Norwegian Income Tax

An individual is deemed to be resident, and therefore taxable on his/her worldwide income, in Norway if he/she stays in Norway and does not have the intention to stay only temporarily. A stay of at least 6 months is sufficient for the taxpayer to be considered a resident from the date of arrival even if the stay is only temporary. A taxpayer is regarded as having terminated his/her residence only if he/she has established a permanent home in another state and is present in Norway for less than 61 days during the tax year. Also, neither the taxpayer nor his/her spouse or dependent children may have a permanent home available in Norway. Individuals who stay for less than six months are considered non-residents and are taxed on Norwegian-source income only. A taxpayer who has been resident in Norway for 10 years or more before emigration will be regarded as being resident for 3 years starting on the date on which the above conditions are met.

There are two categories of taxes: national and municipal income tax. There is a further national income tax, called “top tax”, which is levied on gross income from other income sources. In order to calculate the net income for the national and municipal tax, several deductions can be made: for example, the minimum allowance is a standard deduction to cover expenses connected with the generation of income. It is calculated on the basis of salaries and other types of income. For employees it is 36% of the base subject to a minimum of NOK 31’800 and a maximum of NOK 67’000 (for 2008). The minimum allowance does not cover additional expenses incurred while living away from home, travel expenses, pension premiums, interest, child care expenses and alimony, and such expenses can be claimed in addition to the minimum allowance, and in all events, the taxpayer may choose to claim a deduction for actual expenses if these are higher than the minimum allowance. Jointly assessed married couples and single persons with dependents can benefit from an allowance of NOK 77’700. For other persons the allowance is NOK 38’850.

Expatriates, who stay for less than 2 years in Norway, can claim a special 10% deduction from earned income for the national and municipal tax (not for the top tax which is levied on gross income), the maximum deduction being NOK 40’000. This deduction replaces all other deductions except the minimum allowance and personal allowances.

The rate for national and municipal tax is 28% with a lower rate of 24.5% applying for the counties Finnmark and Nord-Troms. The top tax rate varies from 0% to 12%.