Reduced employer’s national insurance contribution for third payment period 2020

The employer’s national insurance contribution is reduced by four percentage points in May and June 2020.

Employers do not have to change the way they report their employer’s national insurance contributions in the a-melding. Continue to report the basis for the employer’s national insurance contributions as usual, and calculate the employer’s national insurance contributions using the regular rates.

The Tax Administration calculates the reduced employer’s national insurance contributions based on the employer’s national insurance contributions reported in the a-melding for May and June (third payment period). The Tax Administration will send out claims to employers before the third payment period falls due.

The payment date for the third period has been delayed until 15 October.

The reduction in employer’s national insurance contributions also includes employees sent out from USA and Canada who pay employer’s national insurance contributions of 7 percent in 2020.

The reduction in employer's national insurance contributions does not apply to seafarers employed on Norwegian ships used in international shipping that are registered in the Norwegian Ship Register (NOR) when the employer pays a set amount per month.

The reduction in employer’s national insurance contributions does not apply to government administrative agencies that are exempt from calculating employer’s national insurance contributions in the A-melding.

The payment date for the firth period (July and August) is unchanged and due 15 September 2020.

 

Holiday pay and deduction from salary for holiday

The Act relating to Holidays states that usually, holiday pay should be paid on the last normal pay day before the holiday, see section 11 of the Act relating to Holidays. Many employers still pay the total holiday pay in May and June and deduct the employee’s salary for all holidays, so that they can pay the normal salary for the rest of the year. This practice is considered to be lawful if the holiday deduction is carried out when the holiday pay is paid, so that the holiday pay can be used for holiday purposes when the employee actually go on holiday, see the purpose of the act in section 1.

Employers may move the total payout of the holiday pay to the third period (May or June) in order to reduce the employer’s national insurance contributions by 4 percent, if doing so is in line with the agreements the enterprise is bound by. However, the employer may not choose to move the payment date for the holiday pay unless the salary deduction is also moved.

How to report holiday pay

How to report deduction from salary for holiday

 

Reimbursements salary compensation, sickness benefit, parental benefits etc.

When calculating the reduced employer’s national insurance contributions, the employer must include benefits refunded by NAV in the basis for the calculation. This concerns, for example, sickness benefits, parental benefits and salary compensation for laid-off employees.

 

Example

Employer has reported:

Third payment period (May and June)
New basis	NOK 100,000.00
Refund salary comp./sickness benefits	NOK 50,000.00
Total employer's national insurance contributions	NOK 50,000.00
Calculated contribution 14.1 percent of NOK 100,000	NOK 14,100.00
Calculated contribution 14.1 percent of NOK 50,000	- NOK 7,050,00
Employer's national insurance contributions to pay	NOK 7,050.00

Calculated claim from the Tax Administration:

Third payment period (May and June)
New basis	NOK 100,000.00
Refund salary comp./sickness benefits	NOK 50,000.00
Total employer's national insurance contributions	NOK 50,000.00
Calculated contribution 14.1 percent of NOK 100,000	NOK 14,100.00
Calculated contribution 14.1 percent of NOK 50,000	- NOK 7,050,00
Reduction 4 percent of the basis of NOK 100,000	- NOK 4,000,00
Employer's national insurance contributions to pay	NOK 3,050.00

 

Compensation scheme for employers in the target zone and Svalbard

A compensation scheme for employers in zone V (target zone) and Svalbard is introduced, where the rate for calculating the employer’s national insurance contributions is zero. A subsidy of 4 percent of the basis for employer’s national insurance contributions reported in the a-melding will be granted.

The compensation should correspond to the benefit other employers receive through the proposed reduction in mandatory employer’s national insurance contributions for the third payment period. The subsidy is taxable income for the recipient.

The compensation scheme only covers employers that would have paid employer’s national insurance contributions if the rate were not zero.

Employers domiciled on Svalbard and employers that pay salary, etc. covered by the PAYE scheme on Svalbard are covered by the compensation scheme. The same limitations mentioned below also apply to the employers on Svalbard.

Charitable and benevolent organisations that are exempt from paying employer’s national insurance contributions on total salary expenses up to NOK 800,000 and salary expenses up to NOK 80,000 per employee are not covered by the compensation scheme.

Government administrative agencies are not covered by the compensation scheme, independent of whether they report employer’s national insurance contributions in the a-ordning scheme or are exempted from this obligation.

The minimum amount of subsidy is proposed at NOK 1,000. If the calculated subsidy is less than NOK 1,000, no payment will be made.

The Tax Administration will manage the scheme. The subsidy amount will be automatically calculated based on the reported employer’s national insurance contributions in the a-meldings. The subsidy payments are made provided the Tax Administration has the recipient’s bank account number.

The deadline for paying the subsidy is 1 September.