January 15, 2021
On January 1, 2019 a new Paye As You Earn tax on wages and salaries for foreign workers in Norway was introduced. The tax is a flat rate of 25% ("kildeskatt på lønn").
According to information from the Norwegian tax office, the 25% tax applies mainly to foreign temporary workers who are not Norwegian tax residents. This means that the scheme should be applicable automatically for foreign employeeys working in Norway for the first year of their work.
The 25% tax scheme is voluntary. If an employee receives a 25% card, they can apply for a card to be changed to the traditional tax table at any time during the tax year. It should be emphasized that if an employee waives the withholding tax and applies for a regular tax card, he cannot return to PAYE scheme.
The advantages of withholding tax include, among others:
No need to submit an annual tax return
Fixed percentage of tax regardless of income growth
The disadvantages of withholding tax include, among others:
No deductions and discounts
Taxation of all remuneration components (including those additionally paid by the employer, i.e. accommodation, meals, transport)
The tax is fixed for 12 months (there is no possibility to submit only half of the tax in December)
Taxation of the holiday pay at the time of its payout is not taxable on an annual basis in the year in which it is earned.
Each employee should individually consider the profitability of the 25% tax card. However, it should be emphasized that the decision in this matter is made voluntarily only by the employee.
More on this scheme at the Norwegian Tax Offcie - Skatteetaten.
According to information from the Norwegian tax office, the 25% tax applies mainly to foreign temporary workers who are not Norwegian tax residents. This means that the scheme should be applicable automatically for foreign employeeys working in Norway for the first year of their work.
The 25% tax scheme is voluntary. If an employee receives a 25% card, they can apply for a card to be changed to the traditional tax table at any time during the tax year. It should be emphasized that if an employee waives the withholding tax and applies for a regular tax card, he cannot return to PAYE scheme.
The advantages of withholding tax include, among others:
No need to submit an annual tax return
Fixed percentage of tax regardless of income growth
The disadvantages of withholding tax include, among others:
No deductions and discounts
Taxation of all remuneration components (including those additionally paid by the employer, i.e. accommodation, meals, transport)
The tax is fixed for 12 months (there is no possibility to submit only half of the tax in December)
Taxation of the holiday pay at the time of its payout is not taxable on an annual basis in the year in which it is earned.
Each employee should individually consider the profitability of the 25% tax card. However, it should be emphasized that the decision in this matter is made voluntarily only by the employee.
More on this scheme at the Norwegian Tax Offcie - Skatteetaten.
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