However, those planning to come to Norway to set up a business need to know that opening a business is not the same as obtaining a permit to stay and work in the country. These applications are processed by the Foreigners Authority, which communicates with the Norwegian consulate in Warsaw. The application is more likely to be granted if the company has an accurate description of the business and a budget plan.
TYPES OF BUSINESS IN NORWAY
By being aware of your rights and obligations, it is easier to avoid complications and succeed with peace of mind. This section tells you everything you need to know as an entrepreneur running a business in Norway.
Opening a business in Norway is easy, as most of the paperwork is done online and the laws on setting up a business are relatively liberal.
[Infographics] [THE MOST POPULAR BUSINESS FORMS IN NORWAY ARE:
sole proprietorship (enkeltpersonforetak – ENK),
incorporated company (aksjeselskap – AS),
a foreign company registered in Norway (NUF)].
A SOLE PROPRIETORSHIP
- The owner (either a specific person or spouses) is liable with all his/her assets for the company’s obligations – there is no separation between the owner’s assets and the company’s assets.
- Establishing a company in Norway is relatively simple and can be done electronically, taking approximately 4-6 days.
- To set up a company electronically, it is necessary to have a permanent personal number, MinID codes and an account on Altinn.no. A permanent personal number can be obtained by uploading the relevant documents, including a copy of your passport certified by a Norwegian public benefit institution (rett kopi).
- The business owner is obliged to pay income tax on profits at 22 per cent and a social security levy of 11.4 per cent.
- In a given calendar year, the business owner must declare the expected amount of income, according to which the office calculates advances for income tax. These advance payments are payable in four instalments – 15 March, 15 June, 15 September and 15 December. This does not apply to the first year of operation of the company.
- It is possible to set up a sole proprietorship in Norway without having a personal number
It is worth knowing that it is possible to convert a sole proprietorship into an AS company.
If the company’s turnover exceeds NOK 50,000 in 12 months, it must be entered in the VAT register, submit VAT returns to the office and pay VAT.
Norwegian VAT is divided into three rates:
- basic – 25%,
- reduced – 15%,
- low – 12%.
More details on VAT rates can be found later in this article.
VAT is settled by means of a return (print RF-0002) in electronic form (www.altinn.no).
[Infographics] [SINGLE BUSINESSES ALWAYS HAVE TO EMPLOY A SMALL NUMBER OF EMPLOYEES, AND THE COSTS ASSOCIATED WITH THEM ARE DIVIDED INTO FIXED AND VARIABLE COSTS.
FIXED COSTS INCLUDE
the employee levy (Arbeidsgiveravgift), which depends on where the company is registered. The rate, depending on the zone, ranges from 14.1% of gross salary to 0% – in the north of Norway,
OTP pension insurance (Obligatorisk tjenestepensjon) – at least 2% of gross salary,
feriepenger – 10.2% of gross salary,
total fixed costs related to the employee’s employment can be as high as 26.3% of gross salary.
VARIABLE COSTS include:
sick pay – the employer pays for the first 16 days of sick leave,
accident insurance – depending on the type of work performed,
any training necessary to perform a specific job (e.g. health and safety)].
Among the documents necessary to establish an AS company are:
- opening agreement of the company
- opening balance sheet
- minutes of the meeting of the supervisory board, i.e. the company’s decision-making body
- application for establishment of the company
- proof of payment of NOK 30,000
- The assets of the owners are separate from the assets of the company – any liabilities are only collected up to the amount of share capital put in.
- A minimum deposit of share capital of NOK 30,000 is required.
- A considerable limitation compared to a sole proprietorship is the need to document every movement of money.
- Employees are entitled to sick pay (the first 16 days are paid by the employer, the next by NAV.
- The advantage of an AS in Norway is the possibility to be employed in your own company – this entails the possibility to exercise your employment rights and be entitled to all benefits (salary, annual leave, sick leave, maternity leave or work accident compensation)
Setting up an AS in Norway is quite complicated and involves some costs. The establishment time is on average 3-4 weeks. The company is required to appoint a board of directors (with the obligation to meet at least once a year).
In order to register a company, a stamp duty must be paid for entry in the Foretaksregisteret (Register of Companies – www.brreg.no) – this amounts to NOK 5570 for electronic applications and NOK 6797 if applying on paper – at least one of the shareholders should have a permanent personal number. Costs also include share capital, which in this case is a minimum of NOK 30,000.
Setting up an Aksjeselskap company in Norway is a good option for those who are able to predict the company’s profits, have employees and trade large sums of money. Companies are required to comply with reporting, bookkeeping and accounting requirements. The transparency of the legal and financial situation makes AS companies reliable counterparties and looked upon favourably in the financial sector.
Importantly, a company similar to an AS company, but not requiring a deposit of NOK 30,000, is ansvarligselskap. It is also characterised by lower registration costs, while at the same time being linked to the joint and several liability of each shareholder for any financial problems of the company.
To establish an NUF in Norway, you must register with Brønnøysundregistrene – apply for a Norwegian organisation number. The application should contain documents of the foreign entity, e.g. articles of association, articles of association, entry in the register (from Poland it will be KRS or CEIDG), address data, etc., as well as documents concerning the branch you wish to establish in Norway – name of the branch, scope of activities, personal data of persons who are to take decisions regarding legal obligations and, if necessary, data of the representative. The appointment of a representative in Norway is sometimes necessary if none of the managing persons will work in Norway. The branch must have a contact person or company notified to the authorities that deals with this type of service. This will make it easier to deal with tax and other company obligations.
When hiring employees, you must report them to the Central Foreign Tax Office (SFU – Sentralskattekontoret for utenlandssaker) and register them with the police.
NUF can become a Norwegian VAT payer if the turnover of the branch exceeds NOK 50,000 in 12 months.
COMPARISON BETWEEN SOLE PROPRIETORSHIP AND ACE COMPANY IN NORWAY
|A sole proprietorship||AS company|
|For whom?||– people who are just entering the market and do not yet know if and how much profit the company will make,
– people who do not handle large sums of money in their business,
– people who do not know whether they will have regular orders and do not have much money.
|– people who have fairly stable and regular orders, investment plans, etc,
– people who handle large sums of money in their business, incur a lot of liabilities and/or employ a lot of staff.
Such a company is a good solution for people who expect large investments, have extensive business contacts, have many subcontractors.
|Cost of registration||Free of charge – for service companies and those with fewer than 4 employees.||NOK 5,570 (electronically) or NOK 6,797 if you have to apply on paper.|
|Time of establishment||4-6 days (electronic) or 3-6 weeks (application sent on paper).||3-6 weeks.|
|Registration addresses||In Norway.||In Norway.|
|Company name||It should include the name of the owner.||Optional.|
|Share capital||Not required.||Min. 30 000 NOK.|
|Formalities||There are fewer requirements than in other types of business.||They require knowledge and experience. You need to know what documents where and when to submit and how to complete them.|
|Accounting||Accounting is less complex than other types of business, but nevertheless requires knowledge of accounting laws and accounting skills.||Accounting is complex and requires expertise.|
|Drawing money from a company account||The ability to withdraw funds from a company account for private use. This means that the owner can make transfers from the company account to the private account and withdraw cash.||Every expense related to the company must be recorded, every operation in the company account needs to be documented (e.g. with an invoice).|
|Advances on income tax||Payable in four instalments. Their amount is determined by the authority on the basis of the company income declared by the entrepreneur.||Payable in 2 equal instalments in the year following the tax year. The Authority calculates these advance payments on the basis of the income for previous years.|
|Can the owner employ himself in his business?||No.||Yes, due to this he can enjoy the same rights as ordinary employees.|
|Responsibility||It is borne by the company owner and is liable for the company’s obligations with all its assets.||It is borne by the company’s board of directors, liable up to the amount of the share capital.|
|Feriepenger||Not eligible.||It is granted if the shareholder is employed by the company.|
|Sickness benefit||It is only paid to the business owner from the 16th day of release.||If the owner is employed by the company, the benefit is payable from the 1st day of dismissal.|
|Unemployment benefit (Dagpenger)||Not eligible.||If the owner is employed by the company, he or she is entitled to unemployment benefits on the same basis as other employees.|
HOW TO START A COMPANY IN NORWAY?
