NORWEGIAN LAW THAT REGULATES COMPANY ACCOUNTING
Ordinary accounting – posting of income and expenses, annual accounts,
MVA accounting – bimonthly or annual VAT settlements. The latter is only possible for companies with a small turnover, i.e. up to NOK 1 million annual turnover,
Accounting for employee salaries and employee contributions (if, of course, the company is an employer and has employees)].
Norwegian companies are not obliged to use the services of an external accountant (learn more), let alone employ a full-time accountant, in order to record economic events in the company. If an entrepreneur is able to properly manage the company’s bookkeeping in Norway – he/she is allowed to do it on his/her own. However, this may involve many accounting errors and failure to meet the applicable deadlines. As a result, this will lead to more frequent audits from the tax office than if the business owner had outsourced the accounts to an experienced accountant.
Those subject to the obligation to keep records of all company transactions in accounting accounts (bokføringsplikt), as well as those subject to exceptions, should submit an annual return each accounting year. This means that all transactions relevant to the income and expenses of an entity subject to the bookkeeping obligation are best recorded in an accounting programme.
Accounting rules in Norway are regulated by two laws:
These prescribe accounting in accordance with the applicable regulations, emphasising that all transactions made within the company’s business, are relevant and should be recorded. The laws also regulate valuation, profit and loss account and balance sheet.
This is done so that the tax office can easily audit the costs and deductions applied to the company. The accountant is also responsible for the correct filing of documents.
What is the obligation to submit a tax return?
This is an obligation for all businesses operating in Norway. They must send a tax return to the tax office by 31 May for the previous tax year. Through the portal Altinn.no, companies must send information about their income (Skattemelding) to the office by this date. Companies and subsidiaries of foreign companies in Norway (NUF) are required to submit additional annual reports. On the basis of this data, the office sends the taxpayer a Skatteoppgjør within a few months (by October at the latest), in which the tax to be refunded or paid for the previous year is calculated.
Audit obligation
The Norwegian Act on Statutory Auditors (Revisorloven) specifies which companies have an obligation to have their annual reports externally audited. It implies an audit of the balance sheet and annual business reports by a certified auditor.
AS
All AS companies are subject to the audit obligation.
[Infographic] [AS COMPANY IS EXEMPTED FROM THE AUDIT OBLIGATION IF IT MEETS THE FOLLOWING CONDITIONS:
there is an appropriate entry in the incorporation documents to waive the auditor,
the turnover of the company is less than NOK 6 million,
the balance sheet total is less than NOK 23 million,
the company creates fewer than 10 full-time employees].
ENK
[Infographics] [SMALL SINGLE-PERSON COMPANIES ARE NOT, as a rule, obliged to be audited. IF:
THE COMPANY’S ANNUAL TURNOVER IS MORE THAN KR 5 MILLION AND, IN ADDITION, THE COMPANY MEETS ONE OF THE FOLLOWING CONDITIONS:
the balance sheet total is greater than kr 20 million
the company creates more than 20 full-time employees,
SUCH OBLIGATION ARISES].
NUF
Subsidiaries of foreign companies in Norway (NUF) paying income tax in Norway are required to have a Norwegian auditor if their turnover is higher than kr 5 million (find out more).
Advance income tax for employees
Internal tax law in Norway requires all persons working in Norway to pay advance income tax under the Norwegian system. Salary accruals should be made in a system that allows for the monthly sending of an A-melding report.
Double taxation avoidance act
A Convention was signed between the Republic of Poland and the Kingdom of Norway on 9.09.2009 on avoidance of double taxation and prevention of tax evasion with respect to taxes on income earned in Norway and also taxation of income earned in Poland by Norwegian entities. This means in practice that:
Establishing resident status is in practice resolved as a minimum stay of 183 days in a calendar year, but the agreement also states that „…such a person has a centre of life and interests here”. Therefore, it is possible to prove that you are a resident despite a shorter stay, as long as you have an account, company, flat, etc. in the country.
Thus, Poles working in Norway, whose income has already been taxed in this country, will not have to pay income tax in Poland. Norwegian law states that income for work performed in Norway is taxed in Norway. Therefore, the Tax Office also requires foreign companies to pay advance tax in Norway.
The tax and reporting obligations are so complex that it is advisable to consider the legal and organisational form of the planned enterprise in Norway when establishing your own business. If in doubt, contact an experienced accountancy firm.
COMPARISON OF ACCOUNTING FOR A SOLE PROPRIETORSHIP, AS AND NUF COMPANY
- Accounting is less complicated than other types of business, but nevertheless requires knowledge of accounting laws and accounting skills.
- The chart of accounts includes account 2060 – Privatuttak, i.e. private expenses – one of the advantages of a sole proprietorship is the withdrawal of funds from the company account for private use. Thus, the owner can make transfers from the company account to the private account and withdraw cash.
- The 2060 account is also used when expense invoices go missing. The bank statement shows payments from the company account, but the source document is missing.
- The business owner pays advance income tax in four instalments. Their amount is determined by the office on the basis of the company income declared by the entrepreneur.
- The business owner’s income tax advances paid are included in account 2070 – Forskuddsskatt. The balance of this account on the last day of December must agree with the advance payments shown on the Skattemelding.
- At the end of the year, after posting all income and expenses, the year must be 'closed’ in the accounting software. The balances of several accounts must equal zero, e.g. the balance of accounts 2060 and 2070.
- During the year-end closing, Egenkapital (equity) is calculated in account 2050 – Annen egenkapital, which is then shown in the annual return.
- The RF-1175 Næringsoppgave 1 is completed as one of the attachments to the annual return.
- Companies are obliged to cooperate with an auditor when revenues during the year are more than NOK 5 million and, in addition, the company meets one of the following conditions:
- the balance sheet total is greater than 20 million kr,
or
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- the company creates more than 20 full-time employees.
AS public limited company
- Accounting is complex and requires expertise.
- Shareholders are required to pay up capital of NOK 30 000 or more.
- The chart of accounts does not include account 2060 – Privatuttak (private expenses).
- Every expense related to the company must be recorded, every operation in the company account needs to be documented (e.g. with an invoice).
- Shareholders cannot withdraw funds to themselves whenever they want. They should be paid on an employment basis (like an employee in the company), styrehonorar (i.e. shareholder remuneration) or through dividends.
- Advance income tax is payable in two equal instalments in the year following the tax year. The Authority calculates these advances on the basis of income for previous years.
- All AS companies HAVE an audit obligation.
[Infographic] [AS COMPANY IS EXEMPTED FROM THE AUDIT OBLIGATION IF IT MEETS THE FOLLOWING CONDITIONS:
there is an appropriate entry in the incorporation documents to waive the auditor,
the turnover of the company is less than NOK 6 million,
the balance sheet total is less than NOK 23 million,
the company creates fewer than 10 full-time employees].
- AS must submit the following documents for the previous year:
- Aksjonærregisteroppgaven by 31 January,
- Skattemelding for aksjeselskap by 31 May,
- Årsregnskap by 31 July.
- The RF-1167 Næringsoppgave 2 is completed as one of the attachments to the annual return.
NUF
- Accounting requires knowledge in this area, especially if the company has a representative for VAT.
