The organisation as an employer
An employer is defined as “One who , either them self or through an authorised person, pays salary or other remuneration or benefits from which withholding tax and garnishments must be deducted”; see section 4-1, subsection 1 (c) of the Tax Payment Act. Tax-exempt organisations will generally have the same obligations as other employers. The organisation can be an employer even if it does not have any employees. The payment of board fees and expense allowances to board members, other elected representatives and active members will generally be treated in accordance with the same rules as salary payments, etc. to employees.
The organisation must deduct and pay withholding tax, and pay employer’s national insurance contributions on salary payments from any of the organisation’s tax-free and taxable activity. It must submit an a-melding on the fifth day of the month after each payment.
The organisation will not be considered an employer if the fee constitutes business income for the person who performed the work or assignment. Ask the tax office if you’re in any doubt as to whether the fee should be considered business income or employment income for the recipient. Read more about this in the guide Skatte-ABC (in Norwegian only) under the subject Virksomhet allment (Enterprise - general), items 3.1 and 3.2.
Below you can find a brief explanation of some rules of particular interest for tax-exempt organisations that are employers.
Notification to the Register of Legal Entities and NAV’s State Register of Employers and Employees (Aa-registeret)
As an employer, the organisation must submit a notification to the Register of Legal Entities.
Registration in the Register of Legal Entities can take place via either Altinn or a paper form (Coordinated register notification, BR-1010), which must be sent to the Register of Legal Enterprises. A special simplified form has been created for associations. You can get more information from the Brønnøysund Register Centre.
The State Register of Employers and Employees (Aa-registeret) is linked to the Register of Legal Entities, and is the source for all information concerning employers in the Aa-register. When employers register in the Register of Legal Entities, they will be assigned an organisation number. This organisation number is unique to each individual enterprise and is used to identify the enterprise in most official contexts.
In addition, the employer will be assigned one or more enterprise numbers, which are necessary for employees to be registered. Example: An employer that owns two retail outlets in a private limited company (AS) will be allocated two enterprise numbers. The employees will be registered under the number that belongs to the retail outlet where they work.
Employers are obliged to notify the Register of Legal Entities of any changes concerning the enterprise. Examples of such changes include enterprise name, addresses, signatories or board members.
The a-melding is a digital system for the coordinated reporting of income, employment and tax deduction details by those subject to a reporting obligation (primarily employers) to NAV (the Norwegian Labour and Welfare Administration), Statistics Norway and the Norwegian Tax Administration. The organisation number assigned by the Register of Legal Entities must be used when reporting in the a-melding.
The a-meldingmust be submitted by all enterprises that have employees or pay salaries or other benefits. The a-melding must be submitted electronically at least once a month and contains information on all employees and the status of their employment, salary payments, etc. The a-melding ensures that employment and income information is registered by the public administration at the same rate as it is generated by employers.
Charitable and benevolent institutions or organisations that are able to use the simplified scheme (see below) must not submit a-meldings if they use the simplified a-melding, but they must register in the Register of Legal Entities.
As an employer, the organisation must deduct tax from salary, board fees and other remuneration for work or assignments performed for the organisation (see exceptions below). The employer must deduct tax according to the employee’s tax deduction card (table-based or percentage deductions). The employer will obtain the employee’s tax deduction card electronically from the Tax Administration. If the recipient does not have a tax deduction card, the employee must order one from the Norwegian Tax Administration. If the employer does not have access to information from the most recently calculated tax deduction card, the employer must deduct withholding tax at the rate of 50 percent.
As employers, the organisations are responsible for ensuring that the correct amount of tax is deducted.
Exceptions from the obligation to withhold tax
The following payments and benefits are not liable for withholding tax:
- Ordinary holiday pay paid during the holiday year (the year after the accrual year).
- Part of salary in December.
- Pension in December.
- Work-related expenses that the organisation has refunded, e.g. for business travel, board and lodging. (These expenses must be documented through vouchers, or alternatively signed travel invoices, which must be enclosed as appendices to the organisation's accounts.)
- Expense allowances paid according to government rates or a tariff agreement or according to the Directorate of Taxes’ rates and documentation requirements, when the remuneration does not cover more than what the expenses provide a basis for, e.g. subsistence allowances paid at the Directorate of Taxes’ rates. Special provisions apply to overnight supplements.
- Expense allowances in accordance with an expense statement when the organisation has no reason to assume that the allowance will generate a profit.
- Payments in kind in the form of free transport to and from events (does not apply to the free use of a car), free board and lodging in connection with such events, free equipment, etc., when provided in the organisation's interest.
