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 2021, that would be 651,250 Norwegian kroner [NOK]) and is at a flat 25% rate (includes 8.2% 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 184,800 and NOK 260,100 is subject to a bracket tax of 1.7%. For personal income between NOK 260,100 and NOK 651,250, the bracket tax rate is 4.0%. For personal income between NOK 651,250 and NOK 1,021,550, the bracket tax rate is 13.2%. Personal income exceeding NOK 1,021,550 is subject to a bracket tax of 16.2%. The personal income tax base comprises income mainly from employment, including benefits in kind, and pensions.