- You also need to be familiar with the regulations on importing goods and services.
- The chart of accounts does not include account 2060 – Privatuttak (private expenses).
- Branches of foreign companies in Norway (NUF) paying income tax in Norway are required to have a Norwegian auditor if their turnover is higher than kr 5 million.
- Branches must file the following documents in Norway for the previous year:
- Skattemelding by 31 May,
- Årsregnskap by 31 July.
OBLIGATIONS OF THE TRADER
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- 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 required 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 a 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:
-
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- VAT declaration – once the company has been entered in the VAT register, it 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 to do this 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 your home. You can read more about the portal here.
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- Advances on income tax – at the beginning of each calendar year (or after the establishment of the business), the expected profit of the company until the end of the year must be declared to the office. 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:
- Advances on income tax – at the beginning of each calendar year (or after the establishment of the business), the expected profit of the company until the end of the year must be declared to the office. On this basis, the office will calculate advances for income tax, which are payable:
-
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- VAT (MVA), which results from the VAT return,
- income tax (Forskuddsskatt) according to the advance payments calculated by the office and when it results from the annual settlement that he has paid too little of these.
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And if the entrepreneur has employees he pays according to the calculations on the A-melding:
-
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- advance income tax for employees (Forskuddstrekk),
- employer tax (Arbeidsgiveravgift).
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ALTINN PORTAL AND MINID CODES
What is Altinn?
Via the portal www.altinn.no, its user can submit forms to the Tax Office, e.g. in connection with VAT settlements, tax returns, tax settlements and settlements of timely social security contributions and advance payments for income tax. Corrections and appeals can also be submitted via this route.
Altinn.no makes it possible to submit a number of other forms to other public authorities, as it combines the procedures of most administrative institutions – from the Labour Inspectorate (Arbeidstilsynet) to the Customs Office. An overview of all forms available on the Altinn portal can be found here.
The portal www.skatteetaten.no contains information about the forms of the Tax Office.
Why is it worth having an account on altinn.no?
Thanks to this portal, without leaving home – the user – can deal with practically all matters related to tax and other company obligations online. For example, you can register a company here, or you can receive an early preliminary tax return (Skattemelding) or the final tax return (Skatteoppgjør) – which is important when waiting for a tax refund. There are also taxpayers who do not use the electronic system. They too receive official information, but usually have to wait longer than others. Skatteetaten will send the necessary documents by post, so the waiting time can be significantly longer. With altinn.no – the procedure is quick and on target.
On the portal, it is possible to receive assistance if you have problems filling in forms and forms. Also important is the fact that you receive confirmation of the documents you have sent to public institutions, and that you can store them – for ten years in a convenient, space-saving form. Thanks to the portal, it is also possible to make any changes, additions or corrections, e.g. change of address or company name.
What are MinID codes for?
The codes consist of a set of 5 digital passwords with which you can log in to altinn.no. MinID codes can be ordered quickly and easily – using the altinn.no website, of course. This can be done by anyone who is a Norwegian taxpayer and has a personal number (fødselsnummer) or a temporary number (D-nummer). Online registration requires filling in a form – this includes consent to receive, for example, correspondence from the tax office in electronic form. The codes then arrive by post to the address where you are registered in the Norwegian population register (Folkeregisteret). It is important to provide an up-to-date address at the office, as otherwise the codes may not reach the ordering party, which will prevent them from using this portal.
Altinn is also available in English.
DEADLINES FOR SUBMITTING DOCUMENTS TO THE AUTHORITIES
Deadlines for employees:
-
- Print A-melding – by every 5th of the month for the previous month.
- Payment of Arbeidsgiveravgift og skattetrekk – by the 15th of every two months:
[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].
- Form Sammenstillingsoppgave for the previous year:
- Employees must be notified of their income and NAV advances for income tax by 31 January.
VAT deadlines
- VAT registration – as soon as the company has issued invoices amounting to NOK 50 000 within 12 months.
- VAT returns
- Obligation to submit a VAT return every two months:
VAT settlement period | Documents from the period | Deadline for submission of the declaration |
1 term | January / February | 10 April |
2 term | March/April | 10 June |
3 term | May/June | 31 August |
4 term | July / August | 10 October |
5 term | September / October | 10 December |
6 term | November / December | 10 February |
- Choice of annual VAT return:
Until 1 February, companies with sales of less than one million kroner can apply to register for VAT Samordnet registermelding Del 2 – Tillegg for Merverdiavgiftsregisteret (e.g. an application submitted by 1 February 2018 will be for the 2018 return).
VAT settlement period | Documents from the period | Deadline for submission of the declaration |
1 term (Jan-Des) | January – December of the previous year | 10 March of the following year |
Income tax deadlines
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- Deadlines for advance payments of income tax
- for sole traders (Enkeltpersonforetak)
At the beginning of the calendar year or after the start of business, the business owner should declare how much profit (overskudd) his or her company will make for the whole of the following year. In subsequent years, the office itself sends a calculation of the advance payments based on the profit of previous years. If the entrepreneur does not agree with the office’s calculation, he/she should fill in the form Søknad om endring av skattekort on Altinn.no, in which he/she states the income he/she expects for the year.
On the basis of the entrepreneur’s declaration, the tax office calculates the amount of advance tax, which is divided into four equal instalments. These must be paid within the prescribed deadlines:
- for sole traders (Enkeltpersonforetak)
- Deadlines for advance payments of income tax
Instalment | 1 | 2 | 3 | 4 |
Payment term | 15 March | 15 June | 15 September | 15 December |
If the company is incorporated on 20 May, for example, then the entrepreneur’s advance will be divided into 2 instalments payable in September and November.
-
-
- For AS companies (Aksjeselskap)
Companies receive advance payments for the previous year in January. The Authority calculates these advance payments on the basis of the previous years’ income. The advance tax payment is payable in two equal instalments in the year following the tax year (e.g. for 2019 it is payable in 2020).
- For AS companies (Aksjeselskap)
-
Instalment | 1 | 2 |
Payment term | 15 February | 15 April |
An amendment to the advance payment (if the company’s shareholders do not agree with the authority’s calculation) can be submitted by the end of January on the form Søknad om endring av/krav om forskuddsskatt for upersonlige skattytere.
- Deadlines for submission of annual returns
- for private individuals:
- Until 30 April for the previous year’s income,
- for sole proprietorships (Enkeltpersonforetak):
- by 31 May for the previous tax year,
- for Aksjeselskap companies: for the previous tax year:
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- Aksjonærregisteroppgaven by 31 January,
-
- Skattemelding for aksjeselskap until 31 May,
- Årsregnskap by 31 July.
-
- for private individuals:
- Deadline for surcharge of income tax for the previous year. If the company’s income was higher than declared in the previous year, both in a sole proprietorship and in an AS company, by 31 May of the following year, the company is obliged to surcharge income tax (without interest). After this date, the office will charge interest.
Deadlines for industry documents
- Cleaning companies
- Årlig melding for godkjent renholdsvirksomhet – by 31 January,
- Renholdskort – immediately after registration of the company (for the company owner) and after employment (for the employee).
