Tax card and tax deduction

Norway has its own set of rules related to tax deduction which differs from most other countries in Europe.

As an employee in a Norwegian company, you are obligated to obtain a tax card. A tax contains a set of parameters which tells the employer the amount of withholding tax to deduct from gross salary.

Foreign as well as local Norwegian employees who fails to obtain a tax card should be deducted 50 % of withholding taxes regardless of what their salary is.

The tax card may contain a set percentage of tax to deduct, or a set table which shows which amount of withholding tax deduct from a specified amount of salary. It may also be a combination of the two.

The tax card may generally be divided in three categories:

1 – the most normal tax card which deducts tax on 10,5 months per year
It is taxed slightly more in 10,5 months per year, which has the benefit of
– Getting paid holiday pay without deducting withholding tax
– Getting a reduced withholding tax (by 50 %) in November or December (decided by the employer)

2 – Another category is a tax card which is based on deducting withholding tax 12 months per year
Each month is taxed, also holiday pay and there is no reduction in withholding taxes in November or December

3 – A third category is a PAYE tax (Pay As You Earn) which is only available for foreign nationals under certain circumstances.
Each month is taxed with a fixed percentage of 25 %, even holiday pay, commuter expenses and all salary elements. An important remark in this regard is that it is only eligible if total salary is less than 643 800 per year.

The different tax cards are listed on the pages of the tax authority. It also contains a calculator which may assist in (roughly) estimating taxes to pay for a given year:
https://tabellkort.app.skatteetaten.no/#/?_k=58q4bt

If you have obtained a tax card, you can log on to this page in order to see your current tax card, status on taxes and submit a changes to your tax card here:
https://www.skatteetaten.no/en/person/taxes/tax-deduction-card-and-advance-tax/order-a-tax-deduction-card/

The employer will be given notice in a portal called “Altinn” (a cooperation and information exchange portal between authorities and employers and employees). The employer will usually automatically import the tax card relevant to its employees to the payroll system which is utilized. The employer may not deviate from the tax card and deduct less taxes than the tax card states. The withholding tax is normally automatically calculated, and the employer only follows the logic of a given tax card.

It is possible to request for an increased tax deduction, and if relevant this should be given in writing to the employer so that the person(s) in their payroll department can add the increased taxes.

It is however recommended to research this as an employee, and rather submit a change to the tax card to reflect the amount of taxes to deduct based on the salary that will be received.

Employers in general and in particular outsourced payroll service providers may provide an added value in advising in situations where they see that the tax card is not optimal for a given employee. Especially in relation to a PAYE tax card, which has a hard limit of maximum NOK 643 800 in salary per year.

Ecovis in Norway handles payroll for a broad diversity of clients with different backgrounds, both local and foreign. We may assist in advising employers and employees in setting up payroll routines and calculating payroll and withholding taxes, as well as tax cards and tax declarations.

ECOVIS is a leading global consulting firm with its origins in Continental Europe with over 9000 employees in 80 countries. In Norway, ECOVIS assists international companies with compliance and global mobility, from company registration through work permit application, legal advice, house finding, VAT returns, tax advisory, accounting to annual tax declarations.