Welcome to i-paye’s working in Norway Complete Guide

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Welcome to I-PAYE’s working in Norway Complete Guide

Starting Off

Q & A

What are my trading options and which is best for me?

When will I have to pay tax in Norway from?

How can I reduce taxation in Norway?

  • Commuter Status

  • Tax Codes

  • Pension Contributions

Working and Residence

What are the tax rates in Norway in Comparison to the United Kingdom?

What forms do I have to complete?

What are my trading options and which is best for me?

  • Limited Company

I-PAYE does not operate any services where a UK Ltd Company can be used as a payment model for contractors working overseas for two main reasons. Firstly, taxes must be paid at source which is in contradiction to a UK Limited company which is based on UK Taxes. Secondly a Single Person Ltd Company could not obtain an E101. This means that we would not be able to act on your behalf for your time in that country. In addition to this, the Norwegian authorities frown upon this sort of system as they have no proof of tax being paid, etc.

Because we understand every contracting situation is unique, we always advise towards a personalised consultation, which you can get absolutely for free by calling us on 0151 449 3500 and talking to Fiona or Sue.

However, should you wish to operate through your own limited company, you will need to adhere to local registration, tax, and social security requirements. This also means you will have to legalise and report your activity as an employer in Norway.

  • Self Employed

Running self-employed is not a compliant option. As your employer we are liable for the employer’s NI so this has to be deducted from the Ltd Co rate we receive from the agent and paid on your behalf.

  • Employment Management Company

For UK nationals we run a deemed payroll model – this means that we declare a set salary to the UK for NI purposes, greatly reducing the amount of NI payable. We find this is much more beneficial and produces the best net pay.

When will I have to pay tax in Norway from?

From day one in Norway you are liable for Norwegian tax and social. For UK nationals we apply for an A1 which will render them exempt from the social security and allows us to pay the NI to the UK at a lower rate. Many people think they only have to pay tax in Norway after they have been there for 183 days – this is not the case. What they are referring to is the ‘183 day ruling’ but in most cases the contractor does not qualify for the ruling. There are 3 tests and you must pass all 3:

  1. You are not outside of the UK for more than 183 days

  2. The end client (whose site you are working on) must be from the UK

  3. Your services must be independent

If you fail on any one of these, your tax is due in Norway.

If you remain tax resident in the UK, you will be obliged to complete a self-assessment at year end. On the foreign income page, you will declare what income you earned abroad. From this a UK liability will arise against which you offset the tax you paid to Norway – this normally has the effect of reducing the tax to zero unless you earn over the £150k threshold in which case there may be a UK liability. The highest rate of tax in Norway is 40% while in the UK it is 45% so in some cases, when the contractor earns over the threshold they will owe tax to the UK.

  • Local Rules

With regards to tax, you have to pay this at source. Hence you would have to pay this in Norway.

The tax rates in Norway consist of Municipal tax at 28% and a Sur tax which is either 9% or 12%.

  • Double Taxation Relief

Norway does hold a reciprocal agreement with the UK and so as you are paying your tax in Norway you will not be liable to dual taxation.

  • Social Security

If you hold a UK NI number and want to remain in the UK social security system, you will have to apply for an E101 certificate. Due to EU legislations, you cannot receive the benefits of the E101 certificate until it is issued and it has been received.

How can I-Paye help? We will apply for an E101 certificate from the HM Revenues and Customs as soon as we receive word that you will be paid through I-PAYE.

Once we receive this certificate, this will keep you in the UK NI system and exempt from Norwegian Social Security. When working in Norway if we cannot obtain an E101 then you will be liable to Norwegian Social Security. Due to EU legislations, we cannot apply the benefits of the E101 certificate until it is issued and it has been received by I-PAYE.

Employers NI (Primary) and Employees NI (Secondary) are both payable by the contractor. If you worked directly for a company the Employers NI is calculated outside of your wages, in this instance (a payroll company) it is included in your rate and is calculated within the wages.

As per the increase by the HMRC in April 2011 the rates are as follows; Employers NI is set at 13.8% on all earnings. Employees NI is 12% on all earnings below the upper earnings threshold. Above this it is 2%.

Once your E101 certificate is received this is then sent to Norway to Utland where exemption from the local Norwegian Social Security system will be issued.

How can I reduce taxation in Norway?

