Accounting and Tax returns in Norway
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Which services you need depends on your specific situation and business structure. Most foreign companies and expats operating in Norway choose an AS, limited liability company.
For AS companies there are various tax and administration obligations to meet in order to be fully compliant under Norwegian law.
Required Accounting Services in Norway
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Taxes for business owners in Norway
How much tax do I pay in Norway?
Let's take the example of a small AS limited company. The company is 100 percent owned and operated by the same person. That same person is also employed by his own AS.
The company has annual revenues of NOK 1.000.000 and NOK 100.000 in general expenses. The owner himself a salary of roughly NOK 750.000. By paying this salary he ensures his maximum earnings in the National Insurance Scheme. Because of this he enjoys all the benefits such as sick pay.
Corporate tax on company profits
First of all, a business in Norway pays a corporate tax of 22% on its taxable income. There is a range of deductions that are available to businesses, which reduces the amount of tax that they pay.
This means the company has an annual profit of NOK 200.000. This profit will be subject to 22 percent corporate tax. This means Company AS will pay 22 percent of NOK 200.000, meaning NOK 44.000 in corporate tax.
Wage costs & personal income tax
Employees in Norway enjoy many benefits. Many of those are financed by the employer. In turn, the employee pays personal taxes on the wage he or she earns.
As an employer you will need to pay your employee:
- Gross salary + Holiday pay (normally 10,2 percent of gross salary)
- Between 2 and 7 percent of the (1) amount in occupational pension
- Employer's contribution of normally 14,1 percent of (1)
Note: If you are employing yourself in your own AS, the occupational pension payment is NOT mandatory.
The salary of the employee is charged with income tax as stated below:
| Personal income tax | Taxable income | Tax rate |
|---|---|---|
| 22% municipal and national tax, plus: | 1. Income up to NOK 190,349 | 0 |
| 2. Income between NOK NOK 190,350 – 267,899 | 1.7% | |
| 3. Income between NOK 267,900 – 643,799 | 4% | |
| 4. Income between NOK 643,800 – 969,199 | 13.4% (residents of Finnmark and Nord-Troms 11.4%) | |
| 5. Income between NOK 969 200 – 1 999 999 | 16.4% | |
| Income over NOK 2,000,000 | 17.4% |
In addition to this, you will most likely pay contributions to the National Insurance Scheme of around 10 percent. This gives you certain rights and benefits such as sick pay.
How much salary should I take out of the company?
How much you should take out in salary depends on a number of factors. In most cases it is a question of how much you should take out in salary versus how much you should possibly take out in dividends.
How much you should take out in salary must be assessed on the basis of how the amount will affect tax and in relation to other taxes both for you privately and for the business. It will also be relevant in relation to social security benefits (and possibly pensions) for yourself.
To find out what the optimal salary is, a calculation must be set up that shows what the result is financially if you take out x in salary. This is where an accountant can help you.
Employment and Salary Administration
Accounting and tax returns for NUF
NUF - Norwegian Branch of foreign company
Annual report for NUF
A Norwegian branch of a foreign enterprise must submit the annual report of both the Norwegian branch and the foreign enterprise to the Register of Company Account at the Brønnøysund Register Centre before 1 August the year after the end of the financial year.
Tax obligation for NUF
The branch is normally obliged to pay taxes to Norway, and must otherwise operate according to the Norwegian legislation. If foreign citizens are employed, these must have work and residence permits.
Find more information on the NUF in our Norway business guide.
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Accounting and tax returns for ENK (sole proprietorship)
ENK - Sole proprietorship
A sole proprietorship, in Norway called an ENK, is a type of business that is owned and operated by one person. This person is responsible for all the debts and liabilities of the company. This type of business is only suitable for very small businesses of persons living in Norway. The ENK has less accounting obligations than an AS. Furthermore, the setup is very simple and cheaper. On the other hand, you do not build up the same social rights (e.g. sick-pay) as a person employed in his or her own AS.
Bookkeeping obligation ENK
A Norwegian sole proprietorship should have a clear overview of purchases and sales invoices. It is highly recommended to keep accounts in an online accounting system. There are some software packages on the market that make this very easy. Even for those who have no experience with bookkeeping.
Tax obligation for an ENK
The income your earn in the ENK is taxed with personal income tax. In practice you will report your total annual income (from the ENK and any other personal income you might have) to the Norwegian tax authorities. Usually, this tax is paid in advance, either at once or in instalments.
If your business is not exempt for VAT, you should submit a VAT tax return 6 times per year (every 2 months).
You can read more about the requirements, advantages and disadvantages of the ENK in our business guide.
Accounting Software in Norway
Norwegian businesses primarily use Norwegian accounting software. Many of the systems out there are owned by Norwegian software giant Visma. There are also a few smaller ones. We recommend you to use one of these, since they integrate perfectly with the Norwegian accounting rules and systems.
Accounting and Banking
When doing business in Norway, you should keep private and company funds strictly separated. You will set up a bank account during the company formation process. In addition to your payment/current account, you will ask the bank to set up a 'Skattetrekkskonto' or tax deduction account. This account will be used to set aside wage taxes.
When you are just starting up your company you will need to deposit NOK 30.000 (EUR 3.000) in a Norwegian bank account. Note that not all banks offer this process to non-residents of Norway.