All types of income from employment, whether in cash or in kind, are normally taxable. Remuneration in kind includes items such as free housing, free car, and free travel. The taxable value of a company car and most other allowances are subject to withholding tax (WHT) along with the cash salary. The taxable values of these benefits are fixed annually by the tax authorities.
If the employee receives cash remuneration to cover housing costs, the gross income will be taxable. Married assignees with family abroad may claim a tax deduction for housing costs in Norway. In these cases only, the net profit will be taxable if the payment is split between deductible costs and profit. Personnel staying in hotels, guest houses, or barracks are subject to tax only on net profit on cash housing remuneration.
Pensions with source in Norway
A tax of 15% is levied on all pensions with source in Norway. Exemptions may apply under tax treaties and for residents within the European Economic Area (provided certain conditions are met).
A benefit derived upon the exercise or sale of an option to acquire or sell shares or primary capital certificates related to employment is subject to tax on employment income. The benefit is calculated at the time of exercise.
For call options, such benefit is calculated as the difference between the market value of the shares upon exercise and the exercise price (less a possible premium paid).
For put options, the benefit is calculated as the difference between the exercise price and the market value of the shares (less a possible premium paid).
If the option itself is sold, a benefit is calculated as the difference between the sales price of the option and the acquisition cost (premium paid). The taxable benefit of the option is spread over the years during which it has been accumulated.
Social security contributions and income tax are computed as if the benefit of the option had been derived during the period the taxpayer held the option with the same amount for each year.
Whether capital gains are taxable depends on the type of asset and the period of ownership. Losses will be tax deductible, provided that gain from the sale is taxable. Net positive capital income is subject to 22% income tax.
Gains on shares and dividends
Gains on shares and dividends are adjusted by 1.72 before being taxed at the rate of 22% income tax. The effective tax rate on gains on shares and dividends is therefore 37.84%.
Exit tax rules apply to total latent/contingent gains on shares and options exceeding NOK 500,000. The calculation of the taxable benefit is based on the value of the shares/options the last day before the day the individual is regarded as non-resident according to domestic rules or the individual is regarded as tax resident in another country according to tax treaty. If the shares/options are sold/exercised later than five years after the time the employee is regarded as non-resident, the tax liability lapses.
The Norwegian government has decided to review the exit tax regime and introduce stricter rules to ensure that unrealised gains accrued in Norway are actually taxed in Norway. As a starting point, the five-year exemption is therefore no longer applicable as of 29 November 2022. The taxability will also cover the transfer of shares to close family members living abroad.
Income on bank deposits, bonds, securities, or other outstanding amounts is taxable. The amounts are usually taxable in the income year in which they accrue.