Tax deduction account
Generally, all employers that pay salary must have a tax deduction account. This also applies to sole proprietorships with employees. If your company does not have a tax deduction account, the company must have a bank guarantee to cover the withholding tax.
You must set up a separate tax deduction account in your bank. This is a dedicated account where the funds are locked and may only be used to pay tax.
The employer’s responsibility
As an employer, you must deduct withholding tax according to a table or rate at each salary payment. The withholding tax must be deposited to the tax deduction account on the first work day after the salary payment. If the balance of the tax deduction account is sufficiently high to ensure that it covers the ongoing deduction liability, it’s not necessary to deposit regular instalments to the account.
As an employer, you’re responsible for making the withholding tax deductions and payments, and the company may be held financially responsible if the deductions are not made.
All employers must have a tax withholding account in a Norwegian bank or in a Norwegian branch of a foreign bank.
Releasing funds from a tax deduction account
Money deposited to a tax deduction account can only be transferred to the Tax Administration or to a different tax deduction account. If you have transferred funds to a tax deduction account by mistake, you must apply for a refund.
Bank guarantee covering the withholding tax
If the company does not wish to use a tax deduction account, they can provide a guarantee for the withholding tax. It’s most common for a bank to provide the guarantee. The guarantee must be approved by the Tax Administration before salary payments are made. We’ll not accept guarantees from banks and other financial institutions from outside the EEA area. The bank guarantee must be original and must be sent by mail to the Tax Administration.
The guarantee must state:
- Who is the guarantor (bank) and guarantee debtor (enterprise with an organisation number).
- Who benefits from the guarantee.
- The amount (size of the guarantee).
- We refer to section 5-12, subsection 3 and section 16-20 of the Tax Payment Act.
- That the guarantee still applies after termination or expiration, until the withholding tax for all salary payments made in the guarantee period has been paid.