Setting up a company via the administration portal altinn.no
- Once on the website, you need to log in via the logg Inn button.
- Then select the first option – MinID.
- In the next step, you need to enter your personal number in the first field and your login password in the next field. Then click on „neste”.
- In the next step, you have to enter the indicated pin-code from the sheet with 20 MinID codes and then click „neste” to go to the main panel on your account.
- Now go to the tab and open the section „Alle skjema”, where you can find the application form needed to set up a company in Norway.
- On the bottom right, you should find the application „Registrere nye og endre eksisterende foretak og enheter – Samordnet registermelding”.
- Then go to the middle of the form.
- In the first window you choose what you want to do, which is to register a new business (Registrere en ny enhet). We click on 'neste’.
- Then we select the form of organisation, i.e. a sole proprietorship. In the next point, we tick the second option if we do not want to be entered in the VAT register straight away. In the last section, select the first option if you do not wish to trade or the second option if you wish to trade in goods. An official fee of NOK 2250 will be charged for registration in the foretaksregisteret. Once you have selected the relevant options, click on 'neste’.
- Enter the company name in the Navn field. The name of the company owner should appear in the name of a sole proprietorship. In the forretningsadresse field, we enter the Norwegian registration address of the company. Once you are sure that you have entered the company address correctly, click 'neste’.
- In the 'aktivitiet / bransje’ field, we enter the company’s field of activity. We start with the area of activity that will be our main source of income. Please note that if we have trade in our area of activity, we need to enter ourselves in the register of trading companies – foretaksregisteret (see point 9). We click on 'neste’.
- In the next window, a space to enter the business owner’s personal number and name appears. After checking for correctness, we give „legg till” so that the company owner’s details appear in the blue box. If everything is correct, click „neste”.
- The next window (Ansatte) concerns the employees in the company. If we do not want to employ additional people in the company right away, we give the second option. Below this, we select the language in which we want to receive letters.
- The next field concerns the data of the daglig leder in the company. We confirm the data by clicking 'neste’.
- The next box concerns your accountant. We confirm the data by clicking „neste”.
- The next field „revisor” can be omitted, we click „neste”.
- The next proxy also. We click „neste”.
- The next window concerns the company details, we usually click here „neste”, unless we want to indicate, for example, an abbreviated company name or a different registered office address. At the very bottom, we enter the start date of the business, i.e. it is best to enter the date of filling in the application there.
- Next on the form are the VAT questions. The first is whether the business will be carrying out VAT-taxable activities. Medical services, education and the arts are not taxed. The next question is whether we want to immediately register for VAT before reaching a turnover of NOK 50 000 and whether we voluntarily want to be VAT payers. In both questions, we usually give 'nei’. Confirm by clicking 'neste’.
- In the next window, enter the business owner’s e-mail address and tick who will sign the application, i.e. the business owner.
- In the last window, the details of the activity you want to open appear. We check the correctness of the data and give the green button. At this point, it is a matter of checking that the data we have previously entered is correct.
- Once the application has been checked, a field appears where we can download a PDF of the prepared application or enter our email to which the document is to be sent. We then click on the button to send the document for signature to altinn.no.
- A message appears stating that the application has been sent. We give ’tilbake til altinn’.
- After a while, in the main window on altinn.no, the application for establishment appears, a document with a pencil, which you have to open and sign. All you can do now is wait for messages from the office confirming that the company has been registered. The company will be given an identification number, which is the equivalent of the Polish NIP. Congratulations!
WHEN DOES AN ENTERPRISE BECOME LIABLE FOR VAT
When a company in Norway becomes a VAT payer, its invoices are labelled differently – the abbreviation MVA is added after the company’s organisational number, and an appropriate VAT rate is added to each good or service.
VAT in Norway is settled by means of a VAT return (form RF-0002) in which the company reports all costs and revenues – the return is submitted electronically at www.altinn.no.
When importing goods and services, VAT payers are required to show and account for the supplies through the VAT return. Likewise, in the case of exports of services and goods – the obligation to charge and account for the tax lies with the company concerned.
- Company bank account (bedriftskonto) – When you set up your business in Norway, it is a good idea to open a company account for all business transactions. You will need to carry your company registration confirmation, which you will receive at the bank, and your passport.
- Registration in the relevant register:
- VAT (Merverdiavgiftsregisteret) – when the company exceeds a turnover of NOK 50,000, you must seek entry in this register,
- Commercial (Foretaksregisteret) – every AS company is obliged to register. Sole proprietorships (ENK) must do so if they are engaged in trade and if they have more than five employees,
- employers (NAV Aa-registeret) – when the company has even one employee.
- Sending the required documents about the company to the authorities in accordance with the applicable deadlines – the entrepreneur should know by when and which documents to submit to the authorities, e.g:
- VAT declaration – once entered in the VAT register, the company is obliged to submit a VAT declaration every two months,
- Annual settlement – by the end of May of the following year, the office must be informed of the company’s income for the previous year on the Skattemelding form, together with the relevant attachments.
The best way is to use the altinn.no portal. It is a good idea to set up an account there so that you can handle administrative matters without leaving home. You can read more about the portal here.
- Advance income tax – at the beginning of each calendar year (or after setting up your business), you must declare to the office the expected profit of your company by the end of the year. On this basis, the office will calculate advances for income tax, which are payable:
- by 15 March,
- by 15 June,
- by 15 September,
- by 15 December.
- Order in accounting documents – you should also remember to take good care of your accounting documentation. It is a good idea to collect all company account statements, revenue invoices, expense invoices, as well as receipts that the company receives for services and goods purchased for the business.
- Keep your details up to date – in the event of a change (e.g. address or company name), inform the institution i.e. tax office, bank and customers immediately.
- HMS trade cards – those operating in the cleaning or construction industry should apply for trade cards – renholdskort or byggekort, respectively. This can be done even before the company is entered in the VAT register. How do you do this? Find out more about how to obtain a byggekort and renholdskort card.
- Safety at work – especially when a company has employees it has a duty to ensure safe working conditions. In order to gain knowledge on this subject, the company owner or manager must undergo the relevant health and safety training. Find out more about health and safety training in Norway.
- Taking care of the customer – the company’s profits depend on the customers (how many there are and what value they buy for). Therefore, the forward-thinking entrepreneur sells the best quality services/goods, continuously develops them and advertises for new customers.
- Monitoring payments – this works both ways: the entrepreneur should pay his suppliers and at the same time receive payments from customers. In order to know all current receivables and payables, they should be reviewed at least once a week.
- Paying taxes – as Benjamin Franklin aptly put it „In this world only death and taxes are certain”. A particular burden on the entrepreneur is such taxes:
- VAT (MVA), which results from the VAT return,
- income tax (Forskuddsskatt) according to the advance payments calculated by the authorities and when it is apparent from the annual return that he has paid too little of these.
And if the entrepreneur has employees he pays according to the calculations on the A-melding:
- advance income tax for employees (Forskuddstrekk),
- employer tax (Arbeidsgiveravgift).
WHICH COMPANIES REQUIRE A PERMIT (EXAMPLES)?
Register of companies (Foretaksregisteret)
All companies are required to apply to the Register of Companies (Foretaksregisteret). In the case of sole proprietorships, only trading companies and those with more than five employees are required to register.
HMS (Health and Safety at Work) course
It is compulsory to complete a health and safety course – in Norway this is the HMS course – this applies to owners with employees, subcontractors and managers who are responsible for the safety of employees. Sole proprietorships without employees are exempt from this obligation. Find out more about HMS (occupational health and safety) courses.
