Spring season marks the start of tax calculation cycle in Norway. Workers coming from abroad, hired for Norwegian companies or on a Norwegian continental shelf, are entitled to many deductions. Every foreign employee who received a salary in Norway should take the time to carefully check his or her tax return statement before it is sent to the tax office. It will help with generating the highest possible refund from the tax settlement in Norway.

Dates to remember

Norwegian Tax Administration office (Skatteetaten) sends out the tax return statements for the previous year (selvangivelse) at the end of March (this year it is March 31st). The statements include an overview of a worker's income, deductions, assets and debts. They are based on information reported by employers during the last income year. Selvangivelse is distributed electronically or by mail - depending on whether the taxpayer has registered an account in Altinn or not.

The universal deadline for submitting the tax return statement for the year 2015 is April 30th 2016. Altinn-users have the possibility of extending their deadline until the end of May, after signing into their accounts.

The final tax settlements (skatteoppjør) will be mailed after the last day of May in three turns – the first one in June, the third one in October. The date of receiving settlements varies due to a few reasons, for instance the time of submitting selvangivelse to the tax office or the taxpayer's individual situation.

In the further part of the article we will focus on deductions available for foreign workers in Norway. Depended on the situation, these deductions may be slightly different.   

Deductions for commuters

Applying the commuter status (pendler) is a very convenient option for tax calculation. It is a special deduction for foreign workers employed in Norway who traveled to their home countries during the previous year. A taxpayer might be entitled to tax deductions for the additional expenses for food, accommodation and travel between the commuter home and Norway. There are two variants of this deduction: family commuter (familiependler) and single commuters (enslig pendler).

Calculating the tax return in accordance with the famieliependler status is possible if the taxpayer lives with his family and/or spouse outside of Norway, and travels frequently to his/her home abroad. To be regarded as a commuter, joint residential address with family has to be documented. In addition, there need to be at least three or four visits to the home country during the last year.

Unmarried foreign workers can be classified as single commuters (enslig pendler). The most important condition is traveling at least every three weeks between Norway and the occupied home abroad. However, there are some requirements connected to both accommodations. The housing in home country has to be regarded as independent. Houses/apartments considered as independent have running water and drains, and are at the worker's disposal all days of the week for at least twelve months. The living area of the place has to be greater than 30 square meters per person (if there are more occupants, the requirement is increased by 20 square meters for each additional person over the age of 15). Taking into account the above-mentioned conditions, the accommodation in Norway must not be independent. This means no running water or drains, no full access seven days a week, and the taxpayer has not been living there for a period of twelve months.

Furthermore, the single commuter status can be applied even if the Norwegian accommodation is regarded as independent. In this case there are three requirements to meet. Taxpayer who wants apply this deduction must have been registered as resident in the same address in his own country for the last three years. The property has to be more than twice the size of the Norwegian housing and it cannot be rented for anyone else.

Foreign workers under the age of 22 can also deduct their travel and lodging expenses in Norway if they still live with their parents in their home country. Thus, it is necessary to have a registered permanent residence with one's parents and documented travels at least once every six weeks.

10% deduction
The standard deduction for the foreign workers (standardfradrag for utenlandske arbeidstakere), commonly called the 10% deduction, is intended for employees from abroad, with a limited Norwegian tax liability. This deduction amounts to 10% of the calculated taxable gross income and the highest total deducted value for 2015 is 40 000 NOK. It can be granted for taxpayers who haven't spent more than 183 days during the last 12 month period, or 270 days during the last 36 months.

An employee who is considered a tax liable resident in Norway can also apply the standard deduction. However, in this case the deduction can only be applied for the first two years of work or residency in Norway.

It is important to consider that the 10% deduction may not be the most beneficial option for everyone. The gross income, which is the base for deduction, includes all lodge expenses covered by the employer. This results in an increased revenue and thus a higher tax. The standard deduction also blocks some other deductions, for instance the commuter status, interests on loans or travel expenses.

The standard 10% deduction is not automatically applied by the Tax Administration offices in Norway. Every taxpayer is obliged to indicate this deduction in his own tax return statement.

Tax class 2

The tax class 2 decreases the personal taxable allowance and can be combined with the commuter status or standard deduction. Such option allows the taxpayer to acquire a higher tax return for the previous income year. The class 2 is applicable for workers whose spouses have had a low or none income last fiscal year. According to the regulations concerning the statements for 2015, the spouse's profit couldn't exceed 44 751 NOK.

The fact that the taxpayer's wife/husband has low (or does not have) income is not the only condition for assigning the tax class 2. A joint residency of the married couple throughout 2015 is required. In addition, only marriages entered before 2015 can give a right to this deduction. If said taxpayer and his/her spouse both live and are registered in Norway, the class 2 deduction is applied to the tax return automatically. It is the taxpayer's duty to check this information in his/her selvangivelse and make any changes for the amended tax return statement for 2015.

Deductions of debt interests

The Norwegian tax law allows all taxpayers to apply a deduction for interests on loans and debts paid in the previous fiscal year. According to the EU/EEA agreements, foreign employers working in Norway, can deduct their interests on loans taken in their home countries, as long as their Norwegian income amounts to at least 90% of their total earnings. There are no limits regarding the type of debt – both consumer loans or mortgages can be subjects to deduction. It is important to remember that granting the standard deduction (10%) cannot be combined with claiming a deduction for debts.

Offshore workers' tax settlement

Employees working on the sea can apply similar deductions as taxpayers working on land. However, these groups of workers are entitled to some special discounts that give them the benefit of a lower tax fare.

Tax return statements of fishermen can include a special deduction for fishermen and hunters at sea (særskilt fradrag for fiskere og fangstfolk). It can be as high as 30% of the gross income, but not greater than 150 000 NOK. In order to apply for this deduction, the tax paying fisherman has to spend at least 130 days offshore whilst fishing.

Seafarers who earned their taxable income in Norway can apply the standard deduction (10%) every year. Such workers can apply a special deduction for the income earned on board a ship in service (særskilt fradrag for sjøfolk). Seafarers can deduct 30% of their gross income, up to 80 00 NOK.

Appeal against the tax settlement

Many foreign workers have the right to appeal against their tax settlement for previous years, if they have not applied all the deductions they are entitled to. The universal deadline for amended tax settlements is six weeks after the tax settlement has been issued. However, the appeal against the tax assessment can be sent in after the deadline has passed. In this case the Norwegian Tax Administration has the right to decline said request. Nevertheless, in reality it is not very common to receive a rejection, therefore it can be profitable to amend the statement at any time.

All dates and amounts used in this article are relevant to the tax settlement for 2015.

For more information visit: www.multinor.no