We pay tax on money we earn for work, business activities, interest on bank deposits, etc. so-called income tax. We also pay tax on our assets or wealth. Income and wealth tax are the direct taxes.
We also have value-added tax (VAT) which is an indirect tax. This is a tax we pay when we buy goods and services. You have probably noted that when you buy goods, the receipt shows that 25 per cent of the sales total is value-added tax (VAT). This means that some of what you pay for goods is paid by the shop to the state.
It is fraudulent for the shop to not pass the VAT on to the state. By asking that the amount you pay is recorded in the till and getting a receipt, you can help ensure that businesses you deal with pay their dues to the state.
Why do we pay tax?
We want everyone to have the opportunity to go to school to learn to read and write. If we fall ill, we want to be able to be treated in hospital.
Living in Norway, we enjoy and benefit from the many welfare initiatives we have set up for ourselves. This all costs money. A lot of money. And this makes it important that everyone pays their share. We achieve this by paying tax.
We can view society as a large, communal money box, a shared source of funding. Everyone pays tax according to their ability and receives the benefits they need.
More about income tax
You are liable for tax on money you earn for a fulltime or part-time job. How much tax you pay depends on how much you earn. If you earn below a certain amount over the year (the tax-free amount), you pay no tax.
People earning little only pay a little tax. People earning a lot pay a lot of tax.
It is the tax office that calculates how much tax you need to pay. They cannot do this until they know how much you have earned. The tax office receives a notice from your employer about how much you have earned in the past year. The tax office then sends you a pre-filled tax return and asks you to confirm that the details of income, deductions and so forth are correct, and where necessary to correct any that are incorrect. If you need more information, you can read the guidelines for the tax return.
You can submit the tax return over the internet. You do not need to submit it if there are no changes or additions to be made.
Tax assessment notice
Once the tax office has processed your tax return, you will receive a tax assessment notice. If any money is owed to you, it will be transferred to your bank account. If you have paid too little tax, you will have to pay the outstanding tax.
When you receive the tax assessment notice, you will be able to see if you have underpaid or overpaid.
Tax deduction card
If you are going to have a job, you must have a tax deduction card. If you earn below a certain amount, you will receive a tax exemption card and pay no tax. If you earn above the tax-free amount, you must have an ordinary tax deduction card. If you have a Norwegian national ID number you can apply for a tax exemption card or a tax deduction card.
If you do not have a Norwegian national ID number, you need to appear in person at the tax office and present a passport or other approved proof of identity before you can obtain a tax deduction card. If you are a non-EU/EØS/EFTA citizen you must present a residence card showing permission to reside in Norway with a right to work. If you have already appeared in person at the tax office to prove your identity and been assigned a D number, you can apply for a tax deduction card.
It can be difficult if you have to pay all your tax in one go, so in Norway we have a scheme whereby you pay part of each pay packet you receive to the tax collector; it is actually your employer who does this for you. All you need to do is to apply for a tax deduction card. The tax deduction card is electronic. This means that your employer will obtain your tax deduction card electronically from the Tax Administration. You will receive information about your tax deduction card (your tax notice), which will be sent to your registered address in the National Registry. You do not need to submit anything to your employer.
Make sure you get a receipt (pay slip) every time you get paid. The pay slip is your receipt showing that the employer has withheld taxes from your salary.