Certain types of business, e.g. construction work or cleaning services, require special industry cards due to their specific nature.
- Byggekort is an ID badge that every employee of a construction company in Norway should have – the badge is valid for two years and is intended to be able to identify the details of the employee in question and the company for which they work. In practice, the badges are intended to improve work safety and increase control over construction companies. The only institution that has the right to issue a Byggekort badge is Idemia Norway AS, the Norwegian Labour Inspection Authority (www.byggekort.no). Find out more about the byggekort card..
- Renholdskort – Cleaning companies in Norway are obliged to apply for authorisation and provide their employees with Renholdskort – badges that confirm that the business is conducted legally and has the necessary permits. Like Byggekort, Renholdskort is issued by Idemia Norway AS (www.renholdskort.no). Find out more about the renholdskort card.
The badges must contain information on:
- company name,
- the organisation number (organisasjonsnummer),
- details of the owner of the badge (name, surname, date of birth, sex, signature),
- expiry date,
- details of the issuer (name, surname, address).
- Nokut – there are 168 professions regulated by law in Norway. This means that those setting up activities that require permits, e.g. medical industry, massage therapists, electricians, drivers, lawyers, accountants – need a certificate of qualification. A full list of professions is available here. Sometimes, simply having your diploma recognised by Nokut is sufficient, and sometimes you may need to complete additional schooling or pass the Norskprøve language examination (levels A1-A2, A2-B1 or B1-B2) and Bergenstest (advanced level).
- Transport companies in Norway require special financial security. Detailed information on this can be found here.
- Mattilsynet – companies dealing with meals, food, animals, cosmetics (e.g. hairdressers, beauticians) must obtain a permit from Mattilsynet.
COMPANY INCOME – ISSUING INVOICES
[Infographic] [AN INVOICE ISSUED IN NORWAY SHOULD INCLUDE:
the invoice number (the numbering regardless of the passage of time is continuous),
the organisational number assigned by Brønnnøysundregistrene – www.brreg.no; if the company is a VAT payer, MVA should be added at the end,
date of issue of the invoice,
date of payment of the invoice,
seller’s details (company name and registered office),
description of the goods or services,
price (VAT payers enter net price, VAT amount and gross amount),
bank account number (if the company trades in cash, it is obliged to keep a cash register and make appropriate reports),
additional information (e.g. customer number)].
If the company’s turnover does not exceed NOK 50,000 per year, the entrepreneur can invoice with 0% VAT. An incorrectly issued invoice can be corrected by issuing a kreditnot, or credit invoice.
An entrepreneur who does not use an accounting firm and issues invoices himself can use the free software FakturaSolid, which has an interface in Polish and the electronic invoice is available as soon as it is issued.
WHAT TO DO WHEN A CUSTOMER IS LATE WITH PAYING AN INVOICE?
[Infographics] [UNPAID INVOICE
you credit the fv and do not pay taxes on it, but at the same time you cannot apply for payment from the customer, as once credited, the customer is assumed to have no liability.
you do not credit the invoice
sending purring (optional)
sending incassovarsel (if no purring is sent, incassovarsel is sent 14 days after the invoice payment date)
incasso (debt collection) procedure. You can start this yourself, or have a debt collection company or solicitor start it
sending Betalingsoppfording (i.e. demand for payment)]
There is also the possibility of seeking the assistance of Forliksrådet, an institution that handles cases relating to debts for goods and services. The creditor should report his case to the municipality where the debtor has a business or lives.
Find out more about what to do when a customer is late paying an invoice.
[Infographic] [COSTS OF BUSINESS OPERATION:
Registration with the Enhetregisterert (Register of Business Entities) is free of charge and compulsory for everyone without exception.
Registration with the Foretaksregisterert (Commercial Register) is charged at a fee of kr 2,250 for on line registration or kr 2,832 for registration on paper application.
Industry cards – brigekort (for construction companies – 105.25 NOK net per unit) and renholdskort (for cleaning companies -147.02 NOK net per unit).
RVO fees – this fee only applies to construction companies, the minimum amount is NOK 250, depending on the number of employees the owner pays 0.03% of the gross amount from the earnings of his employees (this only applies to those working directly on the construction site).
HMS (Health and Safety at Work) training – this is mandatory when a company has employees – the cost of the online course is approximately NOK 1500 net].
A sole proprietorship in Norway must pay income tax (22% on the company’s profit) and social security contributions (11.4% on profit). In addition, hiring employees involves certain costs that cannot be avoided, such as an employee employment fee (Arbeidsgiveravgift), pension insurance OTP (Obligatorisk tjenestepensjon) or holiday pay (Feriepenger). Find out more about the costs of employing an employee in a company.
A company whose turnover exceeds NOK 50 000 per year must be entered in the VAT register. Norwegian VAT is divided into three rates: standard – 25%, reduced – 15% and low – 12%.
Establishing an AS company requires the creation of share capital of at least NOK 30,000 and the payment of stamp duty for registration in the Foretaksregisteret (Register of Companies – www.brreg.no) – this amounts to NOK 5570 for electronic applications and NOK 6797 if a paper application is submitted.
COMPANY INCOME TAX
[Infographics] [TAX THRESHOLDS CHANGE EVERY YEAR. IN 2020 THEY ARE SET AS FOLLOWS:
threshold one: up to NOK 254 500 (taxation of the excess is 1.9%)
threshold two: up to NOK 254 500 (taxation of the excess is 4.2 %)
threshold three: up to NOK 639 750 (taxation of the surplus is 13.2 %)
threshold four: up to NOK 999 550 (taxation of surplus is 16.2%)]
[Infographics] [TAX THRESHOLDS CHANGE EVERY YEAR. FOR 2019 THEY ARE SET AS FOLLOWS:
threshold one: up to NOK 174,500 (taxation of the excess is 1.9%)
threshold two: up to NOK 245 659 (taxation of the excess is 4.2 %)
threshold three: up to NOK 617 500 (taxation of the surplus is 13.2 per cent)
threshold four: up to NOK 964 800 (taxation of surplus is 16.2%)]
In Norway, the entrepreneur has the option to calculate the expected amount of profit himself/herself and state it in the tax return before the authority calculates it. The company pays advance income tax and the tax itself is paid from the actual income in the following year.
[Infographics] [INCOME TAX PROCEDURE IN A SINGLE-PERSON COMPANY (ENK):
declaration of anticipated profit on form RF-1102 (after the start of the business or at the beginning of the calendar year)
payment of advance income tax (payable on 15 March, 15 May, 15 September and 15 November)
receipt from the office of Skatteoppgjøret, i.e. a tax calculation for the previous year based on the submitted annual return
submission of the Skattemelding tax return (by 31 May of the following year)
a surcharge on income tax (if the Entrepreneur has paid too little in advance payments in the previous year) or a refund from the office (if the Entrepreneur has paid too much than he had actual income in the previous tax year)]
HOW TO OVERCOME A FINANCIAL CRISIS IN A COMPANY?
If a company has employees, there is the possibility of permittering – the employer is released from the obligation to pay wages, which are paid by NAV. Such an exemption can last for a maximum of 49 weeks – after 30 weeks, the employer pays for five consecutive days and NAV again for the next 19 weeks.
[Infographics] [TO USE PERMITTERING THE COMPANY OWNER MUST HAVE A REASONABLE REASON FOR THE FINANCIAL PROBLEMS, AND THE EMPLOYEE SHOULD MEET THE FOLLOWING CONDITIONS:
a minimum gross income (a minimum of 1.5G for the previous calendar year or a minimum of 3G for the last three calendar years – the G rate is a base amount set each year),
exemption from a minimum of 50% of normal working hours,
being on the unemployment register (NAV),
a letter of referral for permittering (issued by the employer)].
