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Frequently asked questions

The decision concerning the type of organisation you should choose depends, among other things, on whether you want to be employed in your own company, how much risk you are willing to take, what the scope of the business will be, or how many owners will be involved.

Hvis du tenker å gjøre noe gjøre noe i tillegg til din normale jobb, kan et enkeltpersonforetak være ditt førstevalg.

Hvis du ser på i et langsiktig perspektiv og du forutser mulige utvidelser, kan det være greit å gå direkte på aksjeselskap.

Kort om forskjeller mellom de to formene:

A sole proprietorship has a single owner, is not a legal entity and the owner is liable for all debts. There is no requirement regarding share capital.

Et AS kan ha flere eiere, er en juridisk person, krever minst kr 30 000 i innskutt aksjekapital og ansvar er begrenset til denne kapitalen.

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Source: Altinn Invoice (sales documentation)

The answer is no. Not every business entity is subject to VAT settlements. Some of them are exempt from VAT by way of the exception to the general rule, and some types of businesses are value added tax excluded. All these issues are regulated in the Value Added Tax Act (Norw. Merverdiavgiftsloven).

Four basic conditions must be met for a business to be subject to registration in the Value Added Tax Register (Norw. Merverdiavgiftsregisteret) and to be required to settle VAT:

- Trade turnover must take place within the framework of a business activity.
- Goods and/or services must be sold against payment.
- Trade turnover must relate to goods/services subject to VAT.
- The value of trade turnover (or the value of the goods or services that have been wihdrawn) subject to VAT must exceed the amount of NOK 50,000 over a 12-month period (the threshold determining the obligation to register).

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Source: Sticos. When is a company subject to VAT?

You do not need a separate invoicing software. You can issue invoices using, for example, an Excel spreadsheet. Nevertheless, in such a situation you must make sure that they are printed on pre-numbered and pre-printed forms and include all the required information. This will therefore require you to employ a printing house or another supplier to prepare such forms.

As an accounting company, we can assist you in generating invoices. Alternatively, you can use one of our systems to do it yourself. In such a case, the invoice will be directly entered into the accounting system leaving you with less paperwork to remember.

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Source: Faktura (salgsdokuamentasjon)

If you intend to hire an employee, in addition to his gross remuneration, you must include the additional costs you will incur as an employer in the calculation. Please find below an estimated calculation of the costs of employment.

By a way of example, we will consider a gross monthly salary in the amount of NOK 20,000 and 4 weeks of annual leave:

- a minimum leave allowance of 10.2%: NOK 2,040
- employer's national insurance contributions (high rate) of 14.1%: NOK 2,820
- the costs of the mandatory occupational pensions (Norw. Obligatorisk tjenestepensjon, OTP) (obligatory second pension pillar), system based on a fixed contribution rate at a minimum rate of 2 %: NOK 400
- employer's national insurance contributions on leave allowance and pension costs: NOK 287 + NOK 56 = NOK 343
- total costs: NOK 25,603

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Source: What is the cost of hiring an employee?

The total amount of remuneration collected by the employee is subject to social security contributions and tax on income after deductions. The deductions concern deductible expenses, other allowances and, where applicable, progressive tax on gross salary (norw. trinnskatt). The total tax rate for the employee is therefore higher than in the case in which the same amount is received as a dividend. In return, one is entitled to social security and pension. The company is required to pay 14.1% of the employer's national insurance contribution on remuneration paid. At the same time, it is entitled to deduct all payroll expenses in the accounting records thus lowering the company's tax base.

If this amount is received as a dividend instead, it will only be subject to tax on the dividend, however, it will not be included in the earned basis for sickness benefit or retirement pension. Furthermore, the company may not deduct the dividend as a cost before paying company tax.

 

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VAT - in accordance with the Value Added Tax Act (Norw. merverdiavgiftsloven).

Advance income tax payments for sole proprietors payable four times a year (15th March, 15th May, 15th September, 15th November)

social security contributions on operating income (11.4 %) constitutes a part of such advance payments.