- Other payments in kind not subject to withholding tax.
Minimum thresholds for withholding tax
Withholding tax should not be deducted
- from salaries when the total payment made to a person during the year does not exceed NOK 10,000
- from the value of cost savings in the home when the total salary payment, etc. excluding the estimated cost saving for a person during the income year does not exceed NOK 10,000
- from combined benefits subject to withholding tax to a person when the benefits do not exceed NOK 500 in a calendar month
- when the total withholding tax for a person does not exceed NOK 100 in a calendar month
- from remuneration for work or assignments performed as part of self-employment
If you’re not sure whether the person concerned runs a business, you should contact the tax office. See also "The role of employer”.
Keeping and depositing withholding tax
When the organisation pays salary or other benefits subject to withholding tax, withholding tax must be deducted from the payments. The deducted withholding tax must be deposited in a separate bank account (tax deduction account) or collateral can be pledged for the amount.
The organisation must submit the a-melding by the fifth day of the month after the salary payment and provide information on the withholding tax that is deducted. When submitting via Altinn, the employer will receive an acknowledgement which states the account number and KID to be used for payment. On the 15th of January, March, May, July, September and November (the due date months), the organisation must send tax deductions for the previous two months to the tax collector in the municipality in which the organisation is registered.
Charitable and benevolent institutions and organisations that are covered by the rules for exemption from the obligation to pay employer’s national insurance contributions (see below) may use a simplified settlement scheme in connection with salary payments. This entails special rules for certain obligations that the organisation has as an employer. Among other things, this concerns the rules regarding notification to the employee register and the obligation to keep and deposit withholding tax. The scheme is voluntary, even if the conditions for using the simplified scheme are met. The simplified settlement scheme is described in more detail below.
Employer’s national insurance contributions
Generally, tax-exempt organisations must pay employer's national insurance contributions.
Employer’s national insurance contributions must be paid on all salary and other remuneration for work or assignments, including salary payments of less than NOK 10,000 per salary recipient during the income year. ‘Salary’ also includes board fees, overtime remuneration, holiday pay, sick pay, etc. Employer’s national insurance contributions must also be calculated on allowances that are subject to withholding tax, e.g. allowances in excess of the Directorate of Taxes’ rates. Employer's national insurance contributions must be paid on payments in kind when the benefit is subject to withholding tax, e.g. in connection with the benefits associated with free housing, use of your employer's car and interest benefits linked to employment-related low-interest loans.
Employer’s national insurance contributions must not be paid on allowances for assignments performed as part of self-employment. Contact the tax office if there’s any doubt as to whether the payment should be considered business income or salary income. See also "The role of employer”.
The zone for employer’s national insurance contributions is determined by the employer’s registered address.
The employer must calculate the contributions for each calendar month. After the end of each calendar month, you must submit an a-melding that specifies the calculated employer’s national insurance contributions. The deadline for submitting the a-melding is the fifth day of the month following the calendar month concerned. Employer's national insurance contributions must be paid in six instalments. An instalment covers the two previous calendar months, e.g. January and February are covered by instalment 1, March and April are covered by instalment 2, etc. The deadline for paying employer's national insurance contributions is 15 days after the end of the instalment period. Amounts of less than NOK 100 for a settlement period (instalment) do not need to be paid.
When submitting the a-melding via Altinn, you’ll receive an acknowledgement that states the account number and KID to be used when paying employer's national insurance contributions.
Exceptions from the obligation to pay employer’s national insurance contributions
Charitable and benevolent institutions and organisations are not required to pay employer’s national insurance contributions for paid work that’s not linked to the taxable commercial activity of the institution or organisation. However, the exemption from the obligation to pay employer’s national insurance contributions only applies when the total salary expenses of the institution or organisation concerning this part of the activity do not exceed NOK 800,000 per year, and only for salary payments not exceeding NOK 80,000 per employee per year. When calculating the threshold amount, salary expenses attributable to any taxable commercial activity must be excluded.
Each employee must be considered individually in relation to the threshold of NOK 80,000 per employee. Payments to employees of NOK 80,000 or less are exempt from employer’s national insurance contributions when the combined total salary payment does not exceed NOK 800,000.
If the payments exceed NOK 800,000, the entire total salary payment will be subject to employer’s national insurance contributions. If the salary payment for one employee exceeds NOK 80,000, or the salary expenses relating to non-commercial activity exceed NOK 800,000 for the entire organisation during the year, employer’s national insurance contributions must immediately be retrospectively calculated on previously paid amounts. In connection with subsequent payments, contributions must be calculated in the normal way by the ordinary deadlines.
