What is the difference between employing foreign citizens oneself and hiring one or more foreign firms?
Answer: If you engage a foreign company as an independent contractor, the foreign company will calculate and pay VAT in Norway through a representative if they do not have a registered place of business or domicile in Norway. A foreign company must pay Norwegian VAT if their turnover in Norway exceeds NOK 50,000.
Hiring of labour is a taxable service and is classed as so-called remote provision of services. This means that if you hire labour from a foreign company that is not registered in Norway, you have to pay VAT on the fee for the service. In this case, the foreign hirer does not need to register for VAT in Norway.
What about National Insurance contributions?
Answer: If you employ foreign citizens, you must pay National Insurance contributions in accordance with the same rules as apply to Norwegian employees. If you engage a foreign company as an independent contractor, the foreign company will be liable to pay National Insurance contributions if the employees are insured in Norway.
If you hire employees from a foreign company, you and the foreign company are jointly responsible for the National Insurance contributions if the employees are members of the Norwegian National Insurance scheme.
In order for you to be exempt from paying National Insurance contributions, form E101/A1 or other documentation from the foreign National Insurance authorities are required, showing that the employees are covered by the National Insurance scheme in their home country while they are working in Norway. The form needs to be registered with the Labour and Welfare Service's (NAV) National Office for Social Insurance Abroad.