From 2019, a new and simplified tax scheme will take effect. The scheme is meant for you as a foreign worker in Norway. This scheme is called PAYE (Pay As You Earn). Most new foreign workers will fall under this scheme the first year they work in Norway.
About the PAYE scheme
- Your income from employment is taxed at a rate of 25 percent. The rate includes national insurance contributions at 8.2 percent.
- Your employer deducts the tax directly from your salary, and your tax is settled when you receive your salary.
- You do not claim deductions, and you do not have to submit a tax return nor wait for your tax assessment.
Who is the scheme for?
Primarily, the scheme is meant for foreign workers who work in Norway for short periods of time, and who are not tax residents in Norway. The scheme also applies to most foreign workers the year in which they become tax residents in Norway.
If you live abroad and receive director’s fees and similar remuneration from Norwegian companies, you fall under the PAYE scheme.
The scheme does not apply for
- foreign seafarers and offshore workers
- workers that have business income or taxable income from property in Norway
How to join the scheme
All foreign workers who work in Norway must have a tax deduction card. If you meet the criteria, you’ll join the scheme automatically when you apply for your tax deduction card. You must provide all necessary information in your application, so that we can determine whether you can participate. Married couples do not have to choose the same tax rules.
You can opt out of the scheme
If you do not want to be taxed under the PAYE scheme, but rather prefer the general tax rules, you can opt out of the scheme. You do this when you apply for a tax deduction card.
If you’re not sure which tax scheme to choose, you can start with the PAYE scheme and then opt out at any time during the income year. You do this by applying for a new tax deduction card and ticking the box for taxation under the general tax rules.
When you’ve opted to be taxed under the general tax rules, you cannot re-join the PAYE scheme that income year. At the turn of the year, you can re-join the scheme if you meet the criteria.
Tax that is already deducted, will be converted to an ordinary advance tax payment when you opt out of the scheme. This will be accounted for in your new tax deduction card.
Tax deduction cards for PAYE
You’ll be issued a tax deduction card with a PAYE rate of 25 percent when you apply for a tax deduction card.
Remember to tick the box for taxation under the general tax rules when you want to opt out of the scheme or if you do not or no longer meet the criteria for taxation under the PAYE scheme.
When your employer applies for a tax deduction card on your behalf, you’ll be issued a PAYE tax deduction card if you meet the criteria to join the PAYE scheme. Your employer does not have all the information about you or your income, and therefore cannot choose to join the PAYE scheme or not on your behalf.
If you do not think that you meet the criteria to join the PAYE scheme, or if you want to pay tax according to the general tax rules, you must change your tax deduction card.
You can calculate what the tax could be if you chose to be taxed according to the general rules under "Calculate your tax".
Your employer/the payer must deduct tax under the PAYE scheme for the following incomes:
- salary and other benefits from sources in Norway for work performed in Norway, including holiday pay
- allowances received as a director or member of a board in companies in Norway
- bonuses and remuneration or similar benefits from Norwegian companies
- salary for foreign employees who are hired out, including holiday pay
- expense allowances, refunds and payments in kind that are considered taxable benefits, including commuter expenses
Income limit of NOK 617,500
If you expect to earn more than NOK 617,500 (including holiday pay and taxable benefits), you must choose to be taxed under the general tax rules when you apply for a tax deduction card.
Not sure how much you‘ll earn? You can start with PAYE and then, if necessary, opt out later on in the income year. The tax office will issue a new tax deduction card when you exceed the income limit if you do not send a notification. If you earn more than the income limit, the entire income will be taxed under the general tax rules.
Are you exempt from paying national insurance contributions?
If you have full or partial exemption from the Norwegian National Insurance Scheme, the rate for contributions of 8.2 percent must be deducted and the rate on your tax deduction card must be reduced. You can get a tax deduction card with a reduced rate if you show documentation to the tax office proving you’re a member of a foreign insurance scheme. For instance, you can use form A1, which will show that you’re a member of an insurance scheme in another EEA state.
PAYE and other income
You cannot join the PAYE scheme if you have other taxable income, such as:
- taxable salary from the Norwegian State for work performed abroad
- taxable income from real property or moveable property in Norway
- taxable income from business in Norway
- income earned on Norwegian ships abroad
- income earned on the Norwegian continental shelf
- public benefits from NAV, for example sickness benefit or unemployment benefit
- other income that’s only liable for national insurance contributions in Norway, for instance salary from a Norwegian employer for work performed abroad when you’re a member of the Norwegian National Insurance Scheme
- income that’s not taxable to Norway according to a tax treaty, for instance if your employer does not have a permanent establishment or is not liable to pay tax to Norway according to a tax treaty
If you have any of the incomes mentioned above combined with other salary income or board fees during the year, you cannot join the PAYE scheme. You must notify the Norwegian Tax Administration by changing your tax deduction card.
PAYE can still be combined with these types of taxable income/wealth:
- dividend from Norwegian companies
- withholding tax on pension and disability benefits from Norway
- income for sports people and artists that is liable for tax under the Foreign Artists Tax Act
- income that is not taxable in Norway, for instance salary earned abroad
- wealth from real property or moveable property in Norway
When you become a resident during the year – capital income
Generally, if you are taxed under the rules in the PAYE scheme, you’re only liable for tax on income and wealth under the provisions regarding limited tax liability in Norway.
If you become a tax resident during the year, you can stay in the PAYE scheme for the remainder of the income year. Yet this only applies if your capital incomes in Norway and other countries does not exceed an amount that will be specified by a regulation, NOK 10,000 for 2019. By capital income we mean for instance dividend, interest income and income from letting property.
If such incomes exceed the income limit, you must be taxed under the general tax rules for all your income and wealth for the entire income year.
Have you paid too much tax?
Then you can apply for a refund by submitting this contact form and include information about the amount, your bank account number and any documentation. You can claim a refund for up to 3 years after the income year when the tax was assessed under the PAYE scheme.