Options - Cash benefits
Concerns a situation when an employee receives a benefit through the redemption or sale of options and the benefit is a cash benefit.
Brief information concerning options – cash benefits
Specify the benefit associated with option benefits upon the redemption or sale of employment-related options. ‘Redemption’ means exercising the right to sell shares or equity certificates.
Transfer to associates
In the event of the sale of the option itself, transfers to associates are not considered sales. In all cases, ‘associate’ means a person to whom the income recipient is related by blood or marriage in an ascending or descending line, or in a lateral branch up to and including uncles and aunts.
Redemption from the associate to another non-associate is considered to constitute redemption or sale by the income recipient.
Options to employees of start-up companies and growth companies
From 2022, the Tax Administration will implement a new model for taxation of employee options in companies that are eligible for the scheme. According to the new model, the allocation or the redemption of the options will not trigger a liability to pay tax. Tax liability or deduction entitlement occurs when the options are realised. Taxation will follow the shareholder model when the shares are realised, see sections 10-30 onwards of the Taxation Act. The scheme replaces the separate tax scheme regarding options for small start-up companies that was introduced on 1 January 2018. A transitional scheme has been introduced so that options issued after the scheme from 2018 are transferred to the new scheme. There are special conditions linked to the employer (the company), the option and the employee (see the Ministry of Finance's Regulations pursuant to the Tax Act (FSFIN)) and to reporting.
Options in employment relationships that are covered by the new model should not be taxed as salary income and should not be reported in the a-melding.
The information you must provide
Amount | NOK x |
Type of salary or benefit | Cash benefit, options |
Subject to withholding tax | Yes |
Basis for employer's national insurance contributions | Yes/No |
Tax and contribution rules | If relevant |
Additional information | - |
Amount
Specify the taxable benefit.
How to calculate the taxable benefit upon redemption of the option (sale of share or primary capital certificate): | |
Redemption price | |
- | Sales value |
- | Cost price (option premium) |
= | Taxable benefit |
The estimated sales value of the underlying asset is used as a basis for the sales value.
How to calculate the taxable benefit upon the sale of the option itself: | |
Sale price | |
- | Cost price (option premium) |
= | Taxable benefit |
Transitional rules for options acquired during the income years 1996-2001. How to calculate the taxable benefit upon redemption (sale of share or primary capital certificate): |
|
Redemption price | |
- | Sales value |
- | Cost price (option premium) |
- | Previously taxed benefit upon acquisition |
= | Taxable benefit |
How to calculate the taxable benefit upon the sale of the option itself: | |
Sale price | |
- | Cost price (option premium) |
- | Previously taxed benefit upon acquisition |
= | Taxable benefit |
Type of salary or benefit
Specify “Cash benefit” and “options”.
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.
Exemption:
You don't have to calculate employer’s national insurance contributions when the income recipient:
- is covered by the national insurance legislation of another country in accordance with a convention or the EEA Agreement
- is a foreign employee who is not a member of the Norwegian National Insurance scheme and who works on the Norwegian continental shelf or in Norwegian territorial waters
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 rules
If the income recipient fulfils the conditions, you must use the following tax and contribution rules:
This tax and contribution rule concerns:
- seafarers who are entitled to a special deduction (seafarer's allowance) from their salary and other benefits,
- when it is earned through work on-board a vessel in service.
If the income recipient fulfils the relevant conditions, you must specify “special allowance for seafarers” for salary and other benefits.
See also the detailed information concerning the special allowance for seafarers
This tax and contribution rule concerns:
- income recipients who are covered by the Jan Mayen Tax Act.
If the income recipient fulfils the relevant conditions, you must specify “Jan Mayen and the Norwegian dependencies” for salary and other benefits.
You must also specify “Jan Mayen and the Norwegian dependencies” for the associated withholding tax.
See detailed information on withholding tax in the a-melding
Remember also to specify the correct deduction descriptions for Jan Mayen and the Norwegian dependencies regarding trade union fees and premium for pension scheme.
See also the detailed information concerning Jan Mayen and the Norwegian dependencies
This tax and contribution rule concerns:
- income recipients who are covered by the Svalbard Tax Act.
If the income recipient fulfils the relevant conditions, you must specify “Svalbard” for salary and other benefits.
You must also specify "Svalbard" for the associated withholding tax.
See detailed information on withholding tax in the a-melding
Remember also to specify the correct deduction descriptions for Svalbard regarding trade union fees, premium for pension scheme, National Insurance premiums and education and development fund premiums and portacabin rent.
Additional information
No additional information.
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
Specify the benefit in the calendar month in which the income recipient redeemed the option and sold shares or primary capital certificates or sold the option itself.
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 salary and other benefits to calculate unemployment benefits and to check benefits such as sickness benefit, parental benefit, disability benefit and advance child maintenance payments.
The Norwegian Tax Administration uses information concerning benefits associated with the redemption of options to pre-complete the tax return and for control purposes. The amount is aggregated with other benefits and transferred to the tax return.
Statistics Norway (SSB) uses the information for statistical purposes.
Applicable regulations
These regulations are only available in Norwegian.