- Construction companies
- Byggekort or HMS-kort til Bygge- og Anleggsnæringen – immediately upon registration of the company (for the company owner) and upon employment (for the employee). The card is valid for two years. If a person in the construction industry changes company, the new employer must order a new card for him or her.
EMPLOYEE IN THE COMPANY
When hiring, the Employer should take care of:
- An entry in the Aa-registeret.On the Samordnet registermelding del 1(BR-1010B) form, mark JA under 3.3 and send it 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. The next step is to sign an employment agreement with the employee. This can be drawn up in two language versions. The contract should compulsorily 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 not less than the rates set by law. You can check the current minimum rates here. Minimum rates are worth monitoring, as they are subject to change. Here are the industries covered: construction, cleaning, electrical, fish processing, gardening and earthworks, shipbuilding, freight transport, passenger transport by bus or coach.
- Notification of the employee to NAV. After signing the contract, it is important to remember the obligation to report the employee’s employment to NAV on form A-melding. Officially, every entrepreneur should report the employee to NAV by the Friday of the following week, when the contract was signed.
- Skattekort from the Employee. The employee, in turn, should ensure that the Skattekort is delivered to the employer, otherwise he may be charged as much as 50% advance income tax.
- Employee bank account numberIn 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 are obliged to pay compulsory pension insurance for an Employee if they employ them for 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 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.
Salary issues:
-
- Timeliste – usually Employers settle with Employees for working hours.
Gross pay is then calculated according to the formula:
number of hours worked * rate per hourTherefore, the Employees provide the Employer with a timeliste – which is a printout in which all working hours for the previous month are written out. The employee and the 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.
- Timeliste – usually Employers settle with Employees for working hours.
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- A-melding – The employer is obliged to report monthly by the 5th day of the following month on payments and employment status. He makes this notification on the A-melding form. If the employer or personnel officer does not meet the deadline, the company may be charged a financial penalty.
- Employment taxes
[Infographics] [FORSKUDDSTREKK (INCOME TAX ASSUMPTION FOR EMPLOYEES) AND ARBEIDSGIVERAVGIFT (EMPLOYER’S TAX) MUST BE PAID IN DEADLINES:
JANUARY-FEBRUARY by 15 March
MARCH-JUNE by 15 May
MAY-JUNE by 15 July
JULY-AUGUST until 15 September
SEPTEMBER-October until 15 November
NOVEMBER-DECEMBER until 15 January]
Full year salary summary for Employee
We wish you successful HR management in your company, as human capital is one of the greatest potentials in an Enterprise.
CHART OF ACCOUNTS, A CURSORY EXPLANATION OF WHAT GOES WHERE
In Norway, the standard chart of accounts is NS4102. It indicates the chart where the economic event should be classified.
An accounting account consists of 4 digits. The most important is the first one and from it the division into:
- 1000 Eiendeler – company assets. This is where all fixed assets (e.g. company car or premises), bank accounts, cash register, settlements with the company’s customers, etc. are located.
- 2000 Gjeld og Egenkapital – debt and equity. Generally, settlements are shown here, e.g. with suppliers, banks, authorities, employees, etc.
- 3000 Inntekter – revenue – the company’s revenue is entered in these accounts. Depending on whether the income is for services or the sale of goods, whether it is VAT-taxed or exempt – the net amounts from income invoices are placed in this group of accounts then the costs begin.
- 4000 Varekjøp – purchase. A detailed breakdown distinguishes between purchases of materials, goods or semi-finished goods, domestic or foreign, and assigns them to the various accounts in this group.
- 5000 Lønnsutgifter – costs related to employees. In addition to wages, any allowances e.g. for the use of a company car, bonuses, rent allowance for an employee must also be booked. In addition to these wage components, there are employer’s fees (Arbeidsgiveravgift) and holiday pay (Feriepenger).
- 6000 Annen driftskostnad – operating costs (including depreciation, purchase of tools, low-value machinery, office supplies, work clothes and rental, consultancy or telecommunication services, etc.).
- 7000 Annen driftskostnad – operating costs (e.g. car costs, advertising, business trips, etc.).
- 8000 Finansinntekter og -kostnader, periodens resultat – financial income and expenses e.g. interest on a loan and on a deposit, the company’s financial result for the year.
Here is a list of the most commonly used accounting accounts:
Sometimes different accountants use slightly different accounts for the same events, e.g. some will post the interest on a deposit to account 8050 and some to 8040. Nevertheless, it is important that the first two digits are well chosen.
Sounds complicated? Yes, in order to put the company’s situation into figures correctly, you need to have knowledge of the subject and experience. Entrepreneur, if you don’t have the time or inclination for this, entrust your accounts to an accountant.
RATES (TAXES, INTEREST, PENALTIES, ETC.)
Income tax
- 22% of income of individuals and business entities applies from 2019.
- 23% of income of individuals and business entities has been in force since 2018.
- 24% of income of individuals and business entities was in force in 2017 (you can read more here).
In addition, tax thresholds have been set in Norway and the amount of tax increases with company income.
[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 %)
threshold four: up to NOK 964 800 (taxation of surplus is 16.2%)]
184 800 * 22% + (260 100 – 184 800) * (22% + 1.7%) + (651 250 – 260 100) * (22% + 1.7% + 4%) + (970 000 – 651 250) * (22% + 1.7% + 4% + 13.2%) = tax to be paid
Details: http://www.skatteetaten.no/no/ Tabeller-og-satser/trinnskatt/
Minstefradrag
i.e. the maximum deduction from an employee’s salary – 104 450 NOK in 2020, and 106 750 NOK in 2021.
Details: http://www.skatteetaten.no/no/ Tabeller-og-satser/Minstefradrag/
Personfradrag
which is the amount of income (from the whole year in Norway) below which no income tax comes out.
In 2021, it amounts to NOK 52 450. In previous years it had an amount:
in 2020
Class 1 | 51 300 NOK |
Class 2 | has been eliminated |
in 2017
Class 1 | 53 150 NOK |
Class 2 | 78 300 NOK |
Details: http://www.skatteetaten.no/no/ Tabeller-og-satser/Personfradrag/
Class 2 (skatt klasse 2)
If the spouse had an income of less than NOK 46 817 in 2017 (that is half of the grunnbeløpet). As of 2018, class 2 has been abolished
Grunnbeløpet
When explaining benefit calculations (e.g. to whom how much is due), Norwegians very often use the terms Grunnbeløpet and folketrygden (base amount). This ensures that the legislation does not need to be changed, but it is only worth checking this amount as it changes every year. As of May 2019, the Grunnbeløpet (G) is 99 858 kroner. You can check the history of the changes here. This amount is used when calculating, among other things, sickness benefits, pension benefits or unemployment benefits. For example, you can read on the NAV website (here) that you can receive Dagpenger (unemployment benefit) if you have earned 1.5 times the base amount in the previous year.
Insurance
- 11.4 % on entrepreneurial income,
- 8.2 % on employee income,
- 5.1 per cent on a pensioner’s income.
The income limit below which no insurance is paid (Trygdeavgift) is NOK 59 650. Find out more about the insurance here.
