An employer is defined as “One who, either himself or through an authorised person, pays wages or other remuneration or benefits from which withholding tax and garnishments must be deducted”; see Section 4-1 first paragraph (c) of the Tax Payment Act. Tax-free organisations will generally have the same obligations as other employers. An organisation can be an employer even if it does not have any employees. The payment of board fees and expense allowances to board members, other elected representatives and active members will generally be treated in accordance with the same rules as salary payments, etc. to employees.
The organisation must deduct and pay withholding tax, and pay employer’s National Insurance contributions on salary payments from any tax-free and taxable activity which the organisation carries on. It must submit an a-melding on the fifth day of the month after each payment.
The organisation will not be deemed to be an employer if the fee constitutes business income for the person who performed the work or assignment. Ask the tax office if you are in any doubt as to whether the fee should be considered business income or employment income for the recipient.
A brief explanation is given below of some rules of particular interest for tax-free organisations which are employers.
Notification to the Register of Legal Entities and NAV’s Aa register
As an employer, the organisation must submit a notification to the Register of Legal Entities.
Registration in the Register of Legal Entities can take place via either Altinn or a paper form (Coordinated register notification, BR-1010), which must be sent to the Register of Legal Enterprises. A special simplified form has been created for associations. More information can be obtained from the Brønnøysund Register Centre.
The Aa register is linked to the Register of Legal Entities, and all information concerning employers in the Aa register is retrieved from there. When an employer registers in the Register of Legal Entities, it will be assigned an organisation number. This organisation number is unique to each individual enterprise and is used to identify the enterprise in most official contexts.
In addition, the employer will be assigned one or more enterprise numbers as necessary to enable employees to be registered. Example: An employer that owns two retail outlets in a private limited company (AS) will be allocated two enterprise numbers. The employees will be registered under the number that belongs to the retail outlet at which they work.
Employers are obliged to notify the Register of Legal Entities of any changes concerning the enterprise. Examples of such changes include enterprise name, addresses, signatories or board members.
The A-ordning scheme
The a-ordning scheme is a digital system for the coordinated reporting of income, employment and tax deduction details by those subject to a reporting obligation (primarily employers) to NAV (the Norwegian Labour and Welfare Administration), Statistics Norway and the Norwegian Tax Administration. The organisation number assigned by the Register of Legal Entities must be used when reporting in the a-ordning scheme.
The a-melding must be submitted by all enterprises which have employees or which pay salaries or other benefits. The a-melding must be submitted electronically at least once a month and contain information on all employees and the status of their employment, salary payments, etc. The a-ordning scheme ensures that employment and income information is registered by the public administration at the same rate as it is generated by employers.
Charitable and benevolent institutions or organisations which are able to use the simplified settlement scheme (see below) must not submit a-meldings if they use the simplified scheme, but they must register in the Register of Legal Entities.
As an employer, the organisation must deduct tax from salary, board fees and other remuneration for work or assignments performed for the organisation (see below concerning exceptions). The employer must make deductions in accordance with the employee’s tax deduction card (table-based or percentage deductions). Your employer will obtain your tax deduction card electronically from the Tax Administration. If the recipient does not have a tax deduction card, the employee must order one from the Norwegian Tax Administration. If the employer does not have access to information from the most recently calculated tax deduction card, the employer must deduct payroll withholding tax at the rate of 50 percent.
As employers, the organisations are responsible for ensuring that the correct amount of tax is deducted.
Exceptions from the obligation to withhold tax
The following payments and benefits are not liable for withholding tax:
- Ordinary holiday pay paid during the holiday year (the year after the accrual year)
- Part of salary before Christmas, pension in December, etc.
- Expenses incurred during the performance of work which the organisation has refunded, e.g. for business travel, accommodation and subsistence. (These expenses must be documented through original vouchers, or alternatively signed travel invoices, which must be enclosed as appendices to the organisation's accounts.)
- Expense allowances paid according to government rates or a tariff agreement or according to the Directorate of Taxes’ rates for allowances not subject to withholding tax and documentation requirements, when the remuneration does not cover more than what the costs provide a basis for, e.g. subsistence allowances paid at the Directorate of Taxes’ rates. Special provisions apply to overnight supplements.
- Expense allowances in accordance with an expense statement when the organisation has no reason to assume that the allowance will generate a profit
- Payments in kind in the form of free transport to and from events (does not apply to the free use of a car), free subsistence and lodging in connection with such events, free equipment, etc., when provided in the organisation's interest.
