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Understanding Payroll in Norway: What Global Companies Need to Know About Norway's Payroll

Jun 27, 2017 

The Scandinavian country of Norway has a lot more going for it than just spectacular mountain scenery and fjord-laden coastlines. It’s a happy place to be, as determined by its residents. Norway ranked #1 in the World Happiness Report 2017, driven mostly by reasons like health, freedom, income, and honesty.  

What else makes Norwegians happy? A strong economy is a prime factor. Norway’s economy is driven mainly by oil production and exploration, agriculture and shipping. The country’s 5.3 million people work hard, contributing in areas of technology, oil & gas, fishing centers and marine and sub-sea occupations. This helps Norway to maintain its high standard of living, while helping its citizens achieve a good work-life balance. Most of Norway’s population is centered around its top three most populated cities - Oslo (647,676); Bergen (275,112) and Trondheim (184,960)

The characteristics that make Norway a pleasant country also make it a generally favorable country for business. Forbes ranked Norway #9 on its 2016 list of Best Countries for Business. Business growth is expected to move up 1.6% in 2017, according to GDP estimates.

Global companies working in Norway with an international payroll can get help ensuring compliance and accuracy of payroll results with a global payroll provider.

Getting Started

To start a business in Norway, a global employer must get registered to receive a tax number. This is a requirement for companies to pay taxes, payroll, and social security. Companies should allow for between 30-60 days to get a tax ID number. All relevant paperwork and accounts must be filed with the Registrar of Company Accounts in Brønnøysund, Norway.

Required paperwork to establish operations in Norway must include an annual report, balance sheet, income statement, cash flow statements and other accounting criteria. Having the tax number allows a company to pay employees, sell goods, manage taxes and other forms of business operations.

The Tax ID number is required for companies to set up separate bank accounts for the business and as individuals. These accounts can be set up at most Norwegian banks quickly, especially if the global company is already part of the EEA (European Economic Area). Previous bank statements, company paperwork, and identification from authorized managers with access to the account will help in setting up your bank account efficiently.

Having the bank accounts set up enables the company to pay all business expenses, using company funds earned by the business.

Payroll Assessment

Employment Laws/Employee Rights

When hiring new employees for the business, global companies have to follow pertinent laws around hiring, overtime, and any union-focused collective bargaining.

Average Norwegians work between 35-40 hrs./week, often making time for family in the late afternoon. It’s generally followed that employees should not work nine or more hours in a 24 hour period, and no more than 40 hours over a seven-day period.

Employers in Norway are required to show in employment contracts the following information:

● The contracted length of employment

● Working hours, job description and conditions of work

● Expected salary, how often payment is made and in what manner

● Any job probation period (3-6 months average)

● Terms of giving notice (during and after probationary period)

● Holiday leave, maternity leave and pension information

Compensation

There is no legally mandated minimum wage for employees in Norway. Employee pay is largely based on a national scale, which is negotiated by representatives of government, labor unions and companies.  

Norwegian employers are subject to strict guidelines about reporting income for employees. Companies must report the income, taxes and national health insurance contributions on a monthly basis. Payroll regulations also stipulate that employers also show sick pay or parental leave pay, holiday pay and the annual holiday payment.  

Tax Requirements/Collection/Withholding

Norway is well-known for its high standard of living, but this comes at the expense of high tax rates. Companies in Norway pay a flat national tax rate of 24%. That’s based on net taxable income.

This amount fell one percent from 25% for non-financial services workers at the start of 2017. The Norwegian Ministry of Finance announced an added 5 percent payroll tax on employee wages for financial services companies. This new rule impacted companies that have at least 30% of their activities in financial services. For a comparison with its Scandinavian neighbors, Denmark’s rate is 60.4% and Sweden’s rate is 56.4%. 

Employees get tax taken out automatically from their paychecks. Tax rates vary for certain taxes, like social security contributions, but that’s on top of the already high 25% for individuals.

Leave – Sick, Maternity, Vacation, Absence, Holidays 

Employees are entitled to ‘self-certified” sick days. These are when an employee feels that he in unable to work because of sickness. If the illness persists after three days, the employee is asked to see a doctor and provide a certificate from the doctor verifying the illness.

Norway is very generous when it comes to maternity leave for parents. The law mandates that employers provide maternity leave to parents of 46 weeks off at full pay, or an additional 10 weeks off to 56 total weeks at 80 percent pay.

There is also the generous annual leave that employers must provide to employees who have worked for the company for over a year. Employees receive four weeks (plus one day) annual leave at full pay, and five weeks off if the employee is over 60 years old.

Date Norway's Public Holiday Schedule
 January 1st  New Years Day
 Thursday before Easter Sunday  Maundy Thursday
 Friday before Easter Sunday  Good Friday
 Monday after Easter Sunday  Easter Monday
 May 1st  Labor Day
 May 17th  Constitution Day
 40 Days after Easter  Ascension Day
 7th Monday after Easter  Whit (Pentecost) Monday
 December 25th  Christmas Day
 December 26th  St. Stephen's Day

Summary

Setting up business operations in Norway can be time-consuming for a new company. That’s why it makes sense for global companies to outsource the payroll solution and filings to an established global payroll provider for the country. Once the necessary guidelines are met and paperwork is filed, companies can move forward doing what they came to do - doing business in Norway.


This article is for informational purposes only and not intended to convey or constitute legal or any other advice. It is not a substitute for advice from a qualified professional.


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