If you qualify as a commuter then any expenses you incur that are associated with commuting can be offset against your per diem/allowances. To qualify as a single commuter you must return to your home country (EU countries only) at least once every 3 weeks. As a married commuter you can travel less, once every 3 months will suffice. The following are what Norway considers to be valid commuter expenses; anything outside of this is not allowable:

  1. Norway accommodation

  2. Norway utility bills (your name must be on the bills and a credit card statement attached)

  3. Travel to and from airports on either side (dates must coincide with a documented flight)

  4. Flights (must have booking receipts and bank statement to show payment)

Your agent will determine your allowance if any. If your rate is contracted as an ‘all inclusive rate’ then we as a payroll company are permitted to break out and contract for a 16.67% allowance – this means that you can offset expenses up to 16.67% of your day rate – as per days worked. If you spend over and above this amount, whilst you will not receive the benefit in the payroll, we will apply the extra expenses to your tax return as deductions which would result in a small rebate.

At year end, when we are completing your tax return, if you can prove that you are married and that your spouse earns less than NOK 30 000 (circa £3500) then we can apply to have your tax code changed to include the married man allowance which increases the amount of money you can have tax free – again, this will result in a small rebate.

  • Commuter Status

In Norway, if you have to stay somewhere other than your real home due to work, you are classed as a commuter and can claim expenses. Norway allows EU/EEA nationals who work in Norway the same rights as those who commute within Norway. Employees who commute from countries outside the EU/EEA area are not entitled to claim commuting expenses.

You may be classed as either a family commuter or a single commuter:

Family Commuter:

You are classed as a family commuter if you have a home in the UK with a spouse/children of which you return to more than four times a year for overnight visits. Marriage certificates/ Birth certificates and documents of the joint residential home may need to be provided upon request from the Norwegian authorities. As a family commuter, you must make four return visits to the UK a year.

Single commuter:

When you are single you can only claim commuting expenses if you meet the following requirements

  • You do not have independent housing in Norway (Housing is classed as independent when you have it at your disposal for at least 12 months and have access to it every day of the week)

  • You must not let out your home in the UK.

  • You must travel home frequently, guidelines suggest once every three/four weeks.

  • Tax Codes

If you are not classed as either a family or single commuter then you are classed as resident in Norway for tax purposes. When you are regarded as resident in Norway you are not entitled to claim commuting expenses.

  • Pension Contributions

If you opt for the employer’s pension scheme then we make the deductions before tax, reducing your taxable income and therefore tax.

Working and Residence

In order to work in Norway you will have to complete an RF1199 and apply for your Norwegian National identity number. This is known as your ‘D’/ Fodselnummer number. This is needed for paying over your taxes and a clear copy of your passport is needed for this application.

I-Paye can do this for you.

We will apply for your RF1199 as soon as we receive your application form, around three weeks later you will receive a tax card to you home address, please forward a copy of this to us for our records.

If you are staying in Norway for a period longer than three months, you will need to register with a local police station with a UDI form and your passport in Norway. It has to be done in person so we unfortunately cannot do this for you.

There have been some changes regarding work and residence in Norway for citizens from EEA/EU. Earlier, until 31.12.2009, you didn’t need to apply for a work permit or residence permit when you were from an EEA/EU country, worked in Norway and commuted every week. The rules have changed. The Norwegian Directorate of Immigration (UDI) said that all workers should register and get the registration certificate. When you have registered, you will receive a registration certificate. This certificate is issued free of charge and is valid indefinitely (does not need to be renewed).The following link has more information and registration


You will need to fill in the registration online. You now have to register (as a EU resident) online  and then present yourself at the office. You must take with you a copy of your contract , your actual passport and your employers registration details in Norway and your online registration number.

As you are not a direct employee of a Norwegian Company, you have to register as a Service Provider, not an employee. After registering online, just take along passport, UK employment contract and letter from your Norwegian Client stating where you are working.

What are the tax rates in Norway in Comparison to the United Kingdom?

The top rate of tax in Norway is 40% whilst it is 45% in the UK.

Due to the similar rates, unless you earn over the threshold it is rare that a large UK liability will arise. If you do earn over the threshold then the excess will be subjected to further UK tax.

However, if your liability is lower in the UK than in Norway, you cannot get a refund on the Norwegian tax already paid.

What forms do I have to complete?

  1. The application form – personal details and info about the client which allows us to apply for the A1 and RF1199

  2. P46 – for us to register you as an I-PAYE employee with HMRC

  3. SA1 – for us to register you for self-assessment

  4. Declaration of trust – to allow us to run the deemed payroll model

  5. POA – to allow us to query tax or answer tax questions on your behalf

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