Norway has one of the strongest economies per capita in the world. This is thanks to the oil and gas industry, as well as fishing and shipping. There is also a burgeoning IT sector similar to Sweden, creating higher demand for tech workers.
Because unemployment is low, there are opportunities for international contractors with the right skill set to find clients in Norway. But before you commit to working in Norway, you will want to know how foreign contractors can handle taxes, social security, and immigration, as well as evaluate payment methods. This guide offers an overview of all these areas and how to stay in compliance while contracting in Norway.
Do I need a visa to be a contractor in Norway?
As a member of the EU, Norway does not require a work visa for EU citizens. However, they must register for stays longer than three months. Non-EU citizens will need a work permit from the Norwegian Immigration Authority. This application must be filed at a Norwegian embassy prior to entering the country.
A work permit will require a sponsor that is a Norwegian entity. An entry permit may be granted if there is a firm contract offer, allowing the expat to wait in Norway for the visa approval, which can take 4-6 weeks.
How do I get paid as a contractor in Norway?
How you get paid will depend on how you organize your contracting business, your level of experience, and possible tax implications.
Work as a freelancer
If you want to work as a freelancer, you would just have to register as a sole proprietor. You would contract directly with one or more Norwegian clients, and arrange for performance and payment milestones and methods. This is a method best used by EU citizens, as most clients may be unwilling to sponsor a work permit for contractors unless it is a long term engagement.
Set up your own limited company
You can also set up your own Norwegian limited company if you have a long-term commitment to contracting in Norway. This can help increase the total amount of income you retain due to the ability to take various deductions as a business. This is best for experienced contractors with some knowledge of setting up and working through their own limited company in a foreign country.
Use your UK-based limited company
For shorter contracts, you might be able to use a UK limited company to serve Norwegian clients. However, you could be subject to the permanent establishment and corporate taxation. Work permits could become an issue depending on the outcome of Brexit trade negotiations. In any case, Norway prefers that you have a Norwegian limited company to work through.
Work with an umbrella company in Norway
New contractors in Norway may be well served to use an umbrella company to take over all the administrative tasks of contracting with clients, including facilitating payments and withholding taxes. An umbrella company can also sponsor work permits for non-EU citizens and give seafarers access to special tax deductions.
How do taxes work for contractors in Norway?
The Norwegian tax code is complex with a variety of rates and deductions depending on how a contractor organizes their business, residency, and the type of industry.
What are the tax rates?
Taxes are fairly high in Norway, with a progressive national income tax of up to 16.2%, plus a flat municipal tax of 22%-25% on income. Non-residents can elect the Expat Tax Scheme with an overall 25% flat tax rate on income, which includes social security contributions.
Expats contracting in Norway for less than two years do get an additional 10% deduction from earned income over the standard 45% deduction.
How do I file taxes in Norway?
Step 1: Receive a Tax Return Form
In March/April, you will receive a tax return from the Norwegian Tax Authority if you work in Norway or on the Norwegian continental shelf. This gives an overview of your income, deductions, assets, and debts for the last income year.
If you have not received a tax return before the end of April, complete and submit Form RF1281 – “Tax return for individuals who have not received a pre-completed tax return”.
Step 2: Verify the Pre-Filled Information
Check that the information is correct and complete. If so, you do not need to submit a tax return. If you need to make any changes, the deadline for making them and submitting the tax return is 30 April.
Remember to:
- Check the information against monthly and annual documentation of your salary payments and tax deductions provided by your employer;
- Examine whether you are entitled to a deduction for various expenses from your taxable income;
- Ensure that your details such as your address are correct;
- Fill in your bank account details for any tax refunds; and
- Complete Item 1.5.5 if you are a foreign employee and have worked for a foreign company in Norway, or have worked for a Norwegian or foreign company on the Norwegian continental shelf.
Step 3: Submit Your Tax Return
You can submit your tax return by post or online.
What is the tax residency rule in Norway?
Norway uses the 183-day rule for tax residency, meaning that for stays of less than six months in any 12 months, only Norwegian-sourced income is taxed. After six months, worldwide income is taxed, and a double taxation treaty will be needed to offset the amount.
What are the social security contributions in Norway?
EU citizens may be able to avoid social security contributions in Norway through bilateral agreements with their home country if they are still being covered there. Non-EU expats will need to pay the normal 11.4% social contribution on earnings for the self-employed.
Are there different regulations for contractors working in the oil and gas industry?
Because of the high demand for workers in the oil and gas industry, there are some incentives for contractors who are seafarers. There is a special seafarer’s tax deduction of 30% up to NOK 80,000 per year, as you will be taxed in Norway even if spending all of your time at sea.
To claim the deduction, you must:
- Spend at least 130 days in a calendar year onboard a ship
- The ship must be registered to work in Norway
- Allowed work activities are construction and maintenance, but not anchor handling or supply boat runs
The deduction is typically for employees, not self-employed. However, if you use the umbrella company solution it may be available to you. It is applicable in the shipping industry as well.
How do I stay compliant while contracting in Norway?
The main compliance concerns for international contractors in Norway are
- Making correct tax payments
- Meeting immigration requirements, and
- Paying social contributions.
Each of these can apply to expat contractors in Norway, and depend on a number of criteria that may be difficult to learn if you are new to the country.
The easiest way to remain compliant given all the variables is to use an umbrella company as your local partner in Norway. They are already well-versed in the rules for self-employed contractors and can help you get started with the contract, and then facilitate all of the compliance-related steps on your behalf.
Aside from compliance, here are the other benefits of using an umbrella company:
- Handles all client payments, tax withholding, and any social contributions
- Issues you a payslip each month, to a Norwegian or foreign account
- Sponsors work permits for non-EU citizens
- Helps set up the contract with the client
- Moderates any disputes with your client
- Advises on access to totalization and double taxation treaties
Contractor Taxation has experienced umbrella companies in Norway who are ready to help you right away, even before you leave home. Please contact us for more information on how an umbrella company can be your essential partner in international contracting.
