Income from | to | Tax Rate

NOK 208.051 | NOK 292.850 | 1.7%

NOK 292.851 | NOK 670,000 | 4.0 %

NOK 670.001 | NOK 937.900 | 13.6 %

NOK 937.901 | NOK 1.350,000 | 16.6%

over NOK 1.350,000 | 17.6%

In terms of its taxes, Norway is no exception compared to the other Scandinavian countries: they are relatively high. Nevertheless, there are some peculiarities in Norway regarding taxes. Most notably, the tax authorities publish information about the income, assets and taxes paid by each taxpayer. For particularly prominent people, this data can thus be read annually in the local newspapers. Indirectly, this makes tax evasion more difficult, but for us in Germany this is a strange approach.

1st Taxation in Norway – Introduction

Normally we like to report on foreign tax regimes that know tax breaks in one form or another. However, in this article we will inform about taxes in Norway, a country that hardly anyone associates with particularly benevolent tax relief, but with many extra-tax peculiarities that characterize the country. So it is no wonder that in recent years many wealthy Norwegian entrepreneurs have left the country and settled in Switzerland.

Taxes in Norway: general information about the country

When we talk about Norway in general, superlatives and a fascinating story play a big role. From this, traditions and folklore flow in a way that only Fortuna’s horn can produce.

2.1 Nature in Norway

Let’s start with the nature of Norway. It is known as the Land of Fjords and extends far beyond the Arctic Circle. Like the fjord coast, all other landscapes in Norway are a product of the Scandinavian ice sheet, whose mighty glaciers in the last ice age for tens of thousands of years continuously grinding and hobbling the old gneis and granite crushed. The result is a mountainous country that appears rocky rugged and inhospitable, but by no means has the classical alpine character of Austria or Switzerland. Only the Lofoten look as if the Matterhorn and its siblings had been sunk to the summits in the sea.

And the sea, the North Sea, Skagerrak, Barents Sea and the Atlantic, is rough, merciless and vast. Where the windswept waves burn on land, they tirelessly grind the hard, bare rock. In the long fjords, however, it is usually as quiet and quiet as the water is deep, cold and clear. And yet it is the sea that keeps Norway as far as the far north ice-free and reasonably habitable. Because without the warming Gulf Stream, Europe would probably still be little more than a huge freezer.

Add to that the light and darkness. In summer, the sun shines in large parts for 24 hours, in winter it remains night. Unless you are lucky enough to see an Aurora borealis ghosting across the pitch-black sky on one of the icy nights.

Norway is and will remain a country where, as a human being, you constantly face the challenges of nature – small and weak before its majesty.

2.2 History of Norway

2.2.1. Prehistoric period

And yet man has dared to defy her. Since the ice sheet melted and released the first coastal strips, they settled people in Norway. The basis for this is probably the fish-rich waters, which initially offered a dwindling population a first livelihood. Little has changed in terms of population density in Norway since that ancient time. Compared to other European countries, with a population of just under five and a half million, very few people live here. More than a quarter of them are concentrated in and around Oslo, the capital of Norway in the south of the country; The rest is almost deserted.

2.2.2. The Middle Ages – the Viking period

But before Oslo became a population magnet, in the early Middle Ages and before and after, there were hardly any larger villages in Norway. It was the time of the Vikings. They were farmers and seafarers, opportunists who once traded, once extorted protection money by force of arms or took it with them, which was easy to rob. As capable and intrepid warriors, however, they were also in the pay of foreign powers, such as the Emperor of Byzantium, whom they valued as a bodyguard because they had no political ambitions. In Russia and Ukraine, however, this was different. Because Russia goes back to the establishment of city-states by Scandinavians who settle there. Western Europe, on the other hand, experienced centuries of horror from marauding Norse, many of whom also came from Norway. But some remained in the lovelier south, settled and mixed with the local population. In the name of Normandy, her influence still echoes today.

2.2.3. The modern age – independence for a people under foreign rule

We know that the end of the Viking Age goes hand in hand with the Christianization of Scandinavia. But it is perhaps more related to the socially logical establishment of centrally controlled kingdoms, for which the new religion offered a welcome divine justification. Thus, sparsely populated Norway first fell to the Danish crown for many centuries through a personal union. Because Denmark, with its stronger economic power and the advantage of an efficient administration, could claim Norway without having to worry about national resistance from the Norwegians. After all, for a long time, most Norwegians regarded their livelihood as their primary and only concern.