Obligations to authorities
In Norway, it is possible to arrange for obligations to authorities to be paid in instalments. This is extremely helpful if your business is experiencing temporary financial difficulties. In order to pay your debts in instalments, you will need to submit appropriate letters, which can be prepared by the relevant companies dealing with such matters. It is also possible to write off part of the debt or interest – there are grounds for requesting remission when the arrears are substantial and exceed the financial capacity of the business.
Advance payment of income tax
Another solution is to change the amount of advance income tax. It is possible to declare a smaller amount of anticipated income for a given year on the RF-1102 form. The office will then determine a smaller advance payment.
Note: You cannot change the advance payment after the due date.
Attracting new customers who will guarantee the company’s liquidity can contribute to solving the financial problems of the business. Adequate advertising can help to conquer the market – it is worth investing in a specialist to optimally select a marketing strategy that is suitable for your type of business.
More ways to attract new customers are described in the article: How to find jobs/customers in Norway in a few days?
Loan / credit
The ultimate form of solving financial problems is to take advantage of the opportunities offered by the financial sector – a loan or credit can plug holes in the budget, but it is important to analyse the potential consequences of such a decision – is it just a temporary problem? Will the company be able to pay the loan instalments? It is important to remember that liabilities will have to be repaid at some point.
EMPLOYEE IN THE COMPANY
When hiring, the employer should take care of:
- entry in the Aa-registeret – this can be done on the Samordnet registermelding del 1(BR-1010B) form. Mark JA under 3.3 and send to BRØNNØYSUNDREGISTRENE. This will show „Registrert i NAV Aa-registeret” under the company details in the Register of Business Entities.
- Skattetrekkskonto – you must open a bank account (skattetrekkskonto). This will be used to secure advance income tax payments for the employee.
- Employee agreement – it is necessary to sign an employment agreement with the employee. This may be drawn up in two language versions. The contract should obligatorily be in hard copy and signed in duplicate. One is for the employer, the other for the employee. The contract of employment must include hourly wages that are no less than those set by law. Up-to-date information on rates in Norway can be found here. Minimum rates are worth monitoring, as they are subject to change.
- Notification to NAV – Once you have signed a contract, remember to notify NAV of your employment using form A-melding. Officially, every entrepreneur in Norway should report the employee to NAV by the Friday of the following week when the contract is signed.
- Skattekort from the Employee – The employee, in turn, should ensure that the Skattekort is delivered to the employer, otherwise he/she may be charged an advance income tax of 50%.
- Employee’s bank account number – In addition to the Skattekort and personal number, the employee should also provide a bank account number. Important: It is not possible to pay wages in cash in Norway.
- OTP (Obligatorisk tjenestepensjon) – employers in Norway are obliged to pay compulsory pension insurance for an Employee if they employ them at least 3/4 time. The employer must enter into an agreement with the insurance company and pay the OTP for the employee every month.
- This is not a premium deducted from the employee’s paycheck, but is an expense of the employer. It amounts to no less than 2% of the salary. (Find out more about pension in Norway).
Employing an employee from outside Norway
It also happens that an Employer wants to employ an Employee from abroad. What happens in this case? Then the employee, with a signed contract and a valid passport, goes to the tax office to obtain a personal number and Skattekort. Non-EEA employees should also take care of a residence permit. Note: this is the responsibility of the employee, not the employer.
- Timeliste – usually Employers settle with Employees for hours worked.
Gross pay is then calculated according to the formula:
number of hours worked * rate per hour
Therefore, Employees provide the Employer with a timelist – i.e. a printout in which all hours worked for the previous month are listed. The employee and employer can also agree on a monthly wage – fastlønn. This type of pay is characteristic of occupations with fixed working hours
- Lønnsslipp – this is a document showing gross pay, net pay and advance income tax. On the basis of the timelist, the HR manager calculates the salary for the employee on a document called Lønnsslipp. If necessary, she will add an allowance for overtime or night work. The employer pays the Employee the net amount from Lønnsslipp by transfer.
- A-melding – The employer is required to report monthly by the 5th day of the following month on payments and employment status. He makes this notification on an A-melding form. If the employer or the human resources officer fails to meet the deadline, the company may face a financial penalty.
- Employment taxes
Forskuddstrekk (advance income tax for the Employee) and Arbeidsgiveravgift (Employer’s tax) must be paid by the deadlines:
[Infographic] [15 March for January – February,
15 May for March – April,
15 July for May – June,
15 September for July – August,
15 November for September – October,
15 January for November – December].
Salary summary for the whole year for the Employee
Form Sammenstillingsoppgave for the previous year – by 31 January, the Employer must provide the Employees with information on their income and advance income tax payments.
We wish you successful HR management in your company, as human capital is one of the greatest potentials in a Company.
Costs of having an employee in the company
In the example below, we assume that the employee earns NOK 360,000 gross and has 5 weeks of holiday.
|Gross annual salary||325.385 NOK||No holiday pay|
|Feriepenger 12 %
|39.046 NOK||The Feriepenger rate is 10.2% or 12%. For employees over 60 years of age, the rate is 12.5% or 14.3%|
|Arbeidsgiveravgift 14.1 %
|51.385 NOK||The rate depends on the area in which the company is based, ranging from 0% (Finnmark and Nord-Troms) to 14.1%.|
|Pensjonskostnader 2% (OTP) Compulsory pension insurance||6.507 NOK||The minimum value is 2%|
|Arbeidsgiveravgift av pensjonskostnadene 14,1% (employer’s levy on OTP)||917 NOK||14.1 % is calculated on the Pensjonskostnader|
|Yrkesskadeforsikring (occupational risk insurance)||E.g. NOK 1,500||The rate depends on the risk existing in the industry concerned|
|Total (total employee cost)||424.740 NOK|
The amount of the benefit depends on the total salary (base plus commission) earned in the previous year – sickness and care allowance is included in this amount. In Norway, by law, holiday pay is 10.2 per cent of earned base (the rate may be higher) – those over 60 are entitled to a minimum of 12.5 per cent of earned base pay.
WHAT SOCIAL BENEFITS YOU CAN ENJOY WHEN RUNNING A BUSINESS IN NORWAYi
According to Norwegian law, maternity allowance is granted to women who have worked for a minimum of six months in the last ten months and whose income has reached a level on which pension contributions have been paid. In addition, the income must be at least half the amount set by NAV – grunnbeløp (G), which changes each year.
When the owner of a sole proprietorship is on sick leave, the company cannot have any income during this period and can only have fixed costs such as rent or the telephone bill as expenses. The exception to this is the 50% exemption where the business is able to earn income for work that is not prohibited by the exemption, such as office work.
Sickness benefit is paid from the 17th day of dismissal by NAV, and the amount depends on the previous year’s income base.
ADDITIONAL INSURANCE FROM THE NAV
As mentioned above, for entrepreneurs, the mandatory health insurance contribution in Norway is 11.4%. This is included in the advance income tax. It enables you to receive sickness benefit of 75% of your income from the 17th day of illness. The amount of sickness benefit is calculated by NAV based on the average of income from the last three full accounting years. If the company has been operating in the Norwegian market for a shorter period, then the benefit is calculated at NAV based on documented income up to that point.
However, it is possible for you as an entrepreneur to receive a significantly higher sickness benefit, and this from the first day of illness. All you have to do is take out additional insurance at NAV. You have three options to choose from.
|Options available||From which date you can receive the benefit||Amount of benefit|
|I||from day 1 of illness||75% of average income|
|II||from day 17 of illness||100% of average income|
|III||from day 1 of illness||100% of average income|
It is worth knowing that there is such a thing as a waiting period. This is based on the fact that you do not become entitled to increased sickness benefit until four weeks after NAV has granted your application.
PENSION IN NORWAY
[Infographic] [THE PENSION CONSISTS OF THREE PARTS:
Pensions from the Folketrygden (from the social security system) is the compulsory part that ensures that Norwegian residents are entitled to pensions.
