The standard deduction for foreign employees

As a foreign employee who have limited tax liability to Norway on wage earnings you can choose to claim the standard deduction for foreign employees instead of certain other deductions to which you may be entitled.

If you have a spouse who is also entitled to the standard deduction, either both of you or neither of you must claim the standard deduction.

The deduction is 10 per cent of gross income from employment, or maximum NOK 40,000. There is no reduction in the allowance if you have been present in Norway for only part of the year.

The standard deduction is entered in item 3.3.7

Foreign employees who stay in Norway for so long that they become tax resident here can claim the standard deduction for foreign employees for the first two income years for which they are taxed as resident in Norway.  If you claim the standard deduction, many other deductions do not apply.

The most relevant deductions that no longer apply when you are tax resident and choose the standard deduction are:

  • deductions for actual expenses of the type that are included in the minimum standard deduction
  • deductions for travel to/from work
  • extra costs relating to stays away from home, including board, lodging and home visits. This also applies to deductions for commuting expenses in connection with commuting from a home abroad.
  • interest on debt, including deductions for the benefit of low-interest loans in employment relationships
  • child-care deduction
  • payments made into individual pension agreements (IPS) pursuant to the Taxation Act
  • losses on the realisation of shares
  • loss from business activities

Persons who are wage earners and who stay in Norway without becoming tax resident here, can choose between the standard deduction and a deduction for the actual expenses relating to the wage earnings that are taxed in Norway.

The  most relevant deductions that no longer apply when you have limited tax liability to Norway and use the standard deduction are:

  • deductions for actual expenses of the type that are included in the minimum standard deduction
  • deductions for travel to/from work
  • extra costs relating to stays away from home, including board, lodging and home visits. This also applies to deductions for commuting expenses in connection with commuting from a home abroad
  • interest on debt in connection with loans relating to real property in Norway (that is not covered by income from the real property)

Persons who stay/are resident in Norway for the whole income year will, in addition to the standard deduction, be entitled to the full minimum standard deduction and personal allowance. Persons who are resident in Norway for part of the income year will, in addition to the standard deduction, be entitled to a proportionate part of the minimum standard deduction and personal allowance according to how long they have been resident in Norway. Persons who are salaried employees but not resident for tax purposes will, in addition to the standard deduction, also be entitled to a proportionate part of the minimum deduction and personal allowance according to how long they have been receiving taxable income in Norway.

The following deductions can be granted in addition to the standard deduction if the requirements are satisfied:

  • deductible contributions to a Norwegian public or private occupational pension scheme
  • deductible trade union dues
  • seafarers’ allowance

The above list is not exhaustive.

Citizens of EU/EEA countries may also be entitled to a deduction for contributions to a pension scheme in another EU/EEA country. Extended right to deductions for persons from EU/EEA countries

Are you commuting to your home abroad?

For information about using the standard deduction when the employer covers expenses relating to board, lodging and travel in connection with home visits for commuting from abroad, see Employer’s coverage of expenses in connection with board, lodging and home visits when commuting from abroad.