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If you were an employee in your AS, you may be entitled to financial support in the form of unemployment benefit, as well as assistance in finding new employment.

If you are self-employed (as the owner of a sole proprietorship), you can claim compensation provided that the loss of income was due to a situation related to the coronavirus pandemic. If you work as a freelancer, you can choose whether to claim unemployment benefit or compensation.

As of 1st November, there are some amendments to the regulations on who can receive unemployment benefits.

    • If you became fully or partially unemployed either on or after 1st November, the working time must be reduced by at least 50% in order for you to be entitled to the benefit.
      If you were granted unemployment benefit before 1st November, a 40% reduction in working hours suffices. If you work for several employers, a reduction of 50% or 40% respectively must be applied to your total working time.
    • Your income from work must be lowered.
    • You must have earned an adequate income base over the last 12 or 36 months. If you were granted unemployment benefit before 1st November, the income from work must amount to a minimum of NOK 76,013 (0.75 G) [translator’s note: G: abbreviation for National Insurance Basic Amount] over the last 12 months or a minimum of NOK 228,040 (2.25 G) over the last 36 months.
    • You have to be an active job-seeker
      This generally means that you must be able to work at least 50% of a full-time position. Moreover, you have to be willing and able to work anywhere in Norway and participate in outplacement programmes.
    • As a rule, you are required to be a resident in Norway and a member of the Norwegian Social Security System.
      In some cases, you may be entitled to unemployment benefit from Norway even if you do not live there.
    • You have to be under 67 years old
      You may receive unemployment benefit up to and including the month in which you reach the age of 67. This is related to the retirement age in Norway.

 

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Source: Norwegian Labour and Welfare Administration (NAV) Unemployed person

Yes, it is possible.

Such an arrangement has been permitted by the tax authorities since the business activity conducted by a person who lives in a state of matrimony, cohabitation or registered partnership and is self-employed is considered a “joint venture”.

This applies both when the company is owned by one of the parties or when the ownership is joint.

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Source: DNB Are you a sole proprietor and married? You can share the profits of your business.

Yes, it is. In accordance with §10-7 of the Norwegian Working Environment Act (Norw. Arbeidsmiljøloven) , the employer is required to provide continuous access to“an overview which shows the number of hours that each individual employee has worked. The overview must be made available to the Norwegian Labour Inspection Authority (Norw. Arbeidstilsynet) and the employees' elected representative.

The overview must show on which date and at what times the work is performed, the number of working hours, breaks and any overtime.

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The selection of the more favourable car option depends on several factors such as: the price of the car, its maintenance costs, as well as the ratio between the distance travelled for private and professional reasons.

In general, the company car may be considered as a cost-effective option provided that:

  • the car you possess is expensive,
  • you travel a long distance in order to commute between work and home,
  • the number of private travels is high,
  • the number of business travels is low,
  • you are entitled only to a deduction for travel between your home and your place of work (work-related travel).

 

Deduction for travel between home and work is beneficial provided that:

  • the car you possess is of average or low-value,
  • you travel a short distance in order to commute between work and home,
  • the number of private travels is low,
  • the number of business travels is high,
  • you are entitled to a high fixed car allowance for using a private car for business purposes.

 

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Source: Smartpenger. Company or private car?

Both Norwegian and foreign companies (the so called NUFs), as well as public entities that have entered into contracts with foreign companies (subcontractors) to perform assignments in Norway or on the Norwegian Continental Shelf, are obliged to report these assignments to the Assignment and employee register (Norw. Oppdrags- og Arbeidsforholdsregisteret) - electronically or using the RF-1199 paper form.

In turn, a foreign commissioned party who refers employees to Norway is required to submit information on them in the contract reported in the Registry. It may be done electronically or using the RF-1199 paper form.

The parties must report information on the contract and employees not later than 14 days after the works have been commenced. The obligation of reporting to the Assignment and employee register does not apply in the case of contracts worth less than NOK 20 000.

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Source: Information on contracts, commissioned parties and employees

Yes, it is possible, however, it depends on a number of factors, including where the company is registered and where its management is based, how long the contract lasts and what type of contract it is.

