Who is considered resident on Svalbard for tax purposes?

Persons who have resided at least 12 months on Svalbard are considered a resident from day one. Permanent residency means that you have true residential ties to Svalbard. Short absences, such as business or vacation trips, do not affect your residential status on Svalbard. Whether or not you have established residential ties to Svalbard is determined on a case by case basis.

In practice, tax liability based on residence means that income such as interest on bank deposits, gains on the sale of shares, etc., dividends or net profits from renting real property on Svalbard, will become taxable on Svalbard. Such income is capital income/other income. Read about taxation of other income on Svalbard.

Even if you are liable to pay tax to Svalbard based on residence, you will not be liable to pay tax to Svalbard for:

• salary and other remuneration for work performed away from Svalbard, and
• income from commercial activity carried on away from Svalbard
• if it can be substantiated that the income is taxable in Norway or another state.
• Capital and income from real property situated away from Svalbard is not taxable to Svalbard.

If you move to Svalbard directly from a country other than Norway, you will only have a limited liability to pay tax to Svalbard during the first five years. You will become liable to pay tax to Svalbard on accrued salary/business income and National Insurance benefits, etc. which you receive on Svalbard. You will also be liable to pay tax to Svalbard on income from real property on Svalbard that you own.

Limited tax liability to Svalbard during the first five years is subject to the condition that you have not been liable to pay tax to Norway/Svalbard as a result of residence during the previous ten years prior to moving to Svalbard.

Liability to pay tax to Svalbard based on residence will lapse with effect from the income year in which you cease to be resident on Svalbard for more than 183 days in any 12-month period. When calculating the number of days, you should include all calendar days or parts thereof on which you are not resident on Svalbard. Periods of residence away from Svalbard need not be continuous.

The reason why you are resident away from Svalbard is generally of no significance. Periods of residence away from Svalbard due to assignments, work or holiday should therefore be included when calculating the number of days.

In cases where essential medical treatment or other similar compelling reasons mean that you must be resident away from Svalbard for more than 183 days, the Svalbard tax office may decide that you should still be considered as being resident on Svalbard following an overall assessment of your residential affiliation. This exception is practised very strictly.

Under the current regulations, the liability to pay tax to Svalbard will cease either on 1 January of the year in which you emigrated or 1 January of the year after that in which you emigrated, depending on which year you were resident away from Svalbard for more than 183 days in any 12-month period.

The date of cessation of the residential tax liability may therefore be important for the tax liability of individual taxpayers. Pension received for the year of emigration will be taxable to the mainland or to Svalbard in its entirety, depending on whether the liability to pay tax to Svalbard based on residence ceases during the year of emigration or the year after emigration. Similarly, all capital income, capital gains and losses, and deductions for interest on debt, etc. will be taxable either to the mainland or to Svalbard in their entirety.

In order for salary earned on Svalbard to be taxable to Svalbard, either a tax liability based on residence or limited tax liability to Svalbard will be required. If the tax liability based on residence ceases on 1 January of the year of emigration, salary earned prior to emigration may be subject to limited tax liability to Svalbard. Each individual period of residence relating to the employment must then last at least 30 consecutive days.

Example:

Option 1

Calculation - Periods of residence away from Svalbard

	from and including	to and including	2011	2012
Autumn holiday	10.09.2011	19.09.2011	10 days
Work-related travel	03.10.2011	05.10.2011	3 days
Christmas holiday	15.12.2011	10.01.2012	17 days	10 days
Work-related travel	13.02.2012	16.02.2012		4 days
On sick leave	30.03.2012	10.04.2012		12 days
Summer holiday	01.06.2012	30.06.2012		30 days
Total			30 days	56 days
Mainland	01.09.2012	31.12.2012		122 days
Stays away from Svalbard in 2012				178 days

Liability to pay tax to Svalbard based on residence will cease from 1 January 2013 inclusive because the period of residence away from Svalbard in any 12-month period will not pass 183 days until 5 January 2013.

Liability to pay tax to Svalbard based on residence will therefore cease on 1 January 2013, even though emigration has already taken place on 1 September 2012. One of the consequences of this is that any pension received during the period from 1 September through to the end of the 2012 income year will be taxable to Svalbard. Similarly, all capital income, capital gains and losses, as well as deductions for interest on debt, etc. during the same income year should be included in connection with taxation on Svalbard. Salary earned on the mainland after emigrating from Svalbard is taxable on the mainland.

Option 2

Calculation - Periods of residence away from Svalbard

	from and including	to and including	2011	2012
Autumn holiday	10.09.2011	19.09.2011	10 days
Work-related travel	03.10.2011	05.10.2011	3 days
Christmas holiday	15.12.2011	10.01.2012	17 days	10 days
Work-related travel	13.02.2012	16.02.2012		4 days
On sick leave	30.03.2012	10.04.2012		12 days
Summer holiday	01.06.2012	30.06.2012		30 days
Total			30 days	56 days
Mainland	01.08.2012	31.12.2012		153 days
Periods of residence away from Svalbard in 2012				209 days

Liability to pay tax to Svalbard based on residence will cease from 1 January 2012 inclusive because the period of residence away from Svalbard in any 12-month period will pass 183 days on 5 December 2012.

Liability to pay tax to Svalbard based on residence will therefore cease on 1 January 2012, even though emigration will not take place until 1 August 2012. One of the consequences of this is that pension received during 2012 (including pension received prior to emigration) will be taxable to the mainland. Similarly, all capital income, all capital gains and losses, as well as deductions for interest on debt, etc. will be taxable to the mainland.

From 1 January 2012, the taxpayer will have limited liability with respect to Svalbard. Salary earned during continuous periods of residence on Svalbard lasting longer than 30 days will then be taxable to Svalbard. If the requirement for 30 days’ continuous residence is not met, the salary for such periods will be taxable to the mainland during the year of emigration. Salary earned on the mainland will be taxed on the mainland.