Pensions from the employer involving compulsory pension schemes that apply to most employees. In addition, the employer may enter into an agreement with AFP (avtalefestet pensjon), in which case the employee is entitled to an additional pension.
Pension savings (voluntary part). To increase your pension, it is worth taking advantage of additional savings schemes].
It is worth noting the rules related to the granting of pensions – depending on the date of birth:
- for persons born before 1954, the old rules apply,
- for persons born between 1954 and 1962 a combination of old and new rules is applied,
- for persons born after 1962, the new rules for pension calculation are applied.
Persons who have been members of the Norwegian social security system for at least three years are entitled to a Norwegian pension. While collecting the benefit, pensioners have the right to work regardless of earnings. When returning home, residents of countries with which Norway has an agreement may collect a Norwegian pension. These countries include Poland.
Recipients of a pension in Norway have the right to work any number of hours during the period of receiving the benefit without the risk of losing it.
It is possible to stay abroad while receiving your Norwegian pension, but there are certain formal restrictions associated with this:
- stay abroad for up to 12 months – you remain a member of Folketrygden provided you have been in Norway for at least 6 months in each calendar year,
- stay abroad for more than 12 months – after this period, you are no longer a member of the Folketrygden (the same applies if you have been a member for more than 6 months per year for at least two consecutive years).
It may also be useful for entrepreneurs to know that, according to Norwegian legislation, it is not possible to suspend a company, only to close it down. Furthermore, once a sole proprietorship is closed down, a person is not entitled to receive unemployment benefit.
- What are business expenses?
A business expense is any expense that is incurred for the purpose of generating revenue (e.g. buying goods or advertising on the internet).
- Can you pay cash for items bought for business purposes?
In order to enter cash purchases in the accounting records and account for them as company expenses, the amount of NOK 10 000 per year for cash payments cannot be exceeded. Companies should complete a Dagsoppgjør form to record all cash transactions in the cash register.
- Can petrol and other car-related costs be deducted if a private vehicle is used for company purposes?
If you are a sole trader, you can use a private car. The basis for the deduction will be the kjørebok, i.e. the vehicle log book. When this document is completed, petrol is no longer deducted, only gates, ferries and car parks relating to business travel.
- Can a private phone with a company subscription be included in company expenses in Norway?
If the phone was used for business purposes, the cost of these calls will be a company expense. It is difficult to separate which calls were for private and which were for company business. The authority has therefore assumed an amount of NOK 4392 to be withdrawn from costs at the end of the year.
- Will all calls made from a company phone, even if for private purposes, be charged to the company?
Only business-related calls are included in company expenses. The Norwegian Tax Administration’s website has a formula for accounting for expenses for private calls.
- Can a company car instalment be a business expense?
Business expenses can be interest on a loan or depreciation of a fixed asset – car instalments are not an expense.
- Can lease instalments be treated as costs?
Lease payments can be treated as a business expense in Norway.
- When renting premises, can the costs of rent and electricity in the flat be included in business expenses?
Rent and electricity costs for the entire flat in which the business is conducted are included in business expenses. However, if part of the flat is used for residential purposes and part for business purposes, it is best to separate some room for the needs of the company. Then the costs can be calculated proportionally. For example, if the flat is 50 sqm and the room where the office is located is 10 sqm, then 20% of the expenses for the flat will be included in the costs of the company (for rent, electricity etc.).
- What are the charges for a person who is contractually employed and at the same time runs their own business in Norway?
The employer pays advance income tax for this person from work, but from the company he/she must remember to pay 4 instalments on the dates:
– 15 March,
– 15 June,
– 15 September,
– 15 December.
This entrepreneur is required to pay a levy of 22% on profit for income tax and 11.4% on profit for compulsory social security. The office calculates the amount of advance tax on the amount that the person has declared. It should also be remembered that if the entrepreneur’s company has already been registered in the MVA register then he or she should pay 25% VAT.
FORMALITIES OF RUNNING A BUSINESS:
- How do I set up a business in Norway?
At www.brreg.no, you will find a form called Samordnet registermelding BR1010, which you must complete. You will need to provide details of the owner, business name, address and type of business. Once the application has been submitted and the company’s registration has been confirmed, you will receive an organisation number. We have described exactly how to do this here. Once you have established your business in Norway, it is advisable to open a company account for all business-related transactions. To do this, you will need confirmation of your company registration and organisation number. Once you have started your business, it is necessary to declare your expected income, on the basis of which the office calculates advance income tax. If the income within 12 months exceeds NOK 50,000, the company must be registered for VAT.
- How do I set up a company in Norway?
The easiest way is to set up a sole proprietorship. All you need is an application to register your business. In order to register a company, in addition to filling in the application, it is necessary to complete the necessary several documents, among others: opening balance sheet, articles of association, minutes of the meeting. It is worth remembering that the application for company registration will not be accepted without confirmation of the payment of share capital from the bank. AS requires a minimum of NOK 30,000 of share capital. It is possible to establish a company without initial capital, i.e. Ansvarlig selskap (ANS/DA).
- What conditions must ANS and DA companies fulfil?
- The ANS/ DA company must be established in Norway,
- The main branch must be located in Norway,
- the company regulations are contained in selskaploven,
- the partners must conclude a liability agreement (selskapavtale),
- the company must have at least two partners,
- no initial capital is required for a DA company,
- the appointment of the supervisory board is not regulated by law,
- registration of the company with the Foretaksregisteret is necessary.
- How do you distinguish between DA and ANS companies?
ANS and DA companies can be compared to limited liability companies – at least one of the partners must be liable for financial obligations. The difference relates to the division of liability – in an ANS company, liability is divided equally between the shareholders, whereas liability in a DA company is governed by an agreement between the shareholders.
- How much does it cost to set up an AS company?
The main cost is the need for start-up capital – NOK 30 000 (can be in the form of fixed assets). The registration fee at Foretaksregisteret is NOK 5 570 (when the company is established electronically) or NOK 6 797 (when the application is sent in paper form). Another cost is the bookkeeping service, the minutes of incorporation and of the supervisory board, and the cost of various forms – the fixed assets protocol, the making of the D-nummer. Altogether, these expenses amount to as much as NOK 15 000.
- How long does it take to set up a company in Norway?
Formalities for setting up a company take between 5 days and 6 weeks (depending on whether the application was sent by post or electronically via Altinn.no).
- What is a Norwegian organisation number used for?
A Norwegian organisation number is the equivalent of a TIN given to sole proprietorships and legal entities. It is used for administrative matters – taxes, insurance premiums. It appears on invoices issued by the company. Banks and financial institutions often require it, e.g. to open a company account.
- What is the process for assigning a tax identification number?
The process for assigning a tax identification number begins when a person already has a source of income in Norway or when they come to stay with a parent/spouse working in Norway.
So, when an immigrant registers a business in Norway, he or she fills in a form (here) with the business registration application and sends it to Brønnøysundregistrene.
- How do I change the address of a sole proprietorship (ENK) in Norway?
To change these details, you need the Samordnet registermelding form BR1010 from the Brønnøysundregistrene website. In field 1.1 you must state the name and organisation number of the company, in field 2.2 you must state that a change is to be made, in field 4 you must state the new address, and in field 18 you must write the date and sign. The completed application must be sent to the office. Institutions such as your bank or insurer must be informed of your new address. The change can also be made on this form electronically via Altinn.no.
- How do I change my company name? Does this involve additional costs?
A company name change is free of charge if the business is only registered in the Enhetsregisteret. If the business is also registered in the Foretaksregisteret, a company name change costs NOK 2,250 (electronic version) or NOK 2,832 (paper version).
- What document is needed for a company name change?
You need the document used previously to register your business – Samordnet registermelding BR1010.
- Is it possible to do business in Norway without registering?
You need to register if you intend to stay in Norway for more than six months. You do not need to register as a self-employed person; you only need to have a registered office in Norway.
