Net salary arrangement, paid foreign tax for work performed abroad
Concerns foreign tax paid for work performed abroad by employees with a net pay arrangement.
Brief information concerning foreign tax paid
Specify foreign tax paid for work performed abroad by employees with a net pay arrangement. Applicable as of 2017.
Important information
A net salary arrangement is when:
- an employee has entered into an agreement with an employer concerning fixed net paid salary and other benefits, and/or
- the employer has undertaken to pay, in full or in part, the employee's tax and national insurance contributions
You must report all salary and other benefits covered by the net salary
agreement with the tax- and contribution rule “net salary”
The information you must provide
| Amount | NOK x |
| Type of income | Cash benefit, foreign tax paid |
| Subject to withholding tax | Yes |
| Basis for employer's national insurance contributions | Yes/No |
| Tax- and contribution rule | Net salary or Net salary for seafarers |
Additional information: |
|
| Country of earnings | Country code |
Amount
Specify foreign tax paid.
Type of salary or benefit
Specify “cash benefit” and “foreign tax paid”.
Subject to withholding tax
The benefit must always be specified as subject to withholding tax.
You do not deduct withholding tax if the amount to be deducted is less than the minimum thresholds for withholding tax.
Basis for employer's national insurance contributions
You must calculate employer's national insurance contributions on this benefit.
Exceptions:
You can only omit to calculate national insurance contributions when the income recipient is not a member of the Norwegian National Insurance Scheme. This applies, for example, when the income recipient:
- is comprised by the national insurance legislation of another country according to a social convention or the EEA Agreement
- the work was performed abroad by a foreign citizen who's not a member of the Norwegian National Insurance scheme.
In some cases, the employee has a confirmation of a membership that is being maintained by their national insurance authority (A1 or another form). The Labour and Welfare Administration’s division for membership and contributions to the Norwegian National Insurance Scheme, NAV Medlemskap og avgift, will consider all documentation, register any exceptions from membership in the National Insurance Scheme and the relevant periods of exception, as well as whether the exception applies to all or parts of the National Insurance Scheme. Registered exceptions from membership in the Norwegian National Insurance Scheme are sendt electronically from NAV to the Tax Administration.
Only exceptions registered with the Tax Administration will allow the employer to omit calculation of employer's national insurance contributions for an employee.
The Tax Administration may assess employer's national insurance contributions if there is no exception registered for the employee, and if the reported salary or benefit is not included in the taxable basis.
The employer or the employee can contact NAV regarding questions about whether an exception from the membership in the National Insurance Scheme is registered.
Tax- and contribution rule
Specify the relevant tax- and contribution rule:
This tax and contribution rule concerns:
- income recipients who are covered by a net salary agreement
The employer will then cover the tax due on the agreed salary or benefit, which means that the total net benefits will have to be grossed up in order to determine the correct gross income.
If the income recipient fulfils the relevant conditions, you must specify "net salary" for salary and other benefits.
This tax and contribution rule concerns seafarers who:
- are subject to a net salary agreement, and
- who are entitled to the special allowance (seafarers' allowance) from salary and other benefits earned through work on-board vessels in service.
If the income recipient fulfils the relevant conditions, you must specify “net salary and special allowance for seafarers” for salary and other benefits.
See also the detailed information concerning the special allowance for seafarers
Additional information
- Country of earnings
Specify country code
Earnings period (voluntary)
You can specify the earnings period for all types of salary and other benefits in the a-melding. Both the start date and the end date of the earnings period must fall within the same reporting month.
See also the explanatory information concerning the earnings period
When you must submit reports
You must specify foreign tax paid in accordance with the cash basis. That is, when the tax has been assessed with final effect and has been paid, or should have been paid.
If the final foreign tax:
- falls due on an ongoing basis (Pay As You Earn), you must specify this on an ongoing basis
- is paid in advance, but has not been assessed with final effect, you must specify this when it has been assessed and fallen due for payment.
The foreign tax is considered final following an initial assessment. If the tax assessment in the country of work is appealed, and the due date for the assessed tax is not deferred, the tax that is assessed through the initial assessment will be deemed as final assessed tax and recognised as of the due date.