But the more the consolidation of nations in Europe and elsewhere in the world increased over time, the more Norwegians became aware of their national identity. Although Norway had in the meantime entered into a personal union with Sweden in the 19th century, the resistance to foreign domination that was gradually emerging in Norway was sufficient to convince Sweden in 1905 to release Norway into independence. The Norwegians celebrate every year on the 17th. May their constitution (of 1814) as a sign of the achieved national sovereignty.

2.2.4. The Norwegian Economic Miracle

Freedom came, poverty remained. The German occupation in the Second World War also had its share in this. As the Wehrmacht withdrew south before the advancing Soviets, they destroyed virtually all buildings and infrastructure in northern Norway in their scorched earth tactics.

Nowadays, Norway is one of the most prosperous countries in the world. It is hard to believe that even 100 years ago Norway was a poorhouse – underdeveloped and enduring. However, after discovering offshore oil and natural gas in large quantities in the 1960s, Norway underwent unprecedented economic development. This, as well as its many other natural resources – fishing, timber, hydropower, important ores and other minerals – also benefits Norway today.

3.Taxes in Norway: general information on tax law

Just like Germany and many other European countries, Norway imposes taxes on world income. The general assessment period also corresponds to ours with the calendar year. Therefore, it is not surprising that there are also rules on tax liability in Norway that are based on the characteristic of residence. However, in Norway you set a certain number of days that you are resident in the country in order to be considered resident there. The threshold for this is 183 days within a twelve-month period. In addition, over a period of 36 months, exceeding the limit of 270 days also leads to an unlimited tax liability in Norway.

A relatively high percentage of the Norwegian population can look forward to working abroad at least temporarily. For this reason, it is understandable that the tax law in Norway has also made corresponding regulations for this eventuality. For example, the unlimited tax liability in Norway is only waived if you can prove that you have spent a maximum of 61 days in Norway during the assessment period. If, on the other hand, you have had unlimited taxation in Norway in the past ten years, you have to prove this condition even for three consecutive years. Only from the fourth year, therefore, the unlimited tax liability in this case ceases.

The counterpart to unlimited tax liability is also limited tax liability in Norway. It concerns only those taxpayers who are exclusively resident abroad but are nevertheless related to sources of income or assets in Norway.

4. The individual types of taxes in Norway

4.1.Taxes in Norway: Income Tax

Income tax is applicable in Norway both at the state and at the level of the Fylke (provincial bodies, equivalent to German federal states) and the cities and municipalities. In this respect, the Norwegian taxation system is more similar to those of the US or Switzerland than our own. And yet there is a clear difference, because in Norway the taxation of income is divided in two.

4.1.1. Basic allowance and advertising deduction

In Norway, a basic allowance of NOK 73,100 (10 Norwegian kronor equivalent to about EUR 0.90) is deducted from income to determine taxable income, which is the basis for collecting ordinary income tax at the level of the Fylke and municipalities.

In addition, employees have the possibility to deduct the actual expenses related to their work from income as advertising costs. Alternatively, they can also calculate their advertising costs flat-rate. For this, you set 46 % of the income, a maximum of NOK 104,450. However, this minimum deduction covers only part of the advertising costs. Further advertising costs may therefore be included if, for example, costs for a work-related stay away from home, travel costs, trade union contributions up to NOK 7,700 or pension contributions have been incurred.

Furthermore, you can also use an allowance when taxing pensions. This is 40% and is limited to a maximum of NOK 86,250.

4.1.2. Ordinary income tax

And now to the two-part income taxation in Norway: up to an amount of the taxable income of NOK 208.050, the levy flows as ordinary income tax to the Fylke and municipalities. For this purpose, a flat-rate income tax rate of 22% is applied. For the two northernmost fylkes on the Norwegian mainland, however, there are exceptions to take into account the difficult living conditions in these remote parts of the country; this is intended to counteract the rural exodus that is particularly relevant there. In 2024, the flat-rate tax rate in Fylke Troms and Finnmark is 18.5%.

