Extended right to deductions for persons from EU/EEA countries who have limited tax liability

Personal and family-related deductions

If you are resident in another EU/EEA country and have limited tax liability to Norway, you can be granted an extended right to deductions if at least 90 per cent of your income from employment, pension, disability benefits or business activities is taxed in Norway.

The extended right to deductions applies to most ordinary deductions. If you are covered by the rules on extended right to deductions, you are entitled, among other things, to the full annual deduction for deductions that are otherwise limited in proportion to how long you stay in Norway during the income year. You may also be entitled to i.e. the child-care deduction for minding and care of children.

If you are married, your spouse’s income will be taken into account when considering whether you pay tax in Norway on at least 90 per cent of your combined income. If you have a cohabitant with whom you have one or more joint children, your cohabitant’s income will be taken into consideration when you claim the child-care deduction.

You must document that the conditions for being granted deductions pursuant to the rules for resident taxpayers are met. You must provide sufficient information about your (and your spouse’s) income outside Norway for it to be possible to calculate whether at least 90 per cent of your income from employment, pension, disability benefits or business activities is liable for tax in Norway. If you are a cohabitant and are claiming a child-care deduction, you must also provide information about your cohabitant’s income.

Deduction for interest on debt

Items 3.3.1 Interest on debt  and 3.3.2 Interest on debt abroad

If you are resident in an EEA country and subject to limited tax liability in Norway, you can also claim a deduction for interest on debt in accordance with the same rules as a person who is resident in Norway. This only applies when at least 90 per cent of your total income is taxable in Norway. If you have real property or activity abroad which cannot be taxed in Norway as a result of a tax treaty, the interest deduction will be limited. Within the EU/EEA, this applies when you have real property or activity in Belgium, Italy or Croatia. If you have real property in one of these countries and no taxable wealth in Norway, the interest deduction will in practice not apply.

Special rules apply if you own a dwelling or holiday home in another EEA country, and income and gains are tax-free in Norway according to the tax treaty with the country in which the dwelling or holiday home is situated. You will then nevertheless be entitled to the full deduction for interest on debt. For the 2016 income year, this will apply if you have a dwelling or holiday home in Belgium, Italy or Croatia. If you have been granted a deduction for interest on debt in the country in which the dwelling or holiday home is situated, you cannot deduction this amount in Norway. You must therefore state which deductions you have claimed in the country in which the dwelling or holiday home is situated.

You must provide sufficient information about your income outside Norway for it to be possible to calculate whether at least 90 per cent of your income is liable to tax in Norway. Foreign interest must be documented.

If you are claiming a deduction pursuant to these rules, you cannot claim the standard deduction for foreign employees.

If you are claiming a deduction for interest on debt, you will in certain cases be taxed on interest income etc. from Norwegian sources.