Deductions in the annual return reducing income for:
- donations to charities/foundations will be a maximum of NOK 50 000. Find out more here,
- commuting to work and home. Amounts in excess of NOK 23 100 are recognised. Find out more here,
- BSU maximum of NOK 27 500 (i.e. tax deduction maximum of NOK 5 000). Find out more here,
- Standardfradrag is 10% of income (maximum NOK 40 000). Find out more here,
- Fagforeningskontingent (union dues) NOK 3 850. Find out more here,
- Foreldrefradrag (childcare) NOK 25 000 for the first child, NOK 15 000 for subsequent children (relief is shared between parents). Find out more here,
- Finnmarkfradrag – for those living in the Finnmark area up to NOK 15 500. Find out more here.
Rates for employees
- 10.2 % or more for employees up to the age of 60,
- 12.5 % for employees over 60 years of age.
Find out more here
Arbeidsgiveravgift
The tax rate depends on the zone:
Zone | Business activities | Agriculture and Fisheries |
I | 14.1 % | 14,1 % |
Ia* | 14.1 % | 10,6 % |
II | 10.6 % | 10,6 % |
III | 6.4 % | 6,4 % |
IV | 5.1 % | 5,1 % |
IVa | 7.9 % | 5,1 % |
V | 0 | 0 |
A map with marked zones is available here.
Zone affiliation can be checked here.
OTP (Obligatorisk tjenestepensjon))
Mandatory pension insurance – at least 2% of the employee’s gross annual salary. You can read more about the pension here.
VAT
[Infographics] [NORWAY VAT is divided into 3 GROUPS:
BASIC 25%
REDUCED 15% for food and beverages
LOW 12% transport services (passenger transport) and cinema tickets, among others.]
You may also encounter a VAT rate of 11.11% for the sale of marine resources directly from fishermen. Find out more here.
VAT registration:
- after exceeding NOK 50 000 in revenue in 12 months by a company,
- after exceeding NOK 140 000 of revenue in 12 months by a non-profit organisation.
Auto
Kjørebok
- NOK 3.5 per 1 km for the use of a private car for company purposes, e.g. by the company owner,
- NOK 4.1 per 1 km for use of a private car by an employee for company purposes.
The number of kilometres is calculated by Elektronisk Kjørebok. Check here.
Depreciation
Depreciation depends on the type of asset, e.g. cars belonging to group C, such as vans or trucks, are depreciated at 24% per year on the value of the car. Detailed information is available here.
Bilpriser – listepris som ny
Value of the car when it was new – this information is necessary to enter in the annual return. Here you can search by the year of manufacture and the make of the vehicle.
Penalties for late filing:
- Failure to submit VAT returns on time is punishable by a fine of NOK 524,50 for each day of delay.
- Failure to submit the report for A01 employees on time is punishable by a fine of NOK 104,90 per employee for each day of delay.
- Failure to submit a shareholders’ report on time is punishable by a fine of NOK 2.098,00 for each day of delay.
- Failure to submit other statements on time (for example, Skattemelding) punishable by a fine of NOK 524,50 for each day of delay.
The maximum penalty for each title and deadline may not exceed NOK 52.450,00. Charges are calculated automatically and will not be able to be cancelled.
Other important rates
Per diems (applies to pendlers in 2020):
- NOK 91 per night for accommodation in a place with access to a kitchen,
- 164 NOK/day for accommodation in a place without access to a kitchen,
- 589 NOK/day for overnight accommodation in a hotel.
Details: https://www.regnskapnorge.no
Business travel allowances:
- NOK 200 for travel between 6-12 hours,
- 400 NOK/day for travel over 12 hours,
- 780 NOK/day for business travel with overnight stay.
Details: https://www.regjeringen.no
Purregebyr:
- NOK 70 (in 2019) for sending inkassovarsel to a customer who is in arrears with an invoice.
HOW TO RECOGNISE A CAR AS A BUSINESS EXPENSE?
The company car can be shown in two ways. It should be analysed in the company which option is more favourable in terms of tax.
- Filling in Kjørebok. This involves filling in a Kjørebok form after using a private car for company purposes. You enter the details of the car, the date of the trip, the purpose, the number of km and multiply by the rate. In 2017, this is NOK 3.5 per km.Kjørebok is beneficial when:
- We do not use the car for business purposes very often. We can only deduct 6 000 km per year. The deduction depends on the rate set in Norway for the year. That is, the maximum deduction is NOK 21 000 in company costs. For accounting, we use the accounting account 7080 Bilkostnader – bruk av privat bil i naering.
- We use a passenger car. The calculation of the tax benefit is heavily influenced by the value spent on the car (e.g. on fuel, insurance, repairs). If it represents more than NOK 100 000 per year, it is then more advantageous to enter the car as a fixed asset. This has to do with the fact that the costs of the passenger car must be 'reversed’ in the annual return and in the accounting software, due to the fact that the car may also have been used for private purposes.
- The amount to reduce costs is calculated according to a formula set by the authority. It is influenced by many factors, such as the age of the car or the value when it was new.
- We do not own the car, it may be borrowed.
- We plan to sell the car soon. Please note that the sale of a private car does not constitute income in the company.
The entrepreneur does not collect invoices or receipts related to the car (e.g. for repairs or fuel). One only has to remember to fill in the vehicle log book after each company trip. Many entrepreneurs are discouraged by this regularity and choose the second way of accounting for a car in the company.
- Entering a car in the company’s fixed asset register. You do not need to fill in a vehicle log book, but you should collect receipts and invoices for expenses concerning the car (all repairs, fuel receipts, etc.).[Infographics] [ A CAR ENTERED INTO THE COMPANY’S FIXED ASSET REGISTER IS BENEFITABLE WHEN:
the car is varebil class 2 or lastebil. All expenses related to the car are a company expense, they do not need to be reduced (as in the case of cars),
the company has many expenses related to the car every year,
the value of the car is significant and the company does not plan to sell it in the near future. Depreciation is included in the costs. Note that if the company car is sold or scrapped, the amount of the sale is company income,
the car is purchased on a lease or loan to the company].Costs relating to the car should be separated in the accounting software into different accounts, depending on what they relate to, e.g. for fuel 7000 Drivstoff, and any repairs account 7020 Vedlikehold.
Afterwards, special appendices should be attached to the annual return indicating these car-related business expenses and depreciation. Correctly recording these costs will reduce taxes.
WHAT CAN BE RECOGNISED AS A BUSINESS EXPENSE?
Without incurring some costs, it would not be possible to generate revenue, e.g. without purchasing goods. On the other hand, expenses not directly related to sales can sometimes be reduced. Taking into account the duration of the cost, we divide them into fixed and variable costs.
Fixed costs
These can include, for example, rent, telephone subscriptions or depreciation.
- Rental
If an entrepreneur deems it necessary to rent premises, he should analyse before signing the contract whether it is really necessary to generate revenue. Certainly, a shop or a wholesaler should have a warehouse, a hairdresser should have his salon and a cook should have a kitchen that meets the requirements of Mattilsynet (this institution is the equivalent of the Polish Sanepid). It is important that these premises are declared as a place of business. Otherwise, the expenses incurred for rent and supplies will not constitute a business expense.