4.1.3. Progressive income tax

For income above NOK 208.050, the taxation of income is progressive and the revenue is then due to the state. For this purpose, the following tax classes and tax rates apply:

Taxable income includes, in particular, those arising from an employment relationship and pensions, from business operations (both sole proprietorships and partnerships) and from capital assets to which rental income is also attributable.

In this context, it should be mentioned that in Norway, wage tax is also withheld as withholding tax by employers and paid to the Treasury.

Furthermore, pensions are subject to a reduced tax rate of 15 % if they are pensions from Norwegian sources.

Certain capital gains are subject to special taxation. If they are related to dividend distributions, the amounts received must be multiplied by a factor of 1,72, so that the effective tax rate increases to 37,84 %. In addition, profit distributions to recipients abroad are in principle subject to a withholding tax of 25%, on which, however, any double taxation agreements exert a mitigating influence. Norway also collects other payments abroad with a withholding tax, such as royalties and similar fees for the transfer of assets.

It is also interesting that Norway even taxes rental income from foreign rentals. If there are double taxation agreements, they are decisive. Norway has concluded double taxation agreements with Germany, Austria and Switzerland, among others, as well as with all other Scandinavian countries.

4.1.4. Alternative income investment for employees from abroad

In addition, there is an alternative income tax regime for employees from abroad who only enter into employment in Norway at short notice, the pay-as-you-earn system or PAYE for short. Here, employers retain a flat-rate income tax of 25% as a withholding tax. This also includes all social security contributions. A recognition of advertising costs or other deductions, however, is excluded. In terms of taxation, the PAYE taxation regime can be both beneficial and detrimental to the taxpayers concerned compared to regular taxation, so it is worthwhile to calculate more precisely here.

The prerequisite for PAYE taxation is that the income is below a certain threshold (NOK 670,000 for 2024). It always corresponds to the second income level in the progressive tax rate system (see above).

When applying PAYE taxation, there is no provision for filing an income tax return, nor is there a tax assessment. For this purpose, the tax authority receipts the paid PAYE tax in the year following the assessment period.

4.2.Taxes in Norway: Corporate Tax

4.2.1. General information on corporate tax in Norway

Entities, in particular corporations, are subject to corporate tax in Norway if they have their registered office in Norway, the management takes place in the country or if they do business there. The world income principle also applies to them. It should be noted that the vast majority of all companies in Norway exist in the legal form of a public limited company (Aksjeselskap, abbreviated AS). There is no exact counterpart to the GmbH.

In contrast to income tax, the tax revenue from corporation tax is exclusively due to the state. In addition, there is no equivalent to the German trade tax in Norway.

4.2.2. Corporate tax in Norway

Corporate income tax is a flat-rate tax in Norway. The corporate tax rate is 22 %. It is therefore just as high as the ordinary income tax. If one considers trade tax as the second significant corporate tax in Germany, the taxation of corporations in Norway is only slightly lower, but uniform throughout the country.

Certain financial services institutions, on the other hand, have to tax their income at 25%.

4.2.3. Derogations with regard to corporate tax in Norway

4.2.3.1. Taxation of the oil sector

If a taxable company is one that makes a profit from production and production in the petrochemical sector, it pays an additional tax to the corporate tax. In addition to the 22 %, a special tax of 56 % is added, so that the total burden in this sector, which is so important for the Norwegian state budget, is 78 %. However, this special tax can be reduced by investments in further production. At the same time, a linear depreciation of investments takes place over six years, which has a tax-reducing effect on the normal corporate tax at the 22 % tax rate.

4.2.3.2. Taxation of electricity-generating hydropower plants

A similar corporate tax exemption applies to companies engaged in the production of electricity from hydropower, provided that they have a capacity of at least 10,000 kVA. Here, the total tax burden in Norway rises to 67%. It is interesting here that in addition taxes on so-called random profits can be incurred. For realised electricity prices of NOK 0,7 per kWh, 23 % of taxes are charged on the part of the income realised at these or higher prices.

In addition to corporation tax, the electricity producers mentioned here also have to pay a levy on natural resources. The tax is measured according to the amount of electricity generated in the year of the assessment and in the six previous years. A tax of NOK 0.013 per kWh then applies to one-seventh of this sum. This tax can be counted against corporate tax.