If the company or sole proprietor has its registered office in a country with which Norway has concluded a tax treaty, the tax liability to Norway depends on whether the company's income is earned from the business activity conducted through a permanent place of establishment in Norway (a permanent establishment). In the case of sole proprietors, the tax liability may be further dependent on the period of residence of the business owner in Norway (and thereby acquiring tax residence in Norway in accordance with Norwegian tax law). The calculation of NUF’s* tax that is taxable in Norway will depend on the form of organisation of the foreign company.

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Source: Tax for a Norwegian branch of a foreign company

It is not necessary. NUF may receive payments as well as pay taxes and fees to/from a foreign account.

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The most up-to-date tax cards are downloaded from the system before each payroll calculation. Both the employer and the accountant are obliged to deduct 50% tax where an employee does not have a tax deduction card issued by the Norwegian Tax Administration. There may be a situation where a tax card was ordered but has not yet been generated by the Tax Administration since the process may take some time.

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Source: The Norwegian Tax Administration (Norw. Skatteetaten) How to deduct the correct advance income tax payment?

Withholding tax on wages is a tax system for foreign workers.

It is payable by persons who stay in Norway only for short periods in connection with work and during the first year after acquiring tax residence in Norway.

Certain conditions must be met in order to be taxed under this system (e.g., one cannot exceed a certain income threshold, earn income from a business activity in Norway or from real estate, etc.). The employer deducts a fixed 25% tax on the wages of the employees who have tax deduction cards against withholding tax.

If the employee is not a member of the Norwegian Social Security System (Norw. Folketrygden), the tax rate is 16.8 per cent.

The employee does not receive a pre-filled tax return or a regular tax statement. Instead, the Tax Administration sends a receipt which shows how much wages and tax the employer has reported.

Withholding tax on wages is a voluntary scheme. An employee can opt out of this scheme at any time during the year, but no later than on 30th April of the year following the financial year.

Once the employee decides to withdraw from the withholding tax scheme, he is not allowed to rejoin it for a given financial year.

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Source: The Norwegian Tax Administration (Norw. Skatteetaten) Withholding tax

Employers are obliged to ensure that employees have 25 working days of leave (including Saturdays). Therefore, in accordance with the Norwegian Holiday Act (Norw. Ferieloven), annual leave is 4 weeks and 1 day of vacation.

Employees over 60 years of age are entitled to an extra week in addition to the basic 4 weeks and 1 day.

The employee is obliged to take the leave each year. There is a possibility to enter into a written agreement to transfer up to 12 days of annual leave to the following holiday year. When it comes to the leave that is not taken over the holiday year in the violation of the statutory law, as well as due to parental leave or unfitness to work, it is transferred to the following holiday year.

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Source: Annual leave

Merchandise imported and purchased for business use can be accounted for within the company.
The goods must be delivered to Norway in accordance with customs procedures.

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The employer pays for the first 16 calendar days of absence due to an employee's sickness (the so called: “employer's period”). If an employee is absent for a longer period, there is a possibility to continue to pay sickness benefits and claim reimbursement from the Norwegian Labour and Welfare Administration (NAV) or NAV assumes the responsibility for making payments.

In order to be entitled to sickness benefit, it is necessary that the employee has worked for the employer for a period of at least four weeks prior to the moment in which the unfitness to work occurred (except in the case of accidents at work, where the employee is entitled to receive the sickness benefit from the employer immediately, even if the accident took place on the first day of work).
Absence due to illness must be documented by providing a sick leave/medical certificate. In addition, employees who have been employed for at least 2 months may use a self-declared absence due to illness (Norw. Egenmelding). In such a case a sick leave is not required.

A self-declaration may be used to document absence due to illness for up to 3 calendar days in a row (if the indisposition lasts longer, the employee is required to present a sick leave issued by a doctor for the subsequent days).
Such a declaration can be used up to 4 times over a 12-month period.

Employers may extend the right to self-declaration to employees covering up to 8 calendar days in a row and a maximum of 24 days within a 12-month period.

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Source: Absence due to illness and sickness benefit