Norway is an excellent place to work as the country’s employment laws are generous and employee centric. However, Norway has specific payroll and taxation rules that can make it difficult to set up payroll and hire employees. Here are some key considerations to help you navigate these complexities.
Taxation rules in Norway
General income is taxed at a flat rate of 22%. The general income tax base comprises all categories of taxable income (i.e., income from employment, business, and capital). Tax allowances, expenses, and certain losses are deductible when computing general income.
As of 2023, the social security rate owed by the employer in Norway continues to be 14.1%. Employee contribution rates are levied on the personal income basis, with a 16.7% maximum for higher salaries and a minimum of 12.8% for lower salaries.
Employers are required to report all employees’ income, tax deductions, and national insurance contributions each month.
Norway payroll options for companies
Companies that expand to Norway have 3 main payroll options:
- Internal: Larger companies planning on keeping an active presence in Norway can hire a team to run payroll out of their Norway subsidiary. However, this option is more expensive and time-consuming for businesses.
- Local Norway payroll processing company: If you don’t want to manage payroll alone, you could outsource it to a Norway payroll processing company. However, you will still be liable for any compliance matters that arise.
- Employer of Record: By partnering with an employer of record, such as G-P, companies can skip local entity setup and start paying teams quickly and compliantly.
How to establish a payroll in Norway
Once you decide on the best Norway payroll option for your company, you’ll need to retrieve some information from employees, such as personal ID number, tax deduction card, and emergency contact information.
Entitlement and termination terms
Norway has strong termination protections for employees, so including entitlement and termination terms in a written employment contract is essential. The notice period for an employer dismissing an employee ranges anywhere from 1 to 6 months, depending on the employee’s time with the company and other factors. Keep in mind that probationary periods are common and can include different entitlement and termination terms.
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