PAYE (Pay As You Earn) for foreign workers
The PAYE scheme is a new and simplified tax scheme for foreign workers. You pay tax under the PAYE scheme when you have short work stays in Norway or the first year that you’re a resident for tax purposes in Norway. You have to meet certain criteria in order to take part in the scheme. The PAYE scheme is a voluntary taxation scheme.
When you take part in the PAYE scheme, you do not receive a tax return and tax assessment notice for your salary. Instead, you’ll receive a receipt for PAYE tax, which shows how much salary and tax your employer has reported to the Tax Administration.
The receipt for PAYE tax for the 2019 income year will be available in Altinn for most participants from 29 June. It will also be shown on the page My tax. You’ll receive a text message and e-mail when your receipt for PAYE tax is ready. If you`re not an online user, you’ll receive the receipt by post.
Read below to learn more about the scheme, the criteria for taking part in the PAYE scheme, and how you may choose to be taxed under the general tax rules instead.
How to take part in the PAYE scheme
- If you’re a foreign worker and you meet the criteria, you’ll join the scheme automatically when you apply for your tax deduction card. Your tax deduction card will be marked “Kildeskatt på lønn". Your tax deduction notis will be marked "PAYE”.
- All foreign workers who work in Norway must have a tax deduction card. In order for us to determine whether you may take part in the scheme, you must provide information about all your income when you apply for a tax deduction card. If any of this information changes, you must notify the Tax Administration so that you can receive a correct tax deduction card. Married couples do not have to choose the same taxation scheme.
- If 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 for joining the PAYE scheme. Your employer cannot decide whether you should join the PAYE scheme or not.
The differences between PAYE and the ordinary taxation rules
- Your employer deducts a fixed rate of tax from your salary – 25 percent. If you’re not a member of the National Insurance Contributions Scheme, the tax rate is 16.8 percent.
- Your tax is settled when you receive your salary payment.
- You do not receive a tax return for salary, and you do not receive an ordinary tax assessment for your salary. Instead, we’ll send you a receipt for PAYE tax, which shows how much salary and tax your employer has reported. You’ll receive the receipt for PAYE tax in June the year after the income year.
- All commuter benefits are subject to tax.
- The PAYE scheme is a voluntary scheme. You may choose to opt out of the scheme at any time during the income year and no later than 30 April the year after the income year. If you choose to opt out, you cannot rejoin the scheme for the same income year.
You meet the PAYE criteria if:
- you’re a foreign worker who work in Norway for short periods of time, or
- you’re a foreign worker who work in Norway and it’s the first year in which you’re a resident in Norway for tax purposes, or
- you live abroad and receive director’s fees and similar remuneration from Norwegian companies, and
- you earn less than NOK 639,750 per year (applies to the 2020 income year)
You may combine the PAYE scheme with these types of taxable income or wealth:
- withholding tax on share dividends from Norwegian companies
- withholding tax on pension and disability benefits from Norway
- income for sports people and artists that are subject to tax under the Foreign Artists Tax Act
- wealth from real property, commercial activity and moveable property in Norway
Income that’s neither taxable nor subject to national insurance contribution deductions in Norway, for instance salary earned in another country when you’re not a member of the Norwegian National Insurance Scheme, may also be combined with participation in the PAYE scheme.
You do not meet the PAYE criteria if:
- You earn more than NOK 639,750 per year (applies to the 2020 income year).
- If you expect to earn more than NOK 639,750 (including holiday pay and taxable expense allowances, etc.), you must choose to be taxed under the general tax rules when you apply for a tax deduction card.
- If you’re not sure whether you’ll earn more than the maximum amount, you can start with PAYE and opt out later on.
- public benefits from NAV, for example sickness benefit or unemployment benefit, when you’re liable to pay national insurance contributions on the benefit
- taxable income from commercial activity in Norway
- income earned on Norwegian ships
- income earned on the Norwegian continental shelf
- taxable salary from the Norwegian State for work performed in other countries
- taxable income from real property in Norway, including your share of the income of a housing company/jointly owned property
- taxable income from moveable property in Norway
- other income that’s only subject to national insurance contributions in Norway, for instance salary from a Norwegian employer for work performed in another country 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 and neither you nor your employer is liable to pay tax in Norway according to a tax treaty
- taxable salary from a Nordic employer where withholding tax is paid to another Nordic country according to the rules in the Nordic Tax Withholding Agreement (NT1)
If you have these kinds of income combined with salary income earned in Norway or director’s fees from Norwegian companies, you cannot join the scheme. If you have these kinds of income, you must notify the Tax Administration so that you can receive a correct tax deduction card. You do this by applying for a new tax deduction card.
Being taxed according to the PAYE scheme is voluntary. You may choose to opt out of the scheme and be taxed under the general tax rules at any time during the income year. Below you can read more about how to choose.
