New withholding tax regulations with effect from 1 January 2019 regarding foreign workers

The new regulations will make it easier for many foreign workers coming to work on short term in Norway.

Under the new regulations, withholding tax of 25% is deducted from the salary. The employee receives no deductions, and does not need to file a Norwegian tax return. The regulations apply to those who have salary income below NOK 617 500 (2019). The regulations do not apply for persons with other kinds of income than salary income. In such cases the general tax regulations will apply.

The regulations include foreign workers with limited tax liability to Norway. This assumes that the persons stay in Norway does not exceed 183 days during a twelve-month period, or 270 days during a thirty six-month period.

It’s optional to use the new regulations. The employee may choose to be taxed according to the general regulations, and in some cases this will be the best option. This applies for example if the taxpayer is a commuter and is entitled to tax deductions foradditional expenses for food, accommodation and travel to and from the commuter home, provided that this deduction is of some significance.

In connection with the introduction of the new regulations, the current standard deduction for foreign employees will be repealed.  The standard deduction is a general income deduction for foreign employees who work in Norway. The deduction amounts to 10 % of gross employment income, subject to a maximum of NOK 40000.