- Other payments in kind not subject to withholding tax
Minimum thresholds for payroll withholding tax
Payroll withholding tax should not be deducted:
- from salaries when the total payment made to a person during the year does not exceed NOK 10,000 (applies from 2016),
- from the value of cost savings in the home when the total salary payment, etc. excluding the estimated cost saving for a person during the income year does not exceed NOK 10,000
- from combined benefits subject to withholding tax to a person when the benefits do not exceed NOK 500 in a calendar month
- when the total payroll withholding tax for a person does not exceed NOK 100 in a calendar month
Payroll withholding tax should not be deducted from remuneration for work or assignments performed as part of self-employment. Contact the tax office if the person concerned runs a business. See also "The role of employer"
Retention and payment of payroll withholding tax
When the organisation pays salary or other benefits subject to withholding tax, payroll withholding tax must be deducted from the payments. The deducted payroll withholding tax must be deposited in a separate bank account (tax deduction account) or collateral can be pledged for the amount.
The organisation must submit the a-melding by the fifth day of the month after the salary payment and provide information on the payroll withholding tax that is deducted. When submitting via Altinn, the employer will receive an acknowledgement which states the account number and KID that are to be used for payment. If you submit the a-melding on paper, the employer must generate a KID number. Generate a KID number here. You will find an overview of account numbers for tax collectors here. On the 15th of January, March, May, July, September and November (the due date months), the organisation must send tax deductions for the previous two months to the tax collector in the municipality in which the organisation is registered.
Charitable and benevolent institutions and organisations which are covered by the rules for exemption from the obligation to pay employer’s National Insurance contributions (see below) may opt to use a simplified settlement scheme in connection with salary payments. This entails special rules for certain obligations which the organisation has as an employer. Among other things, this concerns the rules regarding notification to the employee register and the obligation to withhold and pay payroll withholding tax. The scheme is voluntary, even if the conditions for using the simplified scheme are met. The simplified settlement scheme is described in more detail below.
Employer’s National Insurance contributions
The main rule concerning the obligation of tax-free organisations to pay employer's National Insurance contributions
Employer’s National Insurance contributions must be paid on all salary payments and other remuneration for work or assignments, including salary payments of less than NOK 10,000 (applicable from 2016) per salary recipient during the income year. ‘Salary’ also includes board fees, overtime remuneration, holiday pay, sick pay, etc. Employer’s National Insurance contributions must also be calculated on allowances that are subject to withholding tax, e.g. allowances in excess of the Directorate of Taxes’ rates. Employer's National Insurance contributions must be paid on payments in kind when the benefit is subject to withholding tax, e.g. in connection with the benefits associated with free housing, use of your employer's car and interest benefits linked to employment-related low-interest loans.
Employer’s National Insurance contributions must not be paid on allowances for assignments performed as part of self-employment. Contact the tax office if you are in any doubt as to whether or not the payment should be considered business income or salary income. See also "The role of employer"
The zone for employer’s National Insurance contributions is determined by the employer’s registered address. You will find the rates for the various zones here.
The employer must calculate the contributions for each calendar month. After the end of each calendar month, you must submit an a-melding which specifies the calculated employer’s National Insurance contributions. The deadline for a-melding submission is the fifth day of the month following the calendar month concerned. Employer's National Insurance contributions must be paid in six instalments. An instalment cover the two previous calendar months, e.g. January and February are covered by instalment 1, March and April are covered by instalment 2, etc. The deadline for paying employer's National Insurance contributions is 15 days after the end of the period. Amounts of less than NOK 100 for a settlement period (instalment) do not need to be paid.
When submitting the a-melding via Altinn, you will receive an acknowledgement which states the account number and KID that are to be used when paying employer's National Insurance contributions.
If you submit an a-melding on paper, you must generate a KID number yourself.
Exceptions from the obligation to report employer’s National Insurance contributions
Charitable and benevolent institutions and organisations are not required to pay employer’s National Insurance contributions for paid work that is not linked to the taxable commercial activity of the institution or organisation. However, the exemption from employer’s National Insurance contributions only applies when the total salary expenses of the institution or organisation concerning this part of the activity do not exceed NOK 550,000 (600,000 from 1.1.2017) per year, and only for salary payments not exceeding NOK 55,000 (60,000 from 1.1.2017) per employee per year. When calculating the threshold amount, salary expenses attributable to any taxable commercial activity must be excluded.
Each employee must be considered individually in relation to the threshold of NOK 55,000 (60,000 from 1.1.2017) per employee. Payments to employees of NOK 55,000 (60,000 from 1.1.2017) or less are exempt from employer’s National Insurance contributions when the combined total salary payment does not exceed NOK 550,000 (600,000 from 1.1.2017).
If the payments exceed NOK 550,000 (600,000 from 1.1.2017), the entire total salary payment will be subject to employer’s National Insurance contributions. If the salary payment for one or more employees exceeds NOK 55,000 (60,000 from 1.1.2017), or the salary expenses relating to non-commercial activity exceed NOK 550,000 (600,000 from 1.1.2017) for the entire organisation during the year, employer’s National Insurance contributions must immediately be retrospectively calculated on previously paid amounts. In connection with subsequent payments, contributions must be calculated in the normal way by the ordinary deadlines.
The threshold amounts apply to the organisation as a separate legal entity. In order to constitute a separate calculation unit for the purposes of the NI contribution threshold, the unit must be organised as a separate legal entity with its own organisation number.