You must choose by 30 April in the year after the income year, at the latest.
Please note that when you’re taxed under the general tax rules, you’ll receive a tax return for salary and other relevant circumstances, and you’ll receive a tax assessment notice.
When you’ve opted to be taxed under the general tax rules, you cannot re-join the PAYE scheme for that same income year. Tax that’s already been deducted will be converted to an ordinary advance tax payment when you opt out of the scheme. Your new tax deduction card will account for this. .
If you apply for a tax deduction card for a new income year, you’ll again receive a tax deduction card marked "Kildeskatt på lønn"/tax deduction notice marked "PAYE" if you meet the criteria to join the scheme.
if you meet the criteria to join the scheme.
How to opt out of the PAYE scheme and be taxed under the general tax rules
- If you do not yet have a tax deduction card for 2020, and you want a tax deduction card for taxation under the general tax rules, you must opt out of the scheme the first time you apply for a tax deduction card.
- If you already have a PAYE tax deduction card for 2020 and you want to change to a general tax deduction card, you must opt out of the scheme by changing your tax deduction card.
- You can no longer opt out of the scheme for the income year 2019.
If you’re withdrawn from the PAYE scheme after the receipt for PAYE tax has been sent out, you’ll receive a new receipt where the basis for the PAYE tax and the PAYE tax and the PAYE tax have been changed. You’ll receive the new receipt at the same time as a tax assessment notice for general taxation.
When you have a full or partial exemption from the Norwegian National Insurance Scheme, you pay a reduced rate of tax on your employment income.
If you’re not a member of the Norwegian National Insurance Scheme, and therefore do not pay national insurance contributions in Norway, you must send a confirmation of this to NAV. For example you can use the form A1. If NAV concludes that you’re not a member of the National Insurance Scheme and that you are therefore exempt from paying national insurance contributions in Norway, they will report this to the Tax Administration.
You can get a tax deduction card with a reduced tax rate if you can provide information proving you’re a member of an insurance scheme in another country. This could for example be form A1. If you can submit form A1 or similar when you apply for a tax deduction card, you will receive a PAYE tax deduction card where your tax rate is reduced in line with the national insurance contributions you do not have to pay.
If the exemption from the Norwegian National Insurance Scheme applies for periods during which you’ve paid 25 percent tax, you can apply for a refund of the overpaid tax.
If you’ve overpaid the PAYE tax, you can apply for a refund. Use our contact form. The application must include the following information:
- the year the overpayment applies to
- the month(s) for which you’re applying for a refund
- the refund amount
- any documents proving that you’ve paid too much tax
You may claim a refund up to 3 years after the income year for which the PAYE tax was assessed.
The refunded amount will be paid to your Norwegian or foreign bank account registered with us.
To change the account number for payment, you must:
You’ll find the refunded amount in your receipt for PAYE tax. If we process your refund application after the receipt for PAYE tax was sent to you, you’ll not receive an updated receipt for PAYE tax. The refunded amount will be shown in the refund decision that you’ll receive from the Tax Administration.
Your employer/the payer must deduct tax under the PAYE scheme for the following:
- Salary and other remunerations for work performed in Norway, including holiday pay.
- Salary for foreign employees who are hired out, including holiday pay.
- Expense allowances, refunds and payments in kind that are considered taxable benefits.
- Allowances for personal expenses, for example travels to/from work.
- Allowances for extra expenses relating to your commutes. For example, these allowances may cover expenses relating to home visits, food and accommodation.
- Allowances received as a director or member of a board in Norwegian companies.
- Allowances for commuter expenses for a director or member of a board in a Norwegian company.
- Bonuses and remuneration or similar from Norwegian companies.
When your employer covers expenses directly incurred in connection with work, for example extra expenses you have during work-related stays away from home or when you move, only a surplus will be considered a taxable benefit for you. You only have to pay PAYE tax on a surplus.
Generally, if you’re 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 resident for tax purposes during the year, you can stay in the PAYE scheme for the remainder of the income year. However, this only applies if your capital income in Norway and other countries does not exceed NOK 10,000 in total. By capital income we mean for example dividends, interest income and income from the sale of shares.
If your capital income exceeds the income limit, you must be taxed under the general tax rules for all your income and wealth for the entire income year. If you become a resident for tax purposes during the income year, you must inform the Tax Administration about your expected global capital income in your application for a tax deduction card.
If you believe that your salary income earned in Norway is not taxable in Norway according to the provisions of a tax treaty that Norway has entered into with another country, the Tax Administration will assess this kind of application. You’ll receive a tax deduction card for taxation under the general taxation rules if your application is approved. If this is the case, you cannot be taxed under the PAYE scheme.
Nor can you be taxed under the PAYE scheme if a NT1 form has been submitted showing that tax has been deducted in another Nordic country.
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