Regulations and Norway specific requirements are to be carefully considered when posting employees to Norway. Topics such as value added tax, permanent establishment and hired labour may be of concern and require further attention when choosing to do business in Norway.

Generally, deploying an employee to Norway results in the taxation of the reported income (withholding tax) and the requirement to pay social security contributions to Norway (employee and employer). Under certain circumstances, exemptions from such duties can be made. Amongst other things, the tax office makes use of the information within the Assignment & Employee- Register (OAR) to evaluate the taxability of an employee.    

 

 

Registration of workers in Norway

All workers sent to Norway need to be registered in the so-called “Assignment & Employee- Register” (in Norwegian: oppdrags- og arbeidsforholdsregister, form RF1198/1199). Upon arrival, the employees need to present themselves at a tax office to undergo an ID-check.

Company perspective

• Evaluation of the project: Service agreement or hired labour
• Assessing the possibility of a permanent establishment coming into existence

Employee perspective

• Receiving a personal number (D-number) and the tax card
• Tracking the length of stay in regards to the 183 days rule.

 

Service agreement or hired labour?

The Norwegian tax authority wants to know, whether the foreign company is either offering a specific result-based service (enterprise/service agreement) or whether the foreign company offers a supply of work force (hiring out of personnel) to be able to apply the relevant tax rules to the company and its employees.

 

Option 1: Hired labour

From a company perspective, generally no permanent establishment is coming into existence if work force is being supplied to Norway, as the hiring out of personnel is not being seen as a distinct project or activity.

Employees are deemed taxable to Norway from their first day of work as the 183 day exemption does not apply if they have been hired out.

Option 2: Enterprise/service agreement

From a company perspective, a permanent establishment may come into existence, depending on the duration of the project. Depending on the tax treaty, the threshold for the project duration usually lies between 6 and 12 month.

If an employee is working in Norway within the framework of an enterprise contract, the 183 day exemption rule can generally be applied.

 

To be able to distinguish between hired labour and a service agreement, the following criteria are to be assessed:

• Is the employee incorporated into the receiving company or not?
• Who is responsible for the results that the employee is achieving?
• Who is responsible for the workplace where the work is carried out?
• Is a result-based service or an hourly rate for the workforce being invoiced?
• Who do the tools and materials in use belong to?
• Which company has a say over the qualifications and the number of the work force?

 

The 183 days rule

According to Article 15 of most tax conventions that Norway has signed with other countries, salary is generally taxable to the country in which the work is being performed. Hence, work performed in Norway is taxable to Norway at first glance.

Should the 183 day exemption be applicable, then the salary earned by the employee is taxable to the country in which he is a tax resident. One has to keep in mind that this exemption is only applicable, if the other requirements stated in Article 15 are met. This means that if one condition is not satisfied, the person becomes taxable where the employment is being exercised, even if the stay was shorter than 183 days.

 

A- messages

Irrespective of the length of stay, gross salaries (including allowances) earned in Norway need to be reported in monthly payroll returns, called A-messages (in Norwegian: A-melding). Generally the tax office will claim income tax and social security contributions on the reported salary, even if one can assume that the salary should not be taxable to Norway according to a relevant tax convention. Only once proof over social security coverage and once an application for an exemption from the duty to deduct withholding tax has been handed in and approved, can the claims be reduced to zero.

Should an employee be taxable, his reported income will be taxed after the PAYE scheme or based on the assigned tax card. If an employee has not undergone an ID-Check, they will not be given a tax card and preliminarily be taxed with 50 % instead.

 

Taxation

If a worker is deemed not to be taxable to Norway, an “application for exemption from the obligation to deduct taxes” needs to be filed. Normally, such an exemption is granted.

 

Tax treaties defer from country to country, but at a glance, we can summarize:

 

If a worker is working for a Norwegian limited company, he/she will be taxable! If the worker is working for a company from another country with a permanent establishment in Norway, he/she will be taxable as well. If the worker is working for a company from another country without a permanent establishment in Norway, he/she will only be taxable if he/she is in Norway more than 183 days** within any 12 months period.

Employees working on a hire of labor agreement are always taxable!

 

** applicable for most countries, e.g., Germany

 

Social Security in Norway

When people enter Norway to work, they will usually become members of the mandatory Norwegian National Insurance Scheme from their first day of work. They and their employer are obliged to pay National Insurance contributions. However, the obligation to pay social security on top of the contributions to the social security scheme in the home country can be avoided if you apply for a so called A1 form (or similar forms for non-EU countries). It is important that the A1 certificate is issued electronically, as the Norwegian social security institute “NAV” requires personal social security information to be sent digitally by most EU member states.

Generally, the Norwegian social security contribution rate for employees is 7,8 % and 14,1 % for employers on the reported gross salary.

Minimum Wage in Norway

Even if there is no general minimum wage in Norway, minimum wages have been introduced in certain sectors in general application of collective agreements. Among others, the following sectors have agreed minimum wages:

• Building and construction
• Electricians
• Cleaning
• Hotel and restaurants
• Drivers (tour buses, freight transport)

 

• Minimum hourly wage within construction example:

For skilled workers: NOK 238,30

For unskilled workers without any experience of construction work: NOK 214,90

For unskilled workers with at least one year’s experience of construction work: NOK 223,80

The rates apply from 15 June 2023.

 

Overtime supplement

Pursuant to section 10-6 (11) of the Working Environment Act, an overtime supplement equal to 40% of the hourly rate shall be paid.

 

For work on construction sites, the employer shall cover necessary expenses for travelling and housing.

 

For detailed information, we strongly recommend to look at this link:

https://www.arbeidstilsynet.no/en/working-conditions/pay-and-minimum-rates-of-pay/minimum-wage/

 

Tutorial- Video

This quick video tutorial shows you how Your employees get access to their job site in Norway: