Nordic Tax Withholding Agreement
The Nordic Tax Withholding Agreement is an agreement between the Nordic countries concerning the payment of withholding tax and the transfer of paid tax. The agreement covers tax on employment income, pension and National Insurance payments, as well as the transfer of corporation tax.
The main aim of the agreement is to create clarity in the relationships between the tax authorities in the Nordic countries, so that withholding tax is only deducted in one country, either the country of residence or the country of employment. Where possible, the right to require withholding tax to be deducted rests with the state which is most likely to be able to tax the income under the tax treaty.
If an employee must still be subject to withholding tax deductions in their home country during a period of employment in Norway, the employer must complete form NT 1 (Nordisk Trekkavtale - in Norwegian), which provides confirmation that withholding tax must be paid in the country of residence. The form must be signed by the employer and the tax authorities in the employee’s home country. The tax authorities in the home country will then send the form to the competent authority in Norway. The form must have been received by the competent authority in Norway by the time the work starts in order for the employee to be granted exemption from liability for deductions in Norway.
The Norwegian Tax Administration is the competent authority in Norway and can provide more detailed information concerning the tax withholding agreement.