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Tax system
Direct Taxes
Direct taxes comprise tax deducted from earnings from employment or business activities which is income tax (inntektsskatt). There is also a wealth tax, (formuesskatt), which is a tax on things owned, such as a house, bank deposits, or other assets.
Indirect Tax
Indirect taxes are used as instruments to reduce our use of products that are hazardous to health or environment. Another indirect tax is the Value-added tax (VAT). This is a tax that we pay when we buy goods and services. The VAT for Norway is 25%.
Norway is not in the EU. Many shops operate a VAT refund shopping system for non-residents. This enables you to receive refunds of the VAT on purchased goods, usually at the airport as you leave Norway. UK authorities cannot refund Norwegian VAT.
For Businesses
Businesses within Norway must register with the Central Coordinating Register for Legal Entities. The local tax office determines the amount of advance tax that should be paid. Foreign business persons must contact the Central Office - Foreign Tax Affairs (Tel: 47 51 96 96 00).
Information is collected by tax return received in March/April in the year following the income year. The paperwork must be submitted by March 31st, or it can be completed online by May 31st. Foreign business people receive a tax return from the Foreign Tax Affairs in February.
Once the tax office has processed the tax return, a tax settlement notice will be sent. Check the tax settlement notice against the information you provided in your tax return to check the results. If you feel it is incorrect, you may appeal the assessment. The tax settlement notice arrives in October.
For Employers
Taxes are withheld on the basis of their tax deduction cards. Tax withholdings must be paid to the municipal treasurer or, if you are a foreign employer, to the Foreign Tax Affairs. If you start work without a tax card, your employer is obliged to deduce 50 % tax.
Contributions must also be made to National Insurance contributions for employees insured in Norway. The employer's National Insurance contributions benefit the National Insurance Scheme. The tax deduction card will be sent to you, not to the employee. Part two of the tax deduction card should be given to the employee.
At the end of the year a certificate of pay and tax deducted must be filled out for each employee. The certificate shows the amount of salary and other remuneration paid to the employee and the amount of tax deducted.
For Employees
How much tax paid depends on how much you have earned, as well as any tax deductions allowed. There are two categories of taxpayers:
- Class 1 for single persons and most married couples where both have incomes
- Class 2 for single parents and married couples where only one spouse has an income
These categories determine some of the allowances you may be entitled to.
It is necessary to obtain a tax deduction card. This shows how much tax your employer should deduct from your pay. If you have a Norwegian employer, you will be issued with a tax deduction card from the local tax office. Foreign employers will issue the card from the office of the Foreign Tax Affairs.
Employers deduct a certain amount from your pay on each pay day that will be paid to the tax authorities via the Municipal Treasurer. National Insurance contributions are normally included in the amount deducted from your pay. This payment ensures your inclusion in the National Insurance scheme.
If you have received a pre-completed tax return and the amounts entered are correct, you are not required to submit your tax return. Otherwise, the deadline for submission is April 30th.
Tax returns from foreign business are always submitted. The deadline for submission is March 31st in the year following the income year.
Once the tax return is processed, you will receive a tax settlement notice. It contains information about the income on which tax has been calculated, how much tax your employer has deducted and whether you have paid too much or too little tax. If you think that the settlement is incorrect, you may appeal the assessment. For Norwegian employers, the tax settlement should arrive in June. If your employer is foreign, the tax settlement notice in October.
If you will be residing in Norway less than two years, you may also be eligible for a standard tax deduction of 10 % with a maximum level of NOK 40,000 (as of 2010). Ask about this at your local tax office when you apply for your tax deduction card.
For companies and persons that are not residents in Norway, but engaged in taxable activities, there is a special office that deals with:
Central Office - Foreign Tax Affairs (Sentralskattekontoret for utenlandssaker)
Prinsens vei 1
4300 Sandnes
Telephone: +47 51 67 80 88
16/08/2010