Credit cases
- If the foreign tax is less than, or equal to, the Norwegian tax, you should not specify foreign tax paid. In this case, you should only calculate and specify Norwegian tax and national insurance contributions on an ongoing basis as the net salary is paid.
- If the foreign tax is greater than the Norwegian tax, you should specify Norwegian tax and national insurance contributions on an ongoing basis. When the foreign tax has been assessed with final effect and has fallen due for payment, you must only specify the added tax as foreign tax paid. The added tax is the difference between foreign tax paid and Norwegian tax for the income year in which the net salary is taxed.
Methods for grossing up net salary
There are three methods:
1. When the income recipient fulfils the conditions for tax relief
Concerns:
- tax relief according to the one-year rule (Tax Act, Section 2-1 tenth paragraph)
- alternative allocation and exceptions with or without progression reservation in accordance with a tax treaty
What to do:
- Calculate the taxable gross
Taxable gross must be equal to the sum of net salary plus foreign tax paid by the employer, grossed up with Norwegian employer's national insurance contributions.
Net salary + Foreign tax paid + Norwegian national insurance contributions (calculated based on “taxable gross") = Taxable gross
- Specify Norwegian national insurance contributions calculated on “taxable gross" on an ongoing basis as “calculated tax”. You must specify calculated tax in the calendar month in which the benefits in the gross up basis were paid and given.
- Specify foreign tax paid as foreign tax paid.
2. When double taxation is relieved through a credit deduction, and the foreign tax paid is less than, or equivalent to, the Norwegian tax
Applies:
- When double taxation is relieved through a credit deduction, and the foreign tax is less than, or equivalent to, the Norwegian tax
What to do:
- Calculate the taxable gross
Taxable gross must be equal to the net salary grossed up in accordance with Norwegian tax rates and with Norwegian national insurance contributions
Net salary + Norwegian tax and national insurance contributions (calculated based on “taxable gross") = Taxable gross
- Specify Norwegian tax and national insurance contributions calculated on “taxable gross" on an ongoing basis as “calculated tax”. You must specify calculated tax in the month in which the benefits in the gross up basis were paid and given.
3. When double taxation is relieved through a credit deduction, and the foreign tax paid is greater than the Norwegian tax
Applies:
- when double taxation is relieved through a credit deduction, and the foreign tax paid is greater than the Norwegian tax
What to do:
- Calculate the taxable gross
Taxable gross must be equal to the net salary grossed up according to Norwegian tax rates and with Norwegian national insurance contributions, plus foreign added tax grossed up with Norwegian national insurance contributions
To explain how the calculation is performed, a step-by-step description of the calculation is presented below:
Step 1 Net salary + Norwegian tax and national insurance contributions (calculated on “grossed up net salary”) = Grossed up net salary
Step 2Foreign added tax + Norwegian national insurance contributions (calculated on “grossed up foreign added tax”) = Grossed up foreign added tax
Step 3Grossed up net salary + Grossed up foreign added tax = Taxable gross
- Specify Norwegian tax and national insurance contributions calculated on grossed up net salary on an ongoing basis as “calculated tax”. You must specify calculated tax in the month in which the benefits in the gross up basis were paid and given.
- Specify foreign added tax as foreign tax paid when it has fallen due with final effect.
- Specify the national insurance contributions with which you have grossed up the foreign added tax as “calculated tax” in the month in which the foreign added tax is reported (see the item above).
Correcting errors
| MAGNET_EDAG-114 Invalid value |
| MAGNET_EDAG-114B Invalid value for this calendar month |
| MAGNET_EDAG-200 This income has been reported with incorrect information and is invalid |
| MAGNET_EDAG-230B Invalid value |
| MAGNET_EDAG-243 Information on earnings period is invalid |
| MAGNET_EDAG-298 This income has been reported with incorrect information and is invalid |
What do we use the information for
NAV uses information concerning foreign tax paid to calculate unemployment benefit, and to check benefits such as sickness benefit, parental benefit, disability benefit, and advance payments of child maintenance.
The Norwegian Tax Administration uses information concerning tax paid to pre-enter the tax return, and for control purposes.
Statistics Norway (SSB) uses the information for statistical purposes.
Applicable regulations
These regulations are only available in Norwegian.
