Norway’s allure for ambitious SMEs goes beyond its breathtaking landscapes. A thriving innovation scene, coupled with a skilled and highly educated workforce, creates a fertile ground for entrepreneurial ventures. However, navigating the intricacies of establishing a local presence and employing talent can seem daunting, especially in 2025.
Navigating the 2025 EOR Landscape:
The year 2025 presents specific considerations for SMEs eyeing the Norwegian market. While the overall economy is projected to experience moderate growth, tighter monetary policy and high inflation are expected to dampen demand in certain sectors. This necessitates a cautious approach, with careful evaluation of costs and long-term commitment before establishing a physical presence.
This is where EOR solutions are very useful, though they work differently in Norway than elsewhere. The main challenge: Norwegian employment law requires that employer responsibilities cannot be legally split between a foreign client and a local provider. When a Norwegian company takes on an EOR assignment, they must assume complete employer responsibility. This creates significant financial and legal exposure, requiring substantial deposits that can make the arrangement expensive.
Due to these legal complexities, traditional EOR services aren’t widely advertised in Norway. Instead, specialized providers like employment agencies and Professional Employer Organizations (PEOs) act as your legal employer, handling recruitment, payroll, taxes, and compliance—but at a premium that reflects the full liability they’re assuming.
EOR considerations
Remember: EOR solutions might not be a perfect fit for everyone. Consider these points:
Fees: EOR providers typically charge relatively high fees for their services and in Norway, these fees are particularly elevated due to legal requirements. Norwegian EOR providers must take on complete employer responsibility and typically require substantial deposits to protect themselves from financial exposure. Evaluate these fees (for example, one EOR provider we work charges €505 per month) in comparison to the cost of setting up a local entity and managing everything yourself. Setting up an entity may be cheaper in the long run, but do not forget the additional charges for accounting, a Norwegian business address and additional relocation costs.
Shared control: Depending on the specific EOR agreement, you might share some degree of control over hiring decisions with your EOR partner. Ensure clear communication and alignment on expectations.
Thorough research: Choose a reputable EOR provider with proven expertise in the Norwegian market and your specific industry. Conduct thorough research and compare different options before making a decision.
Legal structure: If you’re using international EOR platforms like Remote, Deel, or G-P in Norway, understand that they’re working with local Norwegian providers behind the scenes. The Norwegian entity assumes the actual employer responsibility, which is why costs remain high even through these platforms.
Beyond EOR: Exploring Alternative Routes
While EOR offers a compelling option for many SMEs, other paths exist.
Branch Office (NUF): This route affords full control over your employees and involves relatively simply setup procedures. Unless the worker is from Norway or the EU/EEA, it will still be complex onboarding workers.
Norwegian Subsidiary (AS): Establishing a AS (limited liability company) offers more control and long-term flexibility but comes with its own set of legal and compliance requirements, as well as cost considerations. The AS in such a case will basically do what the EOR provider does. So the AS will need to hire the worker in Norway, do the onboarding, arrange paperwork etc. This can be quite challenging for most non-EUR companies.
You can read much more about setting up an entity in Norway in our Guide.
Unlocking Potential in 2025:
By leveraging EOR’s agility and cost-effectiveness, SMEs can:
- Test the market: Explore opportunities efficiently without significant upfront investments.
- Respond quickly to emerging trends: Adapt your workforce needs as market conditions evolve.
- Minimize compliance risks: Rely on expert guidance to navigate the nuances of Norwegian regulations.
Remember, EOR isn’t the only path. Branch offices and establishing subsidiaries offer long-term control but come with higher costs and complexities. Carefully assess your specific needs, budget, and long-term vision to choose the right approach for your SME in the unique context of Norway in 2025. With the right strategy and guidance, you can unlock the immense potential this dynamic market holds, transforming your entrepreneurial dream into a thriving reality.