4.2.3.3. Optional tonnage taxation

As a large maritime nation, it is not surprising that Norway also levies taxes in a special way in the shipping sector. Norway also has tonnage taxation. It is optional. If it is used, it binds the company for ten years. The provisions on tonnage taxation in Norway are extensive. In addition, the Norwegian Parliament sets the applicable tax rate annually. Therefore, the presentation of further details is unnecessary at this point.

4.3.Taxes in Norway: VAT

Deliveries and services are subject to VAT in Norway. The general rule rate is 25%. Since travel in Norway requires relatively high transport costs due to long distances and these also affect the rural exodus, it has been decided to set the VAT rate for domestic passenger transport of all kinds at 12 %. In addition to this tax rate, services in the field of sporting and cultural performances as well as museum admissions must be taxed. On the other hand, print media (books, newspapers, etc.) and their digital counterparts have a tax rate of 0%. Social and medical services and financial services remain completely tax-free. With the exception of the rental of parking spaces, the rental of real estate is also exempt from tax. However, as in Germany, you can optionally charge sales tax for rentals.

4.4. Tax incentives for companies in Norway

Norway meets companies in tax terms, especially in two aspects. On the one hand, all companies that are taxable in Norway can apply to deduct 19 % of the costs of research and development (maximum NOK 25 million per year). Research and development efforts must aim to produce new or improved services, products and other economic goods and production processes. If the profit of an applicant company is less than the tax credit, it will receive a payment of the difference. The Norwegian Research Council decides on the granting of this tax deduction or funding. The duration of the grant is limited to a maximum of three years.

Secondly, when transferring assets within a corporate structure, you can apply to the Ministry of Finance so that this transfer remains tax-free. For this purpose, the participation or voting rights must be at least 90% in one hand.

4.5.Taxes in Norway: Property Tax

Norway pays property tax at both state and local level. Taxpayers pay a property tax of 0,7 % on assets exceeding NOK 1,7 million to the municipalities and 0,3 % to the State. If the taxable asset exceeds NOK 20 million, the excess amount is 0.4% as a state property tax. For married couples, the tax bases for both municipal and state property tax double (NOK 3.4 million and NOK 40 million).

In addition to real estate, shares and other company shares, securities and other valuables, own vehicles also belong to the taxable assets, thus in particular cars, motor boats and yachts.

4.6. Property tax

In addition, there is another municipal tax, which concerns real estate assets that serve for own residential purposes (including holiday homes). However, municipalities can decide under their own control whether and, if so, to what extent they collect a property tax. If they decide to collect a property tax, municipalities are bound by two conditions. Thus, the property tax must be at least 0.1% and a maximum of 0.4% of the property value.

Corporations may also be obliged to pay property tax. However, there are some special rules that apply here, for example, to operators of hydropower plants.

4.7. Inheritance and Gift Tax

Since 2014, neither a gift nor an inheritance tax is paid in Norway.

4.8. Document tax on real estate transfers

For the transfer of real estate is also a tax in Norway, the so-called document tax. It accrues at 2.5% on the value of the transferred property. Exceptions are provided if the transfer takes place between spouses or by way of inheritance. Also in the case of a transfer of real estate between persons of a common household, no document tax is required.

It is noteworthy that the cartography authority of the country (Kartverket) is charged with taxing such transactions. Indeed, it also fulfils the function of a land registry office.

5.Taxes in Norway – Final Considerations

First a restriction. Here we talked about the tax law of Norway, but in fact excluded the fact that Spitsbergen has its own tax law. Since Spitsbergen is a very special situation, although the archipelago officially belongs to the Norwegian territory, taxation in this area takes place under the special rules of the Svalbard Tax Act. Although it is strongly based on Norwegian tax law, there are specific regulations for this region, the reproduction of which we had to waive under this article in order to keep the framework manageable.

Norway has an elaborate and highly diverse tax law even without this special tax law. Nevertheless, the taxation of natural and legal persons is generally rather simple. Above all, the collection of taxes, which starts with the fact that between March and April of each year a pre-filled tax return is sent by the respective competent tax authority, is very simple. If you have no reason to make changes, you can even do without a return. The tax office then sets the taxes with the information known to him and then sends a tax notice. Compared to the annual drama that many taxpayers in Germany experience around their taxes, tax collection in Norway is therefore playfully simple. At least this is a contrast to the otherwise so harsh nature of the country.