As an employer, you must report salary and other benefits paid for work performed abroad to persons who are liable to tax as a resident of Norway. You must deduct advance tax based on the employee’s tax deduction card.
In the a-melding, you must report information on employment, salaries and remunerations, tax deductions and employer’s National Insurance contributions.
When reporting via the a-melding, you must state the country in which the salary/benefit was earned.
Tax deduction cards and tax deductions
When an employee receives income which must be taxed abroad under a tax treaty and Norway must remedy double taxation using either the credit method or the alternative distribution method, the employee can apply for a new tax deduction card with lower deductions in Norway. The same applies when it is likely that the employee will meet the conditions for tax relief under the one-year rule. Employers can apply for tax deduction cards on behalf of their employees
The one-year rule for employees resident in Norway
Do you have an employee who is resident in Norway for tax purposes and who has a continuous period of employment outside the country lasting at least 12 months? If so, he or she will be able to ask for the total tax be reduced by an amount corresponding to the tax that applies to the part of the salary income which is earned abroad.
It is of no significance what tax is actually paid on the income abroad. Corresponding limitations on the tax liability may follow from tax treaties with other countries. Even if the conditions for the one-year rule are met, the employee will still be fully liable to pay tax to Norway. This is a rule concerning tax relief rather than the cessation of ordinary tax liability. Among other things, this means that he or she must submit a Norwegian tax return. The rule does not apply to National Insurance contributions.
In order for your employee to be entitled to tax relief on salary income earned abroad, the following conditions must be met:
- the period of residence abroad must be a period of employment
- the period of residence abroad must be of at least 12 months’ continuous duration
- the employee’s residence in Norway must not exceed 72 days over the 12-month period
- In a tax treaty or other agreement under international law, Norway must not have an exclusive right to tax salary income. It is not a requirement that the country of residence actually taxes the salary.
- the work must not primarily take place outside other states’ territories or continental shelves. Among other things, this means that the one-year rule will not normally apply to Norwegian seafarers in international traffic.
If an employee wishes to claim tax relief under the one-year rule, he or she must complete form RF -1150 as an attachment to the tax return.
You will find more information on the one-year rule in the Tax ABC.
Salary reporting for work performed abroad
Norwegian employers must report salary and other benefits for work performed abroad paid to persons who are taxable as a resident of Norway under Section 2-1 of the Tax Act.
It is of no significance whether the recipient or declarant is exempt from taxation under a tax treaty with another country or whether they are liable for tax and/or subject to a reporting obligation under the law of another country. It is also immaterial whether the income was earned in Norway or whether the fee was received or paid in Norway or abroad.
Norwegian employers who have paid salaries or given other benefits to persons who are resident abroad for work performed abroad have a limited reporting obligation with respect to Norway. In these cases, only the following benefits must be reported:
- Benefits similar to salary or other remuneration for work, pensions, etc. (However, no information is required regarding salary payments made to employees of Norwegian businesses at a permanent operating base in a country with which Norway has a tax treaty if the payments are expensed in the accounts for the operating base concerned.)
- Gratuities, bonuses and remuneration (including pension) paid to directors or members of a board, control committee or other similar body in a company or facility domiciled in Norway.
Specific information concerning the reporting obligation for seafarers.
Employer’s National Insurance contributions and National Insurance contributions
The general rule is that the employee is a member of the National Insurance scheme in the country of work and that membership of the Norwegian National Insurance scheme will cease immediately when he or she starts work abroad, but there are exceptions.
Employees must obtain confirmation from NAV indicating that their membership of the Norwegian National Insurance scheme has ceased in order to avoid paying National Insurance contributions in connection with assessment in Norway.
Employees who are resident abroad for more than 12 months will generally lose their membership of the Norwegian National Insurance scheme. There are some exceptions from this rule in the Council Regulation and the National Insurance agreements. It is also possible to apply for voluntary membership of the Norwegian National Insurance scheme.
For Norway, it is NAV which determines all cases concerning choice of law and membership of the Norwegian National Insurance scheme.
If an employee retains membership of the Norwegian National Insurance scheme during a period of work in another EEA state and their salary is paid from abroad, the foreign employer must report and pay employer's National Insurance contributions directly to the Central Tax Office - Foreign Tax Affairs (SFU)/International Tax Collection Office.
Regarding the tax-related handling of employees on net salary, see “Specific information concerning employees on net salary agreements”.
Tax treaties for work performed abroad
In connection with questions regarding tax liability to Norway, a check must first be made to determine whether there are grounds for taxation in Norway under Norwegian domestic law. You should then check whether a tax treaty has been established with the country to which the employee travels. You should also check whether a tax treaty with the country of residence limits the right to taxation and how double taxation should be avoided. It is worth noting that Norway has also signed agreements with collective organisations containing provisions concerning Norway's right to tax salary earned in such an organisation, among other things. Norway’s accession to such conventions takes precedence over any tax treaties.
Avoidance of double taxation
If you have an employee who is resident in Norway under domestic law and under a tax treaty, the Norwegian authorities will ensure that income which can be taxed abroad under a tax treaty is not subject to double taxation. If you have an employee who switches residence under a tax treaty from Norway to the country of work, the main rule is that the income will be liable to tax in the country of work and that Norway will have only limited taxation rights regarding certain types of income.