Home office
If an entrepreneur uses part of the flat in which he or she lives for business purposes, he or she can deduct in costs:- NOK 1700 maximum. This is a standard amount that does not require any invoices. For more on this topic, see here,
- or
- proportionally. E.g. if the flat is 50m2 and the room where the office is located is 10m2. You can then deduct 20% of all the costs of the flat (for rent, electricity, etc.).
- Telephone subscription
It is well known that without a company phone you cannot contact customers. However, this expense in a sole proprietorship has limitations. If an entrepreneur has a phone that he uses both at work and privately, he will only receive a partial deduction. Even if there are one or more telephones in the company, an amount of NOK 4392 should be withdrawn from costs at the end of the year. A detailed accounting can be found here. - Depreciation and other car-related costs
- Company car, i.e. a fixed asset. All expenses related to the car (e.g. fuel, insurance, repairs, gates, car washes, etc.) are a company expense. However, in the case of personal cars, a portion of these costs must be derecognised for private use at the end of the year. The amount reducing the costs is calculated according to a formula set by the authority. It is influenced by many factors, such as the age of the car or the value when it was new. Sometimes a significant amount is removed from costs. More information can be found here. The use of varebil class 2 cars and trucks allows all car-related expenses to be charged to costs.A company car is depreciated over several years. This means that a car e.g. Varebil cl.2 purchased for NOK 50,000 in January 2018 will be recognised as a company expense:
- NOK 12,000 in 2018,
- in 2019 NOK 12,000, etc.
Varebiler saldogruppe C depreciates at 24% per year, so the costs are calculated as follows 50 000 NOK*24% = 12 000 NOK. Depreciation rates can be found here. In addition, if the car is purchased with a company loan, the costs are the interest on the loan.
Sometimes a very attractive offer to buy a car for a company is leasing. The most common type of lease is an operating lease, i.e. the company receives an invoice from the lessor every month. This invoice is recognised as an expense according to the date of issue. Here, however, it should be remembered that the car is not owned by the company until it is purchased, but by the lessor. Despite this, all purchases, i.e. fuel, gate fees and other costs related to the car, will be a company expense.
- private car used for company purposes. This method involves filling in a Kjørebok form. You enter the details of the car, the date of travel, the destination, the number of km and multiply by the rate. In 2017, this is NOK 3.5 per km. The limit is to drive 6 000 km for company purposes, i.e. a maximum of NOK 21 000 can be deducted in costs. You do not need to collect receipts for fuel or car parts. Such a car is not depreciated, on the other hand – it does not constitute company revenue when sold (as is the case with a car that is a fixed asset in the company). In addition, we can deduct gates, parking or ferries for business trips.
- Company car, i.e. a fixed asset. All expenses related to the car (e.g. fuel, insurance, repairs, gates, car washes, etc.) are a company expense. However, in the case of personal cars, a portion of these costs must be derecognised for private use at the end of the year. The amount reducing the costs is calculated according to a formula set by the authority. It is influenced by many factors, such as the age of the car or the value when it was new. Sometimes a significant amount is removed from costs. More information can be found here. The use of varebil class 2 cars and trucks allows all car-related expenses to be charged to costs.A company car is depreciated over several years. This means that a car e.g. Varebil cl.2 purchased for NOK 50,000 in January 2018 will be recognised as a company expense:
- Employees
Employment represents a significant financial burden for the company.Not all entrepreneurs realise that if they agree with an employee on a gross payment of, for example, NOK 30 000, the total cost of the employee is approximately NOK 36 000/month (as Arbeidsgiveravgift, Pensjonskostnader, Yrkesskadeforsikring, a health and safety course and the provision of work clothes, etc., have to be paid for the employee in addition).Therefore, it is important to do a calculation beforehand as to what the cost of the employee will be, whether the company has a continuity of orders and whether it will be able to afford to employ them. In some industries, it is not possible to pay less per hour than the applicable minimum rates (more information here). So many responsibilities for the employer make it a good idea to consider the offer of employment agencies or subcontractors. Then the entrepreneur does not worry about payment of benefits, work schedules or guaranteeing tasks when there is a shortage of orders. He hires an employee when he needs one.
Variable costs
- Materials or goods. Without them, revenue would not be possible. They undoubtedly constitute a business expense.
- Tools and equipment. Any such equipment necessary for the generation of revenue is an expense. However, a purchase of more than NOK 15 000 is not accounted for as an expense on a one-off basis. Such expensive equipment must be depreciated (as with a car) over several years. The depreciation rate depends on the type of machine.
- Per diems and travel expenses. If an entrepreneur has a business trip, he or she should collect receipts for each expense (e.g. gates, parking). These will be necessary to be booked as a business expense. For working more than 12 hours, he can deduct a per diem of NOK 89/per day. More information on this here.
- Representation costs. These are counted as business expenses if the following conditions are met:
- the expense to which the deduction relates is business related,
- the meeting takes place during working hours or during negotiations with a client or presentation of goods,
- the meeting takes place in the company dining room (no limit on the amount) or near the company if there is no company dining room,
- no alcohol is served and the cost per person does not exceed 451 kroner (in 2017).
These types of costs are often questioned by the office during an audit, so the bill should indicate for what purpose the meeting took place – such as promoting goods or presenting an offer to a customer. However, there is no possibility to deduct VAT on this type of cost.
- Advertising. This cost is intended to inform as many potential customers as possible what goods the company sells and services it provides. Therefore, business cards, advertisements in the newspaper or on the Internet will be a cost.
- Services. Entrepreneurs very often use external companies, e.g. accounting, consultancy, customs, transport or office cleaning services. This allows them to concentrate on their work, and they place other spheres of the company, in which they do not have the knowledge or time, in the hands of specialists. The invoices for these services are an expense. Likewise, if a company has too many assignments, it can use subcontractors.
- Office supplies and equipment. Every business will need a laptop, a scanner or a telephone, so such equipment is a business expense.
- Expenses for the development of the entrepreneur and employees, for licences and authorisations. Every company nowadays needs to develop, so training in the services provided or about goods is an expense. This also applies to the purchase of professional literature. In some industries, licences or authorisations are necessary. Payment for the compulsory issuing of, for example, the Byggekort building card or, in the cleaning industry, Renholdskort, represent a cost for the company.
So keep company documents in one place. It is best to arrange them chronologically and file them in a binder. In addition, it is a good idea to photocopy receipts, as over time they can fade and become illegible.
Entrepreneur, I hope that, with the above knowledge, you will pay more attention to keeping your company documents in order and that you will deduct all company expenses from your income in order to pay the optimal tax due to the authorities.
INVOICES (REVENUE AND EXPENSE)
Revenue invoices
The template for such an invoice must contain some basic data:
- Invoice number. A space is reserved for this at the top of the document. Remember to number the invoices consecutively, i.e. after number fifteen there should be number sixteen, then number seventeen, and so on. The numbering must be continuous from year to year. If, for example, the last invoice in December was numbered twenty-seven then the next invoice in January of the following year should be numbered twenty-eight.
- The organisational number of the company that sells the product or service. This number consists of nine digits and VAT payers should add the abbreviation MVA at the end of this number.
- Date of issue – this tells you what period to classify the income in. e.g. a date of 16.11.2017 will include the amount of the invoice in income for 2017 and in the VAT return for term 6 2017.