- How do I suspend my business?
In Norway there is no such concept as „suspension of activities” as in Poland. There, you can only close your business.
If you are planning a longer break from your business, you can of course do this. However, they should remember to meet the deadlines for declarations to the authorities (e.g. VAT declarations or annual returns). He must also pay the advance income tax payments calculated by the authorities. If his income for the previous tax year turns out to be lower than declared, the office will reimburse the overpaid amount.
- What do I need to do to get a start-up loan?
To take a start-up loan, it is necessary to submit a business plan and a budget. The bank will review the application and calculate the financial risk and, if it finds financial security, will grant the entrepreneur the requested loan.
- How much is earned per hour in the different industries?
There is no general minimum wage in Norway, but certain industries have specified minimum rates that must be observed. Thanks to official arrangements, regardless of their background, employees in a particular sector are guaranteed an appropriate level of pay and working conditions.
Hourly wages for professionals in specific industries very often depend on the age (those under 18 are entitled to lower rates) and experience of the employees and are as follows:
– construction: NOK 119.30 -197.90,
– Electricians: NOK 193.06 – 210.40,
– cleaning: NOK 129.59 – 177.63,
– car mechanics: NOK 183.06 – 210.40,
– passenger transport (tourist): NOK 154.57,
– agriculture, horticulture: NOK 95.15 – 120.65,
– freight transport: NOK 167.65,
– catering (hotels, restaurants): NOK 102.18 – 157.18.
In industries that are not regulated by law, the rates depend on the individual agreement between the employee and the eventual employer.
- Can an unemployed person receiving benefits set up a business?
Unemployed persons have the possibility to seek assistance from NAV, where they will receive help in the form of professional advice and possible financial support for start-up costs. The condition is that they submit a business plan.
- Can a single business operate in different unrelated fields?
This is possible, but all fields should be included in the scope of activity. In order to enter the scope of activity, a form must be completed – the same form that must be completed when registering a company. In the application, you must fill in the section updating the company’s details and complete the scope of activity.
- Does the lack of a permanent personal number prevent me from setting up a business in Norway?
The lack of a permanent personal number does not prevent you from establishing a company in Norway. You can be an entrepreneur with a temporary D-number, but it is advisable to apply for a permanent personal number.
- Is it necessary to translate all documents related to a Polish company in Norway in order to establish a NUF in Norway?
It is required to translate all necessary documents (into Norwegian or English). In order to confirm the data of a company abroad, it is also necessary to provide an extract from the register of business activity, e.g. from Poland it will be a confirmation from KRS or CEIDG, depending on the legal form of the company.
- Can a Pole do their own business in Norway?
A Pole, just like any other citizen of the European Union, may run their own business in Norway. Setting up a business and all the associated fees and procedures are the same as for businesses run by Norwegians.
- Is there a list of industries in which you can do business in Norway?
There is such a list http://www.ssb.no/klass/, but you do not have to follow it when determining the scope of your business in your application. It is usually the Brønnøysundregistrene that assigns the industry code itself. It is important to note that when listing the fields of work, the most important one should be given first. The authority assigns an industry code to the field of work that is listed first in the application.
TAXES, INSURANCE, HOLIDAYS:
- What taxes do entrepreneurs have to pay in Norway?
The entrepreneur pays on profit:
- income tax of 22%,
- social security contribution of 11.4%,
- VAT (MVA) (when the company is registered for VAT).
Companies that employ employees pay tax:
- on the employment of an employee Arbeidsgiveravgift – at a rate of 14.1% to 0% (depending on the zone),
- advance income tax Forskuddstrekk – depends on the Skattekort the employee receives from the authority. If the employer does not receive this tax card from the employee then the employer is obliged to deduct 50 per cent of the advance from that employee’s salary.
There are a number of other fees and expenses involved in employment, including Obligatorisk tjenestepensjon, Feriepenger etc.
- How do I get a company tax number in Norway?
To obtain a company tax identification number, you must register your business with the Register of Business Entities (Enhetsregisteret). Form BR-1010 can be sent electronically (available at www.altinn.no) or a paper version can be sent to Brønnøysundregistrene. The authority will then send a confirmation of the company’s registration, which will show this company organisation number.
- What form should I fill in at the tax office in order to receive advance tax payments from a recently registered sole trader in Norway?
You will need to fill in an application for a Norwegian tax card SØKNAD OM ENDRING AV ELLER KRAV OM SKATTEKORT. You need to fill in the sections for self-employed persons stating the anticipated amount of income from your business for the year.
- How do you pay tax on income in Norway?
In Norway, the entrepreneur pays tax as an advance payment. Payments are made four times a year (by 15 March, 15 May, 15 September and 15 November). The Authority calculates the amount of advance payments based on the entrepreneur’s stated anticipated profit. The entrepreneur receives a giro before each deadline with the instalment to be paid.
After the end of the tax year, if it is found that too little tax has been paid, the missing amount can be paid without interest until 31 May of the following year. Payment can also be made after receipt of the annual Skatteoppgjør, but the office will then charge interest.
- What should be done when an entrepreneur has not paid advance tax for a whole year?
In such a situation, the business owner should transfer the outstanding money at the turn of April/May of the following year. At that time, the office sends a preliminary annual tax return, on which the bank account number is indicated, together with the KID number. A tax transfer made by 31 May will not include interest. Payment can also be made after receipt of the annual tax return from Skatteoppgjør, but the office will then charge interest.
- What can you do if you have underpaid tax?
Your final tax statement from Skatteoppgjør will show the amount of the surcharge and the deadline for payment. The authority will add interest to the missing tax amount.
- By when must an entrepreneur in Norway submit a tax return?
The deadline for submitting tax returns for the previous year is 31 May.
- What is the income tax for a company that earns a substantial income?
Norwegian legislation regulates the existence of tax thresholds. Tax thresholds for 2021:
- up to NOK 184 800 – 22%,
- from NOK 184 800 to NOK 260 100 – an additional 1.7%,
- from NOK 260 100 to NOK 651 250 – additional 4%,
- from NOK 651 250 to NOK 1 021 550 – additional 13.2%,
- from NOK 1 021 550 an additional 16.2%.
The amounts of the individual thresholds change each year.
- What is Feriepenger?
Feriepenger is money set aside for an employee’s holiday – the minimum rate is 10.2% gross of salary.
- what is Arbeidsgiveravgift?
Arbeidsgiveravgift is a compulsory fee that is paid by an employer who hires employees – it ranges from 14.1% to 0% of the employee’s gross salary (the rate depends on the national zone).
- What is Sykepenger?
Sykepenger is a sickness benefit. For an employee – the employer pays for the first 16 days of sick leave, then NAV takes over this obligation. For an entrepreneur, NAV only pays the benefit from the 17th day of sick leave. To receive the money from the first day of sickness, additional insurance must be taken out.
- Is income tax deducted from employees’ wages?
The employer is obliged to deduct advance income tax Forskuddstrekk from the employee’s gross salary.
- Does the employee’s income tax and social security payments have to be paid monthly?
Insurance and advance tax on the employee’s income are paid every two months.
- How is the pension contribution calculated in the case of a sole proprietorship?
The pension contribution is included in the insurance premium (11.4%).
- Is it possible to carry out a tax return during the year?
Generally, the settlement must be made after the end of the tax year – upon receipt of the preliminary Skattemelding from the tax office. However, there is a form RF-1038 that allows for an early tax return for a foreign employee. This is provided by those who have been in Norway for less than 183 days in 12 months or less than 270 days in 36 months at the end of the contract.
- What does Innskuddpensjon mean?
Innskuddpensjon is an agreement between an employer and an employee. The employer undertakes to pay part of the salary towards the employee’s future pension.
- In a sole proprietorship, should tax be paid on the entire amount of gross income?
No. Income tax is calculated on the amount of profit. The tax base is the difference between revenue and business expenses.
