Salary paid under NOK 60,000
Special tax rules make it both easier and cheaper for you to hire private individuals to carry out work on either your home or your holiday home.
Well-managed tax and employment affairs
Special tax rules make it both simpler and cheaper to hire private individuals to carry out work on the employer's (client's) home or holiday home, e.g. gardening, work on the house or cabin, cleaning and other housework.
Subject to certain conditions, you can avoid paying employer’s national insurance contributions.
A simplified message both for the payment of tax deductions and as a payslip has also been prepared.
The salary is taxable for the recipient in the normal way. However, read more below about how salary up to and including NOK 6,000 per year to one person is tax-free.
Foreign workers are taxable for their salary according to the same rules as Norwegian workers. This also applies to workers with a work permit in Norway in accordance with the special scheme for au pairs.
The simplified rules do not apply when you hire a company or self-employed person.
Benefits of well-managed affairs
Managing your affairs carefully will give you greater security if the employment relationship is managed within the boundaries of the law and the work is carried out under well-managed circumstances. In this way, work in a private home is treated in the same way as any other work. For the person who performs the work (the worker), it is often an advantage if they have their own registered income. This can have an effect on the payments they receive from the national insurance scheme, including sick pay. The worker will also be able to accrue pension credits.
Here we have primarily explained the rules from the employer's perspective. We then go on to consider circumstances which are of specific interest to the worker. Finally, we give some examples of the practical implications of the rules.
The tax authorities and NAV (the Norwegian Labour and Welfare Administration) in your municipality will also be able to tell you more.
Here are some examples of the practical implications of the rules.
The threshold is NOK 60,000 for the household
During the year, Kari and Ole Larsen refurbish the living room and bathroom in their home. They pay an acquaintance a total of NOK 40,000 to do the work. Over the same summer, their neighbour's son cuts their lawn for them. He receives NOK 2,000 for the job. In the autumn, Ole starts to suffer back pain. He is no longer able to wash the floor. They employ Line Ruud to do the job instead. During the autumn, she receives NOK 6,000 for washing the floor. When Ole has recovered, she stops working for Kari and Ole and is paid NOK 612 in holiday pay. Kari and Loe have paid a total of NOK 48,612 in salary and holiday pay during the year. They are within the threshold of NOK 60,000. They use the simplified notification on an ongoing basis and avoid having to pay employer's national insurance contributions.
Kari and Ole also pay for childminding. They have children under 12 years of age and have paid Knut Vang NOK 2,000 per month during the first six months of the year for regular childminding. Including holiday pay, the total payment to Knut Vang amounts to NOK 13,224. Although the combined payments for the household amount to more than NOK 60,000, the payments are exempt from employer's national insurance contributions. Because the salary for childminding is exempt from employer's national insurance contributions, such salary must not be included in the assessment of whether or not the threshold for the obligation to pay employer's national insurance contributions has been reached.
Although the threshold (NOK 60,000) for using the simplified notification has been exceeded, as in this case the household has already started using the simplified submission, they must continue using it for the rest of the year.
Self-employed - in a different field
Kari Hansen helps her neighbour Kjell Nygaard to build a garage and receives NOK 5,000 in salary. She has her own lorry and runs a transport business as a commercial venture. Before the transport business is not in the same professional field as the construction industry, Kjell Nygaard can use the simplified scheme when paying Kari Hansen's salary. Kjell Nygaard does not have to pay employer’s national insurance contributions.
Self-employed in the same field
Per Pettersen, who is a self-employed joiner, helps out on the same garage. The payment of NOK 5,000 does not meet the conditions for the simplified scheme. The payment constitutes income for his business. He must send an invoice and add value added tax to the amount.
Small payments - Write down the amounts
Per Pettersen gets a boy in his neighbourhood to paint a couple of windows on his house. The salary is NOK 800. The payment is tax-free, not subject to withholding tax and need not be declared as salary. He completes and delivers a copy of the submission to the boy, but does not submit it yet. Per Pettersen records and keeps a check on how much he has paid. He therefore knows how much the boy has left before he reaches the threshold of NOK 6,000. If Per gives the boy more jobs to do later in the year and the boy's total salary during the year exceeds NOK 6,000, Per will submit the submissions for the total salary. He also monitors his situation compared with the threshold of NOK 60,000 for the exemption from employer's national insurance contributions.