Working In Norway – What Compliance Considerations Do I Need To Think About?

Norway continues to be an attractive place for companies in the UK to seek opportunities because of it’s proximity and strong ties with the UK business community. There’s a number of reasons companies and their employees land in Norway. Norway is known for its culture on innovation, high quality of living alongside a workforce that has productivity at its heart.

When operating in any foreign country it’s important that businesses are aware of their compliance responsibilities before they send workers abroad. We always advise that it’s better to start on the right foot and do things the compliant way to avoid having to tidy up afterwards. We have seen a number of businesses in recent years securing lucrative contracts in Norway and then receiving letters from Norwegian tax authorities months later.

Why are businesses receiving letters from Norwegian Tax Authorities?

It’s often misunderstood by businesses when exactly their tax responsibilities start from both an employment and corporate tax perspective. The letters sent by Norwegian Tax Authorities advise businesses that they the company has failed to meet their tax obligations.

Very few employers realise that UK residents are liable to Norwegian income tax from the first day of work offshore on the Norwegian continental shelf. There is also a compulsory requirement to advise the Norwegian tax authorities that the company, their employees and any subcontractors are working there. Employers can face fines from the tax authority in Norway unless they’re able  to account for Norwegian ‘PAYE’ from employee salaries and report income and tax on a Norwegian ‘P60’ equivalent each calendar year.

Does the work need to occur in Norway?

Whether the work is offshore or onshore in Norway and connected to oil and gas projects or not, the UK company and its employees will more than likely have Norwegian compliance obligations and potentially a Norwegian tax liability to report and pay. In addition, there will be considerations as to whether the overseas tax paid can be relieved against home country taxes to minimise double taxation.  Employers must also ensure that any subcontractors do likewise otherwise they could be held responsible.

National Insurance (the hidden tax) should not be forgotten. UK residents are, in principle, liable to Norwegian Social Security when working in Norway unless an exemption certificate is secured to allow UK National Insurance Contributions to continue instead, or if legislation does not grant Norway National Insurance rights in the first place.  National Insurance legislation is vast and complex, often resulting in additional unexpected costs therefore it is important to ensure the technical position is considered and the correct paperwork is completed on time where required.

What about the Norwegian Tax Assessment Notice (TAN)?

Once a Norwegian Tax return has been submitted under the general taxation scheme Skatteetaten (The Norwegian Tax Office) will process this. While we cannot give you a specific date that you can expect to receive your TAN- this will be issued and will show your final position for the year. TANs give you a summary of earnings for the tax year, they show you how the authorities have assessed this and provide individuals with a final income tax due amount.

Should I have the TAN reviewed by a specialist?

The Norwegian tax administration system was set up and has primarily been designed for Norwegian individuals. Coupled with the fact that often internationally mobile employees have complex working arrangements we would advise seeking specialist advice with the TAN. Previous experience has taught us that there can be inaccuracies with the TAN. Failure to notice such irregularities and challenge these will mean that the tax authorities consider the TAN and correct, and they will expect the full amount to be paid. You also might incur significant penalties and interest not only for you but also for your employer if you fail to make your payment.

If you have worked in Norway, don’t bury your head in the sand as here at AAB, we are experts in advising companies & individuals that have, or are considering, work in overseas locations and in particular, Norway. Across the team we have decades of experience supporting companies in assessing what their Norwegian reporting obligations may be and support them in making all necessary registration, tax filings and payment requirements, ensuring the process is as seamless and painless as possible.

If you have any queries about compliance obligations when working in Norway or about the TAN please do not hesitate to get in contact with Carol Sim, or a member of our Overseas Employment tax services team.