Norwegian personal tax returns 2014

Every person who works in Norway, even commuter workers, are required to file a personal tax return in Norway. This includes employees and self-employed workers.

The 2014 individual Tax Assessments are sent out by the tax office during February/March 2015 and the deadline for filing personal tax returns online is 31st May 2015.

Final assessments are issued in October. There is then a 6 week window for appeals.

Many foreign workers in Norway do not know if they have paid the correct taxes, are entitled to tax credits or are paying the correct social costs.

It is common that employers submit incorrect information especially if they are non-Norwegian companies with little experience of Norwegian payroll taxes.

They commonly submit incorrect statistics of days worked in Norway and as such tax and tax credits are incorrectly calculated.

For offshore workers, employers almost never claim the seafarers tax allowance for their employees. Seafarers are entitled to receive back up to 30% of paid income tax assuming they meet the seafarer allowance criteria.

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Norwegian personal tax returns for expat workers in Norway

Every employee that works for a company operating in Norway or within Norwegian waters must pay Norwegian income tax on their earnings received for work carried out within Norwegian territories.

The employer will report income, tax deducted, benefits received and days worked that are subject to Norwegian taxes. Where Norwegian Social Insurance is applicable, this will be deducted and reported a the same time.

However, the reporting of these facts does not guarantee that the correct taxes have been paid over by the employer or the correct tax credits available have been applied. This is the responsibility of the employee to consider and claim for.

Every foreign worker must considers their Norwegian tax code and whether they are entitled to claim tax credits such as the 10% standard deduction, married persons allowance or seafarers allowance.

There are also various disclosures about personal circumstances to make as a foreign worker in Norway.

Norwegian personal tax return process and disclosures are all made through the Altinn online system which holds details of all registered employees, self-employed and contract workers. Every individual can sign up to the system is they hold a personal identification number called a D-number.

There are very few UK-based accountants outside the bigger firms that specialise in Norwegian tax, personal and/or corporate. Depending on the firm, fees can range from £250 - £2,500 for exactly the same service.

At Your Tax Office we have more than 7 years experience with Norwegian tax, working on behalf of UK resident individuals, agencies and companies. We work on a flat fee basis and our personal tax return service is at a cost of £250 per year. Click here to contact us for further details.

Proposals to change Norwegian Corporation Tax

Norway - Proposals for Corporation Tax reform

On December 2, a tax commission charged with examining the tax system in Norway submitted its report to the Minister of Finance that describes proposals for changes to the corporate tax system and for adjustments to the tax system, in general.

The tax commission’s report will be submitted for public consultation.

Background
The tax commission was appointed by the previous government (Stoltenberg II) in March 2013 and was directed to review the corporate tax system in light of recent trends in international taxation.

In November 2013, the current government (Solberg) broadened the commission’s mandate and directed the commission to assess Norway’s tax depreciation rules.

Recommendation for reduced corporate tax rate
The tax commission reviewed the Norwegian corporate tax system in light of recent trends in international taxation, and its recommendation is for a reduction in the statutory corporate income tax rate to 20% (from the current rate of 27%).

Noting that many countries have statutory corporate tax rates lower than 20% or have favorable tax regimes for certain types of income, the tax commission recommended a reduction in the statutory corporate tax rate to be combined with other measures to counter profit shifting.

Your Tax Office observation

The scope for adopting such measures could be limited by Norway's international obligations, primarily under the EEA Agreement. Moreover, Norway's right to taxation would, in some instances, be limited by the 90 tax treaties that Norway has concluded with other countries.
Corporate tax proposals

The key corporate tax proposals from the tax commission’s reports would:

• Reduce the statutory corporate income tax rate to 20% (from 27%)
• Narrow the tax deductions for interest costs further—i.e., to 45% of earnings before interest and tax (EBIT) and applicable to all interest costs (related-party and external interest costs)
• Increase the taxation of shareholder income (dividends and capital gains)
• Introduce a withholding tax on interest and royalty
• Repeal a withholding tax on dividends (except dividends distributed to low tax jurisdictions)
• Amend the depreciation rules
• Introduce a value added tax (VAT) for financial services
• Countering profit shifting

Generally, the tax commission’s view is that Norway needs to follow up any recommendations concerning the arm's length principle resulting from the base erosion and profit shifting (BEPS) project within the OECD.

The proposal for a reduced corporate income tax rate would decrease the profitability of profit shifting abroad. However, in the tax commission's view, it could be difficult to find good arm's length prices in certain areas—such as with respect to royalties, rental payments, and interest—so that special rules would need to be considered, such as:

• Introducing a withholding tax on interest
• Introducing a withholding tax on royalties (including rental payments for certain tangible assets)
• Treating Norwegian registered entities as always being tax residents of Norway
• To counteract tax planning through the use of hybrid arrangements, restricting the exemption method by excluding dividends when the distributing company has been granted a deduction in respect of the distribution
• Broadening the taxpayer disclosure requirements (including foreign ownerships)
• Requiring that tax returns be filed electronically

The tax commission’s position is that there is a need for taxation to address profit shifting, to prevent double non-taxation, and to determine Norway's right to such income.