- Payment date. It is essential for managing cash flow (so-called cash flow). It is the entrepreneur’s responsibility to control who pays, when and how much. In case of late payment, a reminder should be sent to the customer.
- The details of the seller, i.e. the company name and address, inform about the company issuing the invoice.
- Buyer details, i.e. name and address – if the customer is an individual. Company name and address – if the customer is a business entity. It is best to check the details in the company register (here) by entering the company name under Finn foretak/selskap. This will ensure that the correct customer details appear on the invoice.
- Bank account number. The customer should know to which account he is to transfer the money for the goods or services. If cash is traded in the company, then a so-called cash register is required. However, the tax office directs special attention to the fact that payments in the company are made electronically. This helps to keep the accounting records in order.
- Description of the service/goods. It is important that this description is as detailed as possible.
- The amount, i.e. how much the customer must pay for the service or goods. VAT payers write an invoice with the following information: net value, VAT value (in Norway, the vast majority of goods and services are subject to 25% VAT) and gross value. The customer pays the gross amount.
- In addition, non-mandatory information may appear on the invoice, such as the customer number or the KID number for payment.You should take special care when issuing invoices. Based on them, the office becomes convinced of the company’s honesty and a messy document may suggest fraud. In the event of non-payment from the customer, the debt collection company will not undertake to collect the debt if the invoice was issued incorrectly.There are several programmes on the market that allow you to issue invoices for free. One of them is Invoice Solid. It is worth taking advantage of the tools available to make it easier for the entrepreneur to do business.
Method of posting a revenue invoice
To post a revenue invoice, use the account numbers:
- 1500 Kundefordringer – account for settlements with customers.
- 3000 Salgsinntekt varer, avgiftspliktig – revenue account for sales subject to VAT.
- 2700 Utgående merverdiavgift, høy sats – 25% VAT from sales.
Example
Mr Kowalski’s company has issued a VAT invoice for a service for NOK 10 000 gross, i.e. NOK 8 000 net and NOK 2 000 VAT (this is the 25% MVA rate). The accounting for such a sales invoice would be as follows:
Number of accounting account according to the chart of accounts | Value (debetbeløp) in NOK | Value (Kreditbeløp) in NOK | Number of accounting account according to the chart of accounts |
1500 | 10000 / | ||
/ 8000 | 3000 | ||
/ 2000 | 2700 |
Cost invoices
It is the task of every business to check that the details on an invoice from a supplier/vendor are correct. The main question is, is the invoice legitimate? Did we actually purchase the goods/services mentioned on the invoice?
If so, pay particular attention on the invoice to:
- Entrepreneur’s company details, i.e. whether the name, address and organisational number match. In Norway, fortunately, the tax authorities do not look so strictly at every letter on the invoice (as in Poland, where every mistake by the issuer must be corrected with a correcting note). Nevertheless, the data must clearly indicate the buyer’s company. If the name or address is incorrect, the invoice issuer must be asked to correct it.
- The amounts on the invoice, i.e. whether the value of the purchase is as agreed between the seller and the buyer. You should also check:
- whether the gross amount is the sum of the net amount and the VAT,
- whether the VAT is 25% of the gross amount (if the service or goods are subject to such a VAT rate).
It is also worth paying attention to the due date (so that it is paid at that time) and the vendor’s account number (whether it is entered on the invoice and whether it has not changed since the last transaction).
How to account an expense invoice
To post a cost invoice, use the account numbers:
- 2400 Leverandørgjeld, innland- account for settlements with suppliers from Norway.
- Cost account by type (depending on what the cost invoice relates to). In this example, let it be the purchase of building materials – account 4000 Innkjøp varer og halvfabrikata, høy avgiftssats.
- 2710 Inngående merverdiavgift, høy sats- 25% VAT on the purchase.
Example
Mr Kowalski’s company has bought building materials for NOK 5 000 gross, i.e. NOK 4 000 net and NOK 1 000 VAT (this is the 25%MVA rate). The accounting of such an expense invoice would look as follows:
Number of accounting account according to the chart of accounts | Value (debetbeløp) in NOK | Value (Kreditbeløp) in NOK | Number of accounting account according to the chart of accounts |
/ 5000 | 2400 | ||
4000 | 4000 / | ||
2710 | 1000 / |
Recording cost invoices can be difficult due to the matching of the accounting account number by the type to which the cost relates. A purchase of, for example, work clothes, a laptop or paint to be made for a service will be recorded differently. It is therefore important to familiarise yourself with the chart of accounts. An accounting programme that already has a chart of accounts built in is an incredible simplification.
IMPORT AND EXPORT ACCOUNTING
Export of goods/services from Norway
The export of goods and services abroad in Norway is exempt from VAT. It is mandatory to indicate the foreign address of the recipient on the export invoice. Goods and services exported to Svalbard and Jan Mayen are also exempt from VAT.
The export of services is exempt from VAT when the entire service is intended for consumption abroad. If part of the service is intended for use in Norway the entire service should be subject to VAT.
Certain interchangeable services that are delivered electronically to a foreign recipient are also exempt from VAT. Examples of such services are: legal services, consulting, advertising, telecommunications, etc.
We normally book the sale of exported goods and services in account 3100. The value of exported goods and services in the VAT return should appear in boxes 2 and 8.
Important: A buyer in Norway should find out for himself whether he is subject to VAT in the country to which the goods will be exported and, if so, must pay this tax.
Import of goods and services to Norway.
The importation of goods and services to Norway from EEA countries and the EU is exempt from VAT for companies registered for VAT registration. However, the obligation to declare the import of goods and services from abroad in the VAT return remains.
This exception does not apply to private individuals and companies that are not VAT payers. In this situation, VAT must be paid on the imported goods. It is also necessary to ensure that the procedure for importing goods is complied with.
Usually, we can request assistance in importing goods from a forwarding company, which will complete the customs formalities for us: fill in the SAD, declare the goods in the customs declaration and, if necessary, pay VAT, which must then be reimbursed to it. Some forwarding companies complete the customs procedure in such a way that the buyer (who is a VAT payer in Norway) on Altinn.no receives a copy of the customs declaration. This informs the trader of the value of the import to show on the VAT return.
It is also possible to carry out this procedure yourself: at the border, at the local customs office or at the post office. Of course, it is advisable to familiarise yourself with the legal provisions before carrying out such an operation yourself.
Goods imported from abroad are recognised as an expense once all customs formalities have been completed.
The obligation to declare the importation of goods from abroad should also be remembered. In the VAT return, the value of the goods should appear in parts D and G. The field in which the value should be entered depends on the category of goods.
Import of services from abroad can be booked on account 6791 – purchase of services from abroad. In the VAT return, the purchase of services from abroad should appear in fields E and G. In 2020, the NOK 350 allowance for the import of goods is abolished. From 1 January for sensitive groups of goods, but for other goods from 1 April.
Please note that some goods are also subject to customs duties. You can find out more about importing and exporting here.
DOCUMENT STORAGE
To begin with, it is worth clarifying what types of documentation there are. In the literature, documentation is divided into primary documentation (primærdokumentasjon) and secondary documentation (sekundærdokumentasjon). In the table below is an abbreviated list of the most important documents in one and the other group.