- Is it possible to run a business and benefit from Class 2 tax relief?
A business owner was entitled to use the 2nd tax class relief if his or her spouse had less than half the Grunnbeløp amount of income until 2017. As of 2018, this relief has been abolished for everyone.
- Does a sole trader have a right to sickness benefit from Norway?
Sole traders in Norway are entitled to sickness benefit. They are members of the Norwegian social insurance scheme. NAV pays sickness benefit from the 17th day of sickness. Supplementary insurance guarantees the benefit from the first day of sickness.
- Has a sole trader been entitled to sickness benefit for several months?
Sole traders are entitled to sickness benefit, but it is paid from the 17th day of sickness and amounts to 75% of the average income of the last three years of activity.
- Can a business owner receive free medical care?
In Norway, obtaining medical advice involves paying a so-called deductible (egenandel). The deductible is not refundable. The amount depends on the time of day, type and location of the visit.
- Is it possible to reduce tax if a person has a mortgage?
It is possible to reduce the tax, as the interest on the loan is included in the annual return and reduces the basis on which the tax is calculated. This allows the person to receive a larger refund.
- What services are not subject to Norwegian VAT?
Health, financial, insurance and cultural services are not subject to MVA in Norway.
- Is the entrepreneur insured?
Folketrygden, the Norwegian social insurance scheme, covers all persons living in Norway. Every legally employed employee and business owner is a member of Folketrygden. If an entrepreneur becomes ill, NAV will pay the benefit from the 17th day of illness. You may take out additional insurance for yourself. To do this, you must conclude an insurance contract with NAV (or another insurer) and pay additional premiums.
You can read more here.
- Is the entrepreneur’s Norwegian insurance recognised in Poland?
Norwegian insurance is recognised in Poland. In order to prove membership of the Norwegian social insurance scheme, you must present one of the following documents:
- EHIC (European Health Insurance Card) – the card entitles the holder to receive medical services during a temporary stay in a country that is a member of the European Union, EEA (European Economic Area) or Switzerland. On the basis of the EHIC, the holder is entitled to receive medical services on the same basis as the residents of the country in which he/she is staying temporarily. An EHIC may be issued to a person who is a member of the Norwegian national insurance scheme and is a national of Norway, one of the EU countries, the EEA or Switzerland. EHICs in Norway are issued by HELFO (Helseøkonomiforvaltningen).
- S1 form (formerly E-106 and E-109)
- Allows full access to medical services in Poland and other countries in the European Economic Area under Norwegian insurance. The prerequisite for obtaining the form is:
- employment by a Norwegian employer/operating a business/receiving unemployment benefit;
- payment of Norwegian social insurance contributions/income tax contributions;
- have the nationality of an EEA member;
- permanent residence in another EEA country.
- What is the giro issued to construction companies by the RVO? Is the company obliged to pay it?
The giro is a mandatory fee charged to companies in the construction industry. The RVO programme aims to improve working conditions and safety. Its representatives appear on construction sites and inform about the regulations for construction work. The amount of the giro depends on the number of workers employed. NOK 250 is the minimum amount charged to companies that do not employ workers. The charge is 0.03% of gross salary based on the past year.
- How long before going on maternity leave must one be in business?
Maternity leave can be taken by women who have earned income at a certain level for at least six of the last ten months preceding maternity leave.
- Which income will count towards maternity leave if a person works full-time and also runs a business?
In this case, all income will be taken into account.
- Where should a newly recruited employee be reported?
It is the responsibility of each employee to register with the police and obtain a tax card (Skattekort). Once these conditions have been met, the employer is obliged to report the employee through Altinn.no on form A-melding. At the same time, the company that employs the employee must be registered with NAV Aa-registeret.
- When is it necessary to report an employee to NAV?
The deadline for reporting an employee to NAV is the Friday of the following week after the new employee’s first week of work.
- What is the cost of employing an employee in Norway?
The cost of employing an employee is divided into fixed costs and variable costs.
Fixed costs are:
- Arbeidsgiveravgift employment fee – rates range from 14.1% to 0% of gross salary (depending on the tax zone),
- OTP pension insurance (Obligatorisk tjenestepensjon) – at least 2% of gross salary,
- Feriepenger (10.2% on gross salary).
Fixed costs total 26.3% on gross salary.
Variable costs are on average 5% on the employee’s gross salary. They are related to sickness benefits, NWW insurance and any training.
- Does an entrepreneur in Norway have to pay for periodic examinations of employees?
Payment for periodic examinations of employees is voluntary – the employer is not obliged to bear the cost. However, there are some industries where such an examination is necessary, such as in the cleaning industry. The employer enters into a contract with a medical unit and pays for the examination.
- Do the regulations say what should be in the employees’ files?
Norwegian legislation does not regulate how personnel files should be kept – this means that it does not specify what documents should be in the file.
- Who is responsible for keeping employee files?
The file is maintained by the accountant.
- What if Daglig Leder wants to employ a spouse in Enkeltpersonforetak (EPF)?
Employment is not possible, but it is possible to run the company together – without reporting a change of situation. All you have to do is fill in an application for a tax card and then divide the income for the past year between the spouses in the annual return.
- I have employees in a company in Norway, but there are fewer construction contracts coming up in the winter. Is it possible to employ workers only when I have orders for them?
Only employment agencies have the option of employing workers only for the period of orders. Companies that are not employment agencies must employ employees on a permanent basis. However, there are circumstances in which an employee may be hired on a temporary basis:
- when such an arrangement is justified by the nature of the work,
- when the employee is hired as a replacement,
- when the employee is taken on as a trainee,
- when the employee is a participant in labour market programmes organised by an employment or welfare office,
- when the employee’s profession is that of an athlete, coach or sports referee,
- when the employee carries out research, artistic or sports-related work.
- How to pay VAT in Norway?
A business that has not exceeded a turnover of NOK 50,000 in 12 months is not required to pay VAT to the authorities. If exceeded – this business must be registered for VAT. The MVA rates for branches of foreign companies (i.e. NUF type) are the same as for Norwegian companies, but the tax is paid by a representative who calculates and pays VAT in Norway on behalf of the foreign company.
- When is the deadline for the annual VAT return?
The deadline for settlement is 10 March of the following financial year.
- What is the VAT return for?
With the VAT returns, it is possible to show how much VAT has flowed into the business (revenue invoices) and how much has flowed out of the business (cost invoices). The difference between these values is either payable to the authorities or recoverable from them.
- How to find out if a company is already listed in the VAT register?
To find out whether a company is VAT registered, simply visit: www.brreg.no and check the status of the company. The following information should appear next to the registered business: Registrert i Merverdiavgiftsregisteret.
- Is an AS company required to pay MVA every two months or can it do so once a year?
An AS company may pay the MVA once a year if its annual turnover does not exceed NOK 1 000 000. However, it must indicate this option on the application when registering for VAT. If it wishes to make a change during the year, it can do so by the end of January for the year in progress. The Authority may not agree to this type of settlement if the Company has tax arrears.
- Is it necessary to have a European VAT number when buying goods in the European Union without VAT?
Norway is not a member of the European Union, which means that it is not possible to obtain a European VAT number. In order to avoid unnecessary costs, you can buy goods in an EU country and inform the export of products when you leave. Private individuals or companies that are not 'vat-holders’ pay Norwegian VAT on entry to Norway. Companies registered in the Norwegian MVA register only report the import in the VAT return.
- Can a teacher whose income exceeds NOK 50 000 be exempt from paying VAT?
Such a person is exempt from paying VAT (despite exceeding NOK 50,000 in turnover). However, this means that the dues cannot be deducted from costs. Services related to education are exempt from VAT.
- How to fill in an invoice for the sale of a service and materials that have been purchased for a client to avoid double taxation?
