What will I be taxed on if my employer has covered all my costs, including expenses for visits to my home country?

If your employer has covered commuting expenses, the benefit of this is tax-exempt provided that you would have been entitled to deduct the expenses if you had paid them yourself. The same applies to any allowances received that do not exceed the rates for deductions. It is only any surplus on allowances that will be taxed as pay. The amounts will be reported as a non-taxable allowance. This is called the ‘net method’.

If your employer covered all your subsistence costs, either on the basis of receipts or by providing free board, and you receive this tax-free, you will be taxed for ‘savings on household costs’. For 2016, the rate is NOK 87 per day. The savings on household costs have been taken into account in the deduction rates.

If you have a tax deduction card that is based on you using the standard deduction for foreign employees, your employer must deduct tax on the benefit you derive from having your commuting expenses covered. The employer may also treat the allowance as a taxable allowance in other cases. In such case, the amounts will be reported as a taxable allowance in the statement you receive from your employer. This is called the ‘gross method’.

When you fill in your tax return, you must choose whether you wish to be taxed in accordance with the ‘net method’ or the ‘gross method’. You can choose this irrespective of which method your employer has used.

If your employer has reported an allowance as a taxable allowance, you can nonetheless choose the ‘net method’ in connection with the tax assessment. This means that you must change the amount in your tax return, so that it will only be any surplus on the allowance that is deemed to be taxable income. If the allowance has resulted in a deficit, you can deduct it. If you choose the ‘net method’, you cannot claim the standard deduction for foreign employees. 

If it is more favourable for you to use the standard deduction for foreign employees, you can choose to be taxed on the benefit you derive from your employer covering the costs and/or on the allowance received (the ‘gross method’). You must in such case increase the income declared in your tax return by the amount of the benefit. If the item is completed in advance in your tax return, you must correct the amount of income entered. In such case, you must also claim the standard deduction for foreign employees.

What is the difference between the ‘net method’ and the ‘gross method’?

The ‘net method’ means that the allowance and/or benefit you derive from your employer covering the costs directly is neither included in your gross income (personal income) nor in your net income (general income). Any surplus on the allowance is taxable. The same applies to the addition for savings in household costs. You can claim a deduction for any deficit on allowances received.

The ‘gross method’ means that the entire allowance and/or benefit derived from the employer covering the costs directly is included in your gross income (personal income). You can then claim the standard deduction for foreign employees.