Previous wordings in this brochure have led to a perception that, for example, sports associations that divide their organisations into separate sections for hiking, skiing, athletics, football, etc. can utilise the threshold separately for each section. This is an incorrect reading of the law, since sections of this kind will not be separate legal entities.See the Directorate of Taxes’ statement of 1.12.2016.
For organisations that have made arrangements to calculate separate threshold amounts for each section/sub-entity in line with information previously provided in this brochure, we appreciate that time may be needed to make rearrangements. The Directorate of Taxes has therefore determined in its statement that the tax authorities will not object to changes in practices being implemented starting from 1 January 2018.
In connection with salary payments which are exempt from employer’s National Insurance contributions, the amounts should not be included in the basis for the contributions. If the institution or organisation makes one or more payments on which employer’s National Insurance contributions are payable (i.e. payments to a person amounting to more than NOK 55,000 (60,000 from 1.1.2017) during the year) and one or more payments on which contributions are not payable, only payments on which contributions are payable should be included in the calculation.
Charitable and benevolent institutions and organisations which do not fulfil the conditions for exemption from employer’s National Insurance contributions must pay such contributions in accordance with the ordinary rules and will not be able to make use of the simplified settlement scheme when making salary payments.
Reporting obligation regarding salary payments
Organisations that have paid salary, cash benefits or payments in kind must submit an a-melding for the period relating to the payment/benefit. The a-melding must be submitted electronically at least once for each month during which you are subject to a reporting obligation. The a-melding must be submitted via your payroll system or accountant or through direct registration in Altinn. A-messages must be submitted by no later than the 5th of the month after the payment of salary or benefits. If you do not have any circumstances which trigger a reporting obligation, such as salary payments or employees, you will not need to submit an a-melding. See Altinn's website for information on what must be reported via the a-melding and how.
Organisations that use the simplified settlement scheme should not submit ordinary a-meldings.
Limitations on the obligation to report salary
Charitable and benevolent institutions and organisations are exempt from the obligation to report salary payments for:
- salary when the total salary payment made to a person during the income year does not exceed NOK 10,000 (applicable from 2016)
- expense allowances not subject to withholding tax to cover expenses attributable to a member's efforts or actions for the organisation which do not exceed NOK 10,000 during the income year.
- expense allowances paid to a person in a paid position within the organisation to cover costs attributable to travel to and from events, etc. to which the organisation has contributed, which do not exceed NOK 10,000 during the income year
- allowances in accordance with the government travel expenses scale to cover accommodation and subsistence costs, and paid to a person who does not hold a paid position within the organisation, when the recipient does not travel on more than 50 days during the calendar year
- payments in kind in the form of free travel to and from events (does not apply to the free use of a car), free subsistence and lodging in connection with such business travel, free equipment, etc., when they are provided in the organisation's interest.
The simplified settlement scheme
Charitable and benevolent institutions and organisations which come under the thresholds for exemption from employer’s National Insurance contributions can use a simplified settlement scheme. This scheme is ideal when the organisation makes individual payments to one or more people. A simplified a-melding (A05) has been prepared for use by organisations which opt to use the simplified settlement method. The simplified a-melding can be submitted via Altinn. When you submit it in Altinn, you can retrieve the tax deduction card for the salary recipient in the same form. You will then get help to calculate the tax deduction based on information from the tax deduction card. It is also possible to submit the simplified a-melding on paper. When submitting via Altinn, you will receive an acknowledgement which, among other things, states the account number and KID that are to be used in connection with payment. When submitting on paper, you must generate a KID number yourself and find the account number for the tax collector.
The charitable or benevolent institution or organisation must deduct payroll withholding tax and pay the amount that is deducted to the tax collector immediately. The deduction will then be paid at the same time as the salary payment. The organisation will fulfil all its obligations on pay day and will not have to deposit an amount in a tax deduction account. The organisation will also be released from the obligation to notify the employee register. When the simplified settlement scheme is used, a simplified a-melding must be completed for every employee to whom salary is paid. The employee must receive a copy of the a-melding that is submitted.
Guidance concerning the simplified a-melding for charitable or benevolent organisations can be found at altinn.no. The settlement scheme you decide to use has no effect on the exemption from employer's National Insurance contributions. If you opt not to use the simplified settlement scheme or the conditions for using the scheme are not met, the ordinary rules for employers’ obligations and liabilities will apply.
Employer's National Insurance contributions must be calculated if an employee passes the exemption threshold of NOK 55,000 (60,000 from 1.1.2017) for employer’s National Insurance contributions during the year or if the organisation as a whole passes the collective threshold of NOK 550,000 (600,000 from 1.1.2017) . Employer's National Insurance contributions must then be calculated retrospectively on previously paid amounts. In connection with subsequent payments, contributions must be calculated in the normal way. In such cases, the organisation can continue to use the simplified a-melding. Calculated contributions must then be paid by the applicable deadlines.