If the company does not plan to make money on the materials purchased for the customer when a service has been provided to the customer, two items should be separated on the invoice: 1 – service and 2 – materials. Before doing so, count the costs of materials from all receipts and invoices (net and VAT amounts) that relate to the customer in question. Then, when issuing the invoice, enter the total for these materials in item 2. At the same time, book all these expenses for the purchase into costs. Then there will be the same amount in revenue as in costs, i.e. tax-wise the company comes out at 0.
If the company wants to make money on these materials, it writes a higher value on the revenue invoice than the sum of the costs for their purchase. Taxes will be charged on the difference between revenue and costs for the materials. However, it is important to note that an entry in the Foretaksregisteret is required in order to trade.
- How do I account for an invoice issued only for VAT when the company accrues outstanding VAT after the registration process has been completed?
When registering for VAT, companies often invoice for the net amount alone. Only later, when they are registered for VAT, do they send these customers invoices knowing the VAT alone for these net amounts. In this situation, the accounting accounts – 1500 dt / 2700 ct – should be used to book this type of invoice. To book a tax payment that the customer has made to a company account, you need to use the accounts: 1920 dt / 1500 ct.
- What does a Norwegian invoice contain?
A Norwegian invoice contains:
- the invoice number,
- the company’s organisational number (the symbol 'MVA’ at the end indicates that the company is a VAT payer),
- date of issue of the invoice,
- date of payment,
- details of the seller (company name and address),
- details of the buyer (full name/company name, address),
- seller’s bank account number,
- the net, VAT and gross price of the goods/services.
- What requirements must be met to issue invoices?
Every company must be registered with Brønnøysundregistrene. The entrepreneur receives confirmation of the company’s registration and an organisation number. Once the business is registered, a company bank account must be set up. Only then can the company issue invoices.
- Should I start numbering invoices from the beginning after the new year?
The numbering of invoices is continuous, which means that in the new year, the numbering from the previous year is continued.
- Do I have to give my customers new numbers from the new year?
The customer number is permanent and does not change over time.
- Is it possible for an unemployed person with a work permit and a tax card to issue invoices without having their own company?
Only entities that have been issued with a Norwegian organisation number have the right to issue invoices. To obtain a number, you can set up a sole proprietorship – Enkeltpersonforetak (EPF). Setting up a company is free of charge (if the object of the business is not trade, otherwise a fee to the Foretaksregisteret will be necessary) and no equity capital is required.
- Do you need any permits to start a cleaning company?
Cleaning companies are required to have an Authorisation (Godkjenning) issued by the Norwegian Labour Inspectorate. In addition, every employee of the company and the owner should have a Renholdskort badge.
- Where can you find out whether a company has a cleaning permit from the Norwegian Labour Inspection Authority?
Information on whether a permit has been granted can be found on the Norwegian Labour Inspectorate’s website (here). The status should be set to Godkjent.
- Does the owner of a construction company in Norway have to provide Byggekort for employees?
It is the responsibility of construction company owners to provide Byggekort to all construction workers. It is up to the employer to equip each employee with a badge and monitor its validity (up to two years).
- What is the 'green card’ that every construction worker must have?
In Norway, all construction companies are required to provide their employees with Byggekort badges issued by Idemia Norway AS. These contain the card holder’s basic data, which helps to identify them. It is worth remembering that it is the employer’s responsibility to pay for the card for the employee.
- How do I extend a building card?
The Byggekort building card can be extended via the website: www.byggekort.no. You will need the ID and password you set up when you first log in.
- What kind of work can a builder do in his/her own business without completing special courses?
There are construction jobs that require proof of qualification, such as electrical work or work at heights. However, an employee without evidence of skills in the form of course diplomas can carry out simple construction work. For such advanced activities as putting up houses from scratch, a company should have Godkjenning.
- What are the requirements for setting up a garage in Norway?
Special permits are required to set up a car workshop in Norway, e.g. for air-conditioning repairs, electronics and bodywork services, and recognition as a car mechanic. Permits are not required if the services performed in the workshop are not related to safety.
- Do I have to meet any special criteria to set up a cosmetics business (massage parlour)?
In order to set up a business of this type, it is necessary to obtain a permit from the municipality where the activity is to be carried out. A number of strict sanitary requirements must also be met.
- How do I do løyvekurs?
In order to obtain a transport permit, you must apply to the relevant municipality and take a course.
- Is a Polish entrepreneur performing work in Norway obliged to have a proxy who will pay VAT dues?
The representative may be a Norwegian company or a person with a Norwegian permanent personal number. The representative’s task is to calculate and pay the VAT. The company transfers the fee for services to the resident’s bank account, who pays the tax at the tax office and the net amount goes back to the owner of the company.
- Can the owner of an Enkeltpersonforetak with no income, but with high-value goods, transfer the business to his or her spouse, or must he or she set up a separate business?
It is not possible to directly transfer the business to another person. However, in order not to register a new company, co-ownership and revenue sharing can be established – all income can be assigned to the other person. However, if it is a matter of severing all ties with the business, it is necessary to open a second company and possibly sell its goods before closing the Enkeltpersonforetak (EPF).
- When a company wants to sell a used car (which is on fixed assets), does it have to issue an invoice with VAT?
No, when selling a used company car, an invoice without VAT must be issued.
- If a private car is used in a one-man transport company, can you have a petrol station card for the company?
This is not possible in this situation.
- How do I keep a driver’s log book?
Kjørebok is a record of kilometres driven for company purposes. On the basis of this logbook, it is possible to deduct the costs of using a private car for business purposes. The date and purpose of the trip, the route taken and the number of kilometres must be entered in this logbook. The number of kilometres is then multiplied * the applicable rate (in 2020, this is NOK 3.5 per kilometre). No more fuel receipts or invoices are collected.
- Do I have to collect petrol receipts if I keep a logbook?
It is not necessary to collect receipts when keeping a driver’s log book. Only the value resulting from this driver’s log book will be deducted in company costs, but no more than 6,000 km * rate per km (in 2020 this is NOK 3.5/km).
- Is there an obligation to have a cash register in a company?
The determinant of the need for a fiscal cash register is the turnover of the company and the frequency of cash transactions. If such transactions are very infrequent, there is no obligation to do so.
- If an employee is dismissed from the AS company, is he entitled to unemployment benefit?
Any employee who meets the conditions stipulated by law is entitled to unemployment benefits. Criteria taken into account include length of service and income.
- Is it always necessary to keep records of fixed assets?
It is always necessary to keep records of fixed assets (machinery, computers, office equipment).
- How do I collect outstanding payments for services rendered?
Overdue payments can be recovered in two ways:
- by sending purringi, i.e. reminders, and when the debtor does not pay the amount owed inkassovarsel, a demand for payment. The matter can then be taken to court or to a debt collection agency,
- by sending the debtor an inkassovarsel after 14 days and then taking the matter to debt collection or court. Reminder fees and interest are paid by the debtor.
You can read more about this here.
- Can a sole trader use his abbreviated company name on business cards, advertisements, etc.?
It is possible to use an abbreviated company name, but it is the name of the owner of the sole trader that appears in the company name at government offices and institutions. You must declare on the Samordnet registration form BR1010 that the company name will be used as an abbreviated name.
- Where can I find information about the rules for importing goods into Norway?
Information about customs rates for importing goods into Norway is arranged with the Norwegian Customs Service – www.toll.no.
- Are fees incurred for closing down and liquidating a business that has not made a profit?
No costs are incurred by the owner if there are no liabilities to the state budget and the legal status of the business allows the business to be closed down. In order to close the business, the appropriate form must be sent to the tax office.
- What matters can be dealt with through Altinn.no?
The portal www.altinn.no allows you to correspond with a number of institutions, e.g. the tax authorities, the commercial register, the company register and the population register, etc. The portal allows you to electronically submit the necessary documents, tax returns, insurance contributions, etc.
- How long should a company’s accounting documents be kept?
The retention period depends on the type of document. Most company documents e.g. invoices or balance sheets should be kept for 5 years.