In order to determine whether employer's national insurance contributions are to be paid on work carried out by a sole proprietorship, you must consider:

When is it a business?

It's normally clear when work is carried out as a commercial activity. When in doubt, you must assess the following conditions in order to reach a conclusion. The contractor is a sole proprietor if he/she, for his/her own account and financial risk, operates a sustained business capable of generating a profit. You must consider each work assignment on a case-by-case basis. Use the following factors to determine whether an individual is acting as a sole proprietor:

• if the business has a certain scope
• if they're responsible for the results of the business
• if they have workers in their employ or they use freelance workers
• if they run their business from a permanent place of business (office, workshop, etc.)
• if they bear the financial risk for the business
• if they use their own tools, machines, etc.

Please note that you must apply the normal criteria for commercial activity to work and assignments in the field of construction.

Work and assignments as part of a commercial activity

As a rule, it is normally clear when work or an assignment is carried out as a commercial activity by a sole proprietorship. However, in certain cases, this can be unclear.

Work or an assignment that is not a commercial activity itself may be part of other commercial activities. For example, it is normally considered a commercial activity when a lawyer in private practice carries out an assignment as a union secretary, while an employee who does the same is not considered to earn his/her remuneration as part of a commercial activity.

When a sole proprietor carries out work or an assignment that's not considered part of his/her commercial activity, employer's national insurance contributions must be calculated on the remuneration. An example of this is when a doctor in private practice receives remuneration for individual lectures at a school or university. However, there are instances where the same individual can operate multiple commercial activities.

Work and assignment in addition to employment

Sometimes a wage earner runs a sole proprietorship outside his permanent work. For example, he/she can work in their free time as a musician for multiple clients. He/she works for their own account and financial risk, and with a certain scope and duration, such that the business must be considered a sole proprietorship.

However, occasional work or individual business initiatives are not considered commercial activity within a sole proprietorship. You can consider work to be part of the commercial activity of a sole proprietorship when:

• the business is sustained over time, and
• the activity is carried out for the owners account and risk, and
• preferably the owner has responsibility for the materials, work site, hired help, machinery, tools, instruments or other equipment

Generally, when a wage earner takes on occasional extra work, for example at night or during vacation, this will not be considered commercial activity within a sole proprietorship.

For example, when a practicing lawyer writes a contract for a merchant who sells on credit, the lawyer's work is part of the commercial activity of his/her sole proprietorship. If the merchant does not engage a lawyer but instead uses his/her own authorised agent to write the contract in their free time, this work will not be generally considered commercial activity carried out by a sole proprietorship.

If an architect employed by the government takes on architectural work in his/her spare time, the extra work is not considered commercial activity as long as there is no sustained activity for his/her own account. The same is true when professionals such as engineers, economists or others, whose professions can traditionally be organized as sole proprietorships, are in an employer's service, and in their spare time occasionally carry out work for others.  

Spouse's income in a company owned by the other spouse

Income paid to one spouse in a company owned by the other spouse (sole proprietorship) is considered business income. The same is true when the company is jointly owned with others. This also applies when the one spouse has a participant interest in a partnership, general partnership and the like.

Wage benefits for partners in a business assessed as a partnership or limited company

Work remuneration to partners in a business assessed as a partnership is considered business income, as is work remuneration to limited partners not classified and reported as wage income.

When a business is organized as a limited company, remuneration for work carried out within the company is not considered business income for the individual, even in the case where the individual is a majority shareholder and the sole board member.

For further information, see the guide Skatte-ABC (in Norwegian only) and the chapter with general information about enterprises; "Virksomhet - Allment", under the item regarding limits for employment income; "Avgrensning mot arbeidsinntekt utenfor virksomhet".