Norwegian tax legislation distinguishes between full tax liability for resident taxpayers and limited tax liability for non-resident taxpayers. Residents are liable to income tax on their worldwide income, whereas non-resident taxpayers are only subject to income tax on specific types of income from Norwegian sources.
To simplify reporting and compliance for temporary employment in Norway, a PAYE system is introduced and in force from 1 January 2019. The PAYE scheme is applicable for limited tax liable non-resident workers, except workers offshore and seamen on ships, who have a salary below bracket tax level 3 (for 2022, that would be 643,800 and for the 2023 income year, the maximum amount is 644,700 Norwegian kroner [NOK]). The rate is a flat 25% rate (includes social security contributions). Where PAYE applies, deductions are not applicable.
If PAYE applies, the workers are not in need of an individual tax return. The tax is final at payment and is, therefore, not subject to change.
Where an individual is tax liable to Norway only a part of the income year, the income is annualised. The same applies for certain deductions (i.e. personal deduction and minimum deduction, see the Deductions section).
The Norwegian income tax system for individuals is based on a dual tax base system: general income and personal income.
General income tax
General income is taxed at a flat rate of 22%. The general income tax base comprises all categories of taxable income (i.e. income from employment, business, and capital). Tax allowances, expenses, and certain losses are deductible when computing general income. The taxes on general income are the county tax, the municipal tax (Norway is divided into 11 counties and subdivided into 356 municipalities), and the state tax.
Bracket tax on personal income
Personal income between NOK 198,350 and NOK 279,149 is subject to a bracket tax of 1.7%. For personal income between NOK 279,150 and NOK 642,949, the bracket tax rate is 4.0%. For personal income between NOK 642,950 and NOK 926,799, the bracket tax rate is 13.5%. For personal income between NOK 926,800 and NOK 1,499,999, the bracket tax rate is 16.5%. For income exceeding NOK 1,500,000, the bracket tax rate is 17.5%. The personal income tax base comprises income mainly from employment, including benefits in kind, and pensions, as well as income from a self-proprietorship and certain remuneration from partnerships.