard deduction
The standard deduction is 10 % on gross/personal income when the gross-deal method is chosen, max. NOK 40 000.

Deductible trade union contribution
Max. NOK 3 600.

Seafarer’s deduction
The seafarer’s deduction (if qualified) is 30 %, max. amount NOK 80 000.

Personal/family allowance
If you are not regarded as resident in Norway for tax purposes, the personal/family allowance is reduced according to the duration of the stay/work period. (The deduction is not to be stated in the Tax Return).

Example:
If you are taxed in tax Code 1 and have a total work period in Norway/on the Norwegian Continental Shelf of 60 days (2 months), you are entitled to a personal/family allowance of: NOK 42 210  x  2/12 = NOK 7 035

This allowance is not to be used when calculating the top tax and NIS, only when calculating the municipal tax.

Calculations of the taxes
If you work onshore in Norway, a part of your tax is local municipal tax and another part is tax to the State (top tax and NIS). When working offshore, the calculation is the same, but the total tax goes to the State.

To calculate the total taxes you must add municipal tax, top tax and contribution to the NIS (if not exempted).

Municipal tax
The municipal tax rate is 28 % on ordinary/net income.

Top Tax
The top tax is calculated on gross/personal income and the tax free amount is (like the personal/family allowance) reduced according to the stay/work period.

Please note that the tax rates with regard to municipal tax and top tax are different for Finnmark and Nord-Troms. There is also a particular deduction (Finnmarks-fradrag) applicable for these counties.

National insurance contrubution
Employee's contribution to NIS for the income year 2010 is 7,8 %. NIS is not to be calculated when the gross/personal  income does not exceed NOK 39 600. This contribution is calculated on gross/personal income.

Example
This person is taxed in tax Code 1. The total working period including paid off-duty periods has been 60 days (2 months). The person is entitled to 2/12 personal/family allowance and 2/12 of the minimum deduction. The calculation is based on the “net-deal” method (without the 10 % standard deduction), ref. letter of subject no 5, 12 and 13.