[Infographic] [FIRST DOCUMENTATION – Annual declarations, general ledger, register of accounts, balances, accounts receivable specification, accounts payable specification, cost and income documents, cash reports, balance sheets, personnel documents, VAT declarations, fixed asset specification, revision letters etc.
INTERMEDIATE DOCUMENTATION – contracts, accounting correspondence, stock records, price reviews, etc.]
The general rule is that primary documentation should be kept 5 years after the accounting year is closed, while secondary documentation should be kept 3.5 years after the accounting year is closed.
Of course, there are exceptions to this rule: certain customs declarations, legal documents for real estate, project accounting, documents of related companies and facilities abroad, loan documentation, and accounting documentation from certain industries: companies operating on the Norwegian continental shelf, financial institutions and banks, electrical companies, real estate companies and accounting and auditing firms. Documents in the above-described cases must be kept for between 5 and 15 years, depending on the type of business.
The documents can be stored in the accountant’s archives, directly in the company or can be given to a special storage company for safekeeping. The entity responsible for the storage should provide access to the documents when the need arises.
And what happens to the documents that remain after the closure of the company’s bankruptcy procedure? Well, this is decided by the trustee who is handling the case. He has the right to decide to hand over the documents to authorised persons or to destroy the documentation if no interested parties are found.
So Entrepreneur, keep your accounts in order and keep these company documents for the required period.
HOW DO YOU KEEP YOUR COMPANY DOCUMENTS IN ORDER
[Infographics] [BENEFITS OF TIDY IN DOCUMENTS:
Reduce taxes – all your business expenses can form the basis for a reduction in income tax, so it is important to keep all your invoices in one place.
You save time, money and nerves – in the event of a possible audit by the office, you are not frantically chasing around the office looking for lost documents. In addition, this tidying up will also make it easier for the officials.
Deadlines – entrepreneurs in Norway are required to meet certain deadlines, e.g. if your company is already registered for VAT, you must remember to submit your VAT returns every two months. If you keep your documents in order, it will be much easier to collect the necessary documentation to prepare such a declaration].
All pluses and zero minuses! But how to organise it all? Everything will be explained in detail in a moment.
-
- Binders – set up one binder for each year of your business.
- Bookmarks in the binder – it is a good idea to create the following bookmarks:
[Infographic] [TABS IN SEGREGATOR It is a good idea to create the following tabs:
bank statements from the company account
cost invoices and receipts
revenue invoices
confirmations of advance payments of income tax
VAT returns filed
other company documents (e.g. documents relating to the ownership of a car or other fixed assets, as well as applications filed in connection with the operation of the company)].
- Employee binder – if your company has employees, it’s a good idea to keep a separate binder for documents related to employees, i.e. sick leave, employment contracts or work cards, for example.
Simple, right?
It is worth knowing that accounting documents related to your company should be kept for several years. You can find detailed information here.
WHY IS IT WORTH HAVING AN ACCOUNTANT?
If a business owner is a specialist in his or her field, enjoys what he or she does and pursues his or her passions at work, but does not feel strong in accounts and legal issues – it is worthwhile for him or her to get help in this area. Especially as there is often another barrier for Poles, as well as other immigrants in Norway – the language barrier.
In order for an entrepreneur to feel secure abroad, he or she should start working with an experienced accountant. His/her assistance is not only about entering invoices into an accounting programme and calculating taxes.
[Infographic] [In recent times, the accountant has more tasks. HAS BECOME AN ADVISOR , WHO:
reminds you of filing deadlines,
checks the correctness of documents (e.g. invoices or contracts),
shows the status of settlements with clients and other institutions,
issue revenue invoices and payment reminders,
advise on what to include in company costs,
saves time related to following the changes in tax law,
correctly manage the process of hiring employees and calculating salaries,
remotely assist in resolving official matters,
ensures order and clarity in your accounting records,
takes care of the archiving of documents,
helps to correctly interpret and read the company’s results,
will advise on how to optimise taxes in a legal manner,
will present the company’s forecasts for subsequent periods].
The adviser uses accounting software, which usually has extensive report-generating capabilities, which can make it easier to control the company’s financial situation and verify settlements with counterparties and authorities. The records make it possible to assess the outcome of the business and whether the company is making money and has met its objectives. This information is worth using to improve the offer – so that the company’s income grows.
This is why it is so important to select an accounting firm that can safely guide the company through the complexities of Norwegian accounting. It is best to establish long-term cooperation with such an advisor. This will result in absence of risky financial behaviour, transparency in documents and maintaining punctuality in obligations and settlements with authorities.
A good accountant is also the kind of person who sometimes questions the financial documents that the entrepreneur provides. If an accounting office books everything, even private expenses of employees or business owners, many irregularities will come to light at the first inspection. And coming across obvious accounting errors will give the office a pretext to audit the previous years.
The task of such an advisor is to provide overall support for the business. A professional accounting firm acts as a partner and provides business support that is mutually beneficial. Unfortunately, many entities that offer their bookkeeping services are limited to fulfilling the basic tasks assigned to them by the client company.
We wish these right decisions – both in the choice of business partners and reliable advisors – to all Entrepreneurs.
FAQ
Do I need to invest in an accounting programme?
Not if there are less than 600 accounting transactions per year in your company.
You can use, for example, excel for bookkeeping in Norway. However, this is not considered good accounting practice.
Can I deduct petrol and other car-related costs if I use a private vehicle for business 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 trips.
How do you keep a driver’s log book?
The driver’s log book, or kjørebok, is a record of the kilometres driven, and on the basis of this you can deduct costs related to the use of the car in the course of business. The date of the journey, the purpose of the journey, the route taken and the number of kilometres must be entered in the logbook.
Do I need to collect petrol receipts if I keep a driving book?
In this case, you do not need to.
Can a loan instalment for a company car be a business expense?
A car instalment cannot be recognised as a business expense. Interest on a loan and depreciation of a fixed asset are considered business expenses.
I have a leased car. Can I include the lease instalments in my costs?
Yes, lease payments are a business expense.
Can I include the annual tax (Årsavgift) for the car as an expense?
Only if the car is a fixed asset in the company.
I bought the machine for NOK 30 000 and was hoping that my income would be less by this amount. My accountant said that he did not book this purchase as a one-off. I do not understand what this means.
A purchase of more than NOK 15 000 is not accounted for as an expense immediately in full. Such an expensive machine must be depreciated over several years. The depreciation rate depends on the type of machine (check here), e.g. an office machine for NOK 16 000 would be deducted in costs at 30% of the purchase amount, i.e. NOK 4800 in one year, NOK 4800 the following year, etc.
Is it always necessary to keep records of fixed assets?
Yes, you must keep records of fixed assets, which include office equipment, machinery, computers and all tools.
Can a private telephone with a company subscription be included in business expenses?
If the phone was used for business purposes, then the cost of those calls will be a business expense. It is difficult to separate which calls were for private matters and which were for business matters. Therefore, the office has assumed an amount of NOK 4392 to be withdrawn from costs at the end of the year.
I rent two flats, in one of which I have an office. Can the costs of rent and electricity in the flat be included in company costs?