In December 2016, the Directorate of Taxes issued an interpretation statement saying that the threshold amounts apply to each independent legal unit that constitutes an independent taxable entity. This means that sub-divisions or groups in the independent taxable entity cannot each make use of the threshold amount.
After the statement, it has become apparent that many sports clubs over time have interpreted and practiced the rules in such a way that each sub-division or group with its own board of directors and separate account can make use of their own threshold amount. This practice can be continued until the rules are changed, as the Ministry of Finance gives notice of in Prop 1 LS (2018-2019) (in Norwegian only).
When paying out salaries that are exempt from employer’s national insurance contributions, the amounts should not be included in the basis for the contributions. If the institution or organisation makes one or more payments on which employer’s national insurance contributions are payable (i.e. payments to a person in excess of NOK 80,000 during the year), and one or more payments on which contributions are not payable, only payments on which contributions are payable should be included in the calculation.
Charitable and benevolent institutions and organisations that do not fulfil the conditions for exemption from employer’s national insurance contributions must pay such contributions in accordance with the ordinary rules and will not be able to make use of the simplified settlement scheme when making salary payments.
Reporting obligation regarding salary payments
Organisations that have paid salary, cash benefits or payments in kind must submit an a-melding for the period in which the payment/benefit was paid. The a-melding must be submitted electronically at least once for each month during which you are subject to a reporting obligation. The a-melding must be submitted via your payroll system, your accountant or through direct registration in Altinn. A-meldings must be submitted by no later than the 5th of the month after the payment of salary or benefits. If you do not have any circumstances that trigger a reporting obligation, such as salary payments or employees, you will not need to submit an a-melding.
Organisations that use the simplified settlement scheme should not submit ordinary a-meldings.
Limitations on the obligation to report salary
Charitable and benevolent institutions and organisations are exempt from the obligation to report salary payments for
- salary when the total salary payment made to a person during the income year does not exceed NOK 10,000
- expense allowances not subject to withholding tax to cover expenses related to a member's efforts or actions for the organisation that do not exceed NOK 10,000 during the income year
- expense allowances not subject to withholding tax paid to a person in a paid position within the organisation to cover expenses attributable to travel to and from events, etc. to which the organisation has contributed that do not exceed NOK 10,000 during the income year
- allowances in accordance with the government rates for travel expenses to cover board and lodging expenses, and paid to a person who does not hold a paid position within the organisation, when the recipient does not travel on more than 50 days during the calendar year
- payments in kind in the form of free travel to and from events (does not apply to the free use of a car), free board and lodging in connection with such business travel, free equipment, etc., when they are provided in the organisation's interest.
The simplified settlement scheme
Charitable and benevolent institutions and organisations that fall under the thresholds for exemption from employer’s national insurance contributions can use a simplified settlement scheme. This scheme is ideal when the organisation makes individual payments to one or more people. A simplified a-melding (A05) is available for organisations that use the simplified settlement method. The simplified a-melding can be submitted via Altinn. When you submit it in Altinn, you can retrieve the tax deduction card for the salary recipient in the same form. You’ll then get help to calculate the tax deduction based on information from the tax deduction card. When submitting via Altinn, you’ll receive an acknowledgement that, among other things, states the account number and KID that you must use when making the payment.
The charitable or benevolent institution or organisation must deduct withholding tax and pay the amount that’s deducted to the tax collector immediately. The deduction will then be paid at the same time as the salary payment. The organisation will fulfil all its obligations on pay day and will not have to deposit an amount in a tax deduction account. The organisation will also be released from the obligation to notify the Register of Employers and Employees. Under the simplified settlement scheme, a simplified a-melding must be completed for every employee to whom salary is paid. The employee must receive a copy of the submitted a-melding.
A guide to the simplified a-melding for charitable or benevolent organisations can be found at altinn.no. The settlement scheme used has no effect on the exemption from employer's national insurance contributions. If you opt not to use the simplified settlement scheme or the conditions for using the scheme are not met, the ordinary rules for employers’ obligations and liabilities will apply.
Employer's national insurance contributions must be calculated if an employee exceeds the exemption threshold of NOK 80,000 for employer’s national insurance contributions during the year, or if the entire organisation exceeds the collective threshold of NOK 800,000. Employer's national insurance contributions must then be calculated retrospectively on previously paid amounts. Contributions must be calculated in the normal way for subsequent payments. In such cases, the organisation can continue to use the simplified a-melding. Calculated contributions must then be paid by the relevant deadlines.