Social security contributions
The Social Security Law deals with the various benefits from and payments to the National Insurance Scheme.
The scheme is financed by the individual's and employer's social security contributions in addition to grants from the state and the municipalities. The individual's contribution is charged at a higher rate for self-employed persons (11.1%) than for employees (7.9%). The employer's contribution (14.1%) must be paid with respect to salaries, etc. The rates are determined by the Parliament in the annual decrees on contributions to the National Insurance Scheme.
Social security contributions are levied on the ‘personal income’ base.
Individuals, including non-residents receiving remuneration for services performed in Norway, are liable to social security and pension contributions, which are paid together with income taxes. Foreigners may be wholly or partly exempted from social security contributions, according to social security agreements, or upon application, provided they are satisfactorily covered in their home country. The European Economic Area (EEA) agreement may also exempt member-country citizens from Norwegian social security.
The following conditions apply to both employed and self-employed individuals:
- Income not exceeding NOK 64,650 is exempt; the contribution may not constitute more than 25% of the income for amounts in excess of NOK 64,650.
- Income derived by individuals under 17 or over 69 years of age is subject to the contribution, but at a low rate of 5.1%.
The individual's contribution is not deductible for their tax purposes.
The employer must also make social security contributions. The contribution is based on total Norwegian gross salary (and taxable benefit) costs. The employer’s contribution is levied at a rate of 14.1% but could be lower when the employer is established in certain sparsely populated areas. The employer share increases 5% (meaning a total rate of 19.1%) for income exceeding NOK 750,000.
Social security agreements may exempt the employer from this tax (see the Foreign tax relief and tax treaties section for a list of countries with which social security agreements exist). If a similar social security contribution is paid to another state based on the same salaries, etc., then a credit may be applied for against the employer's Norwegian social security costs.
The employer's contribution is deductible for tax purposes of the employer insofar as the wages to which it relates are deductible.
Value-added tax (VAT)
VAT is a tax on sales. It is due to be paid when sales of goods and taxable services are taking place at all stages in the chain of distribution within Norway. VAT is also levied on imports.
The expenses (actual costs) are included in the following VAT rates:
- Principal VAT rate: 25%.
- Train: 12%.
- Airplane: 12%.
- Taxi: 12%.
- Rental car: 25%.
- Hotel, boarding house and rent: 12%.
- Buying food, (e.g. in a grocery, take away): 15%.
- Buying food in a restaurant: 25%.
Individuals pay both municipal wealth tax and state wealth tax.
The municipal wealth tax rate is 0.7% and is calculated based on assets exceeding a net capital tax basis of NOK 1.7 million for single/not married taxpayers and NOK 3.4 million for married couples.
The state wealth tax rate is 0.3% and is calculated based on assets exceeding a net capital tax basis of NOK 1.7 million for single/not married taxpayers and NOK 3.4 million for married couples. For 2022, a new step for the state rate is introduced. For net wealth in excess of NOK 20 million (NOK 40 million for married couples), the rate is 0.4%.
Thus, the maximum wealth tax rate is 1.1%.
Inheritance, estate, and gift taxes
Inheritance and gift tax was removed as of 1 January 2014.
Tax on property is an optional tax and decided by each municipality. If tax on property is levied, for personal homes and vacation homes, the minimum is 1‰ and maximum is capped at 4‰. A basic deduction may apply.