The rent and electricity charges in the flat where the business is actually carried out can be included in such costs.
My office is located in the flat where I live. I have set aside one room for work, and I use electricity for my business. How can I deduct this cost?
There are two ways to deduct:
– NOK 1700 maximum (as hjemmekontor). This is a standard amount that does not require any invoices
or
– proportionally. E.g. if the flat is 50m2 and the room where the office is located is 10m2. You can then deduct 20% of all housing costs (for rent, electricity, etc.).
Do I have to pay anything else for the employee besides his/her salary?
In addition, Arbeidsgiveravgift, Pensjonskostnader, Yrkesskadeforsikring, a health and safety course, provision of working clothes etc. must be paid for him/her.
In which account do I book unpaid wages for employees?
2930 Skyldig lønn.
The accountant tells me to open a Skattetrekkskonto. Why do I need another bank account?
It will be used to secure an advance payment of income tax for the employee. The advance payment is paid every two months, so every month you need to set aside a sufficient amount in this account to make the payment to the authorities in good time.
I am a business owner and sometimes I am away on business for a whole day. Am I entitled to any per diems?
You can deduct a meal allowance of NOK 88/per day for working more than 12 hours.
I have a construction company. I have bought a laptop. Can it be an expense in my company?
If you will be using it for company purposes – then yes. The important thing is that you can prove to the authorities during a possible inspection that it is necessary for your business.
Can I deduct commuting expenses?
These expenses can be deducted in your annual return. However, they are not deductible costs in a company.
I have not been able to set up a company account. Can I pay for materials and employees’ wages in cash?
Only up to NOK 10 000 per year. Anything above this limit will not be an expense in the company.
Sometimes I get confused with my bank cards, I will pay for company expenses with my private card and with my company card for private purchases. Is this a big mistake?
You cannot do this in a company. However, in a sole proprietorship it is possible. Every transaction on the company account must be registered in the accounting software so that the balance of the Bankinnskudd (numbered 1920 according to the chart of accounts) is the same as on the bank statement. It is important that, when payments are made from the private account for expense invoices, the accountant is informed of this event.
The company has bought a car. Do I mark this purchase somewhere in the accounting software?
Yes, fixed assets are recorded in accounts starting with the number 1. The car is shown in account 1230.
I am the owner of the company. How can I make withdrawals to myself?
Shareholders cannot make payments to themselves whenever they want. They should be paid on an employment basis (like an employee in a company), styrehonorar (i.e. shareholder remuneration) or through dividends.
I import goods of small value from Poland. Should everything be declared at the border?
In 2020, the 350 NOK import allowance will be abolished. From 1 January for sensitive goods and from 1 April for other goods.
I am looking for information on the rules for importing goods into Norway. Where can I find them?
The rates of duty applicable to the importation of goods into Norway must be determined each time at the Norwegian customs office (www.toll.no).
Can I book an invoice from Poland for the purchase of materials?
Yes, but only if the customs procedure has been carried out correctly and all customs documents have been completed.
I recently received a giro for NOK 250 from RVO. My Norwegian accountant said that I have to pay this amount, but I do not understand what it is?
Yes, your accountant is correct. It is a compulsory fee for companies in the construction industry. The regionale verneombud (RVO) programme covers all those involved in construction work, including individual contractors. It aims to improve safety in this industry. RVO representatives make unannounced visits to construction sites and provide information on the necessary regulations for construction work.
NOK 250 is the minimum amount to be paid for companies without employees. If employees are employed, the fee increases in proportion to the number of employees. Employees who work in the company’s administration or services that fall under industries other than construction are not included. The levy is currently 0.03% of the gross salary (of construction employees and of the business owner if he also works on site) calculated on the basis of the previous year’s accounts.
The calculation can be found at: ba.rvofond.no/avgiften
Can I include postage stamps as an expense?
Yes, if the stamps were used in the company.
What does a Norwegian invoice contain?
The invoice should contain the following information:
– the invoice number,
– the organisational number of the company, including whether it is subject to VAT,
– Date of issue of the invoice,
– date of payment,
– details of the seller,
– details of the buyer,
– bank account number of the seller,
– price and description of goods or services.
What requirements do I have to meet to start issuing invoices?
First of all, the company must be registered with Brønnøysundregistrene. The entrepreneur will receive a confirmation of the company’s registration together with an organisation number, which must appear on each invoice. Once the company has been successfully registered, a company bank account must be set up. Once these formalities have been completed, the business can start and the first invoice can be issued.
Do I have to start numbering invoices from the beginning after the new year?
No, the numbering of invoices should continue. If in the old year the last invoice issued was numbered 585, the first invoice in the new year should be numbered 586.
Is it possible for an unemployed person with a work permit and tax card to issue invoices without having their own company in Norway?
Only entities with a Norwegian organisation number can issue invoices. The easiest way to obtain such a number is to set up a sole proprietorship, a so-called Enkeltpersonforetak. The establishment of this type of business is free of charge and does not require equity capital. Up to 50 000 kroner you do not have to pay VAT, so running such a company will not be complicated.
Can I deduct VAT on every expense?
No, there are some expenses on which you cannot deduct tax in your VAT return, such as hotel, food or entertainment costs.
When will I be able to invoice for VAT?
As soon as the company is registered for VAT.
If I have five or more employees, do I have to register with Foretaksregistret?
Yes.
Where can I check how much advance payment I have made in the current year?
You can check this information on altinn.no in the form Mine krav og betalinger.
If it turns out at the end of the year that I have not paid enough advance payments, by when do I have to pay?
If an entrepreneur wants to avoid penalty interest, he/she should pay the tax by 31 May of the following year.
How do I calculate tax on an income of NOK 970 000?
Income tax in Norway in 2021 is 22%, but more income is taxed at higher rates.
Here is how to calculate the tax if someone has an income of NOK 970 000 during 2021:
184 800 * 22% + (260 100 – 184 800) * (22% + 1.7%) + (651 250 – 260 100) * (22% + 1.7% + 4%) + (970 000 – 651 250) * (22% + 1.7% + 4% + 13.2%) = tax payable.
I have 25 employees and a large income. Does anyone need to verify the accounting of my company?
One of the conditions regarding the number of employees is met. If the company’s annual turnover is more than kr 5 million then it will be necessary to have the balance sheet and annual accounts verified by a chartered accountant.
I am constantly reminding my clients about unpaid invoices. This costs me a lot of stress and postage. Can I charge customers for postage costs?
Yes, in 2020 there is an additional charge – purregebyr 70 NOK – for sending inkassovarsel to a customer who is in arrears with the payment of an invoice. Interest may also be added for late payment.
How long do I have to keep my company invoices?
Company documentation, i.e. income and expense invoices, should be kept for five years after the end of the accounting year.
What happens to the documents that remain after the closure of the company’s bankruptcy procedure?
This is decided by the trustee who is handling the case. He has the right to decide whether to hand over the documents to authorised persons or to destroy the documentation if no interested parties are found.
Is it possible to receive official correspondence via Altinn?
Yes. If you wish to receive official correspondence electronically, you can do so by completing form RF-1299 on Atinn.no. Notification of new messages will be sent to the e-mail address provided during registration.