Taxes and NI in Norway
Hi,
I am writing this message to request a few clarifications regarding my Norway Contract. Please review the point below and advise. Your soonest response would be much appreciated.
I have a UK LTD Company and am working in Norway since June 2018. My Norwegian accountant had asked me to get an A1 certificate as employee of my UK LTD Company which I did received from HMRC and as a result as employee I do not pay any NI in Norway.
a. How I am setup is such that as an employee of UK LTD, I pay myself only £1000 p/mth and pass on the payslip to Norwegian accountant, who then only pay tax on this income to Norway Tax authorities. And no NI is due in Norway as I have an A1 certificate.
The rest of the payment is then transferred to my UK LTD business account by the client and I have been told the UK tax rates will then apply to the remainder amount.
b. However, I had applied for a CA3821 certificate for the UK LTD Company which has been declined by HMRC and they has asked that the UK LTD Company shall pay NI contributions in Norway. I am a little confused that as the employee I have an A1 but as the Employer (UK LTD Company) does not and what implications this would have.
Q1: Reading all the forums suggest that 28% tax is due on any income in Norway, will this be applicable on to my employee payments i.e. £1000 p/mth or does the 28% tax needs to be paid on all invoiced by the UK LTD Company?
Q2: The forum also states "It is not possible for the Employer (your Ltd Co) to exempt you from the Norwegian National Insurance system if you are the only employee."
From b above where CA3821 is declined, is UK LTD Company liable to pay 14.1% NI in Norway? Will the situation change if I have another employee working in Norway under my UK LTD Company i.e. then there will be 2 employees with same circumstances?
Q3: Until now, I have been expensing my UK LTD Company using HMRC Scale Rate expenses, will the UK scale rate expenses be exempt from NI in Norway? From my reading of different forums, it suggests that only a max of 20% expenses are allowed in Norway. Does this mean that UK LTD Company needs to pay 14.1% NI on all payments minus 20% max expenses.
Q4: As an example, assuming the numbers below, please advise if my calculation below is roughly correct? Also as a result do I get any NI relief or any other reliefs in UK?
If UK LTD Company Earns = £100K per annum
Expenses = 20K per annum
Norway Tax @ 28% on £80K= 80*0.28=£22.4K per annum
UK Tax = Nill (Double Tax Relief)
Norway NI @ 14.1% on 80K = 80*0.141=£11.28K per annum
Total Net Salary = 80-22.4-11.28=£46.32K per annum plus expense
Total deductions= 33.68/80=0.421 i.e 42.1 %
Is there any NI due in UK as well for the UK LTD company?
Many thanks
MA
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Thanks Andy!
Dear Harrison, Ill answer the best I can here, this info is just generic though because I don't know much about you or your contract. To answer in order.....
Can i operate my Limited Company there?
You may, the question is whether you should, whether there is anything to be gained, and the answer in Norway is no, there isn't. You can take a UK Ltd and use it anywhere you like, as long as you adhere to local tax and social security legislation, follow all appropriate registration and reporting processes, and report this income correct both in country and back home to HMRC.
Then there is Reciprocal agreements (for Social security) and double taxation treaties to consider.
It is important to understand that no matter where your company is registered it will be treated as resident in Norway from the moment you start working on an assignment awarded to it in Norway. This means that any profits derived in Norway will be subject to Norwegian Corporation Tax at 28%
As the profits would also be reportable to the UK Tax Authorities, as the company is resident in the UK, then you could offset up to 20% of the Norwegian Taxation paid against the UK Corporation Tax arising on the same income.
Any salary paid to you as an employee in Norway would be subject to Norwegian Employers National Insurance at 14.1%.
Any expenses reimbursed to you as a commuter that are either in excess of the Norwegian Rates or disallowed for whatever reason would also be subject to the 14.1% Employer National Insurance charge. (see below for expenses)
It is not possible for the Employer (your Ltd Co) to exempt you from the Norwegian National Insurance system if you are the only employee.
Can anyone advise what is the best (most tax efficient) way of operating there?
Again this is subject to your personal circumstances and the contract. The Norwegian Tax office has ensured that there is no one particular way to be paid that has any distinct advantage over standard PAYE.
There are, as always, lots of schemes offered for contractors in Norway that provide for a high rate of net income, as there are in the UK, but these will involve EBT/offshore/split income deals which are, of course, non compliant and will lead to a whole world of pain with both the Norwegian and UK Tax man. See below for appropriate expected net rates for PAYE.
How much of my day rate can i expect to lose in tax?
Income taxes in Norway are between 28 - 40%, Corporation tax is 28%, Employer NI 14.1%, employees 7.8%. There is no upper earnings limits for NI.
A ballpark figure for net income could be between 55-65% depending on your personal circumstances. For a worker who does not qualify for commuter status and is unable to offset any expenses this can fall to 45%.
Will I be taxed on apartment and utilities that are in the deal?
The simplest way to consider this is that you are taxable on the whole of your day rate including per diems, allowances or accommodation costs. If you then qualify for 'Commuter Status' you may then deduct reasonable, allowable and receipted expenses (no more than around 20% of gross is considered reasonable in Norway) so this would include travel to and from Norway to your home, and accommodation, along with subsistence (at Norwegian rates)
I hope this is helpful.
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Congratulations on securing a great contract.
The most credible company we deal with in respect of Norway is I-Paye. Sue (who posts on here) is an absolute expert I-Paye, UK and European Umbrella Services | I-Paye what they don't know about contracting in Norway isn't worth knowing.
As others have said, Norway is very heavy on taxes.Leave a comment:
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Yes, hence my initial post. In the People's Socialist Republic of Norway you pay all your hard earned money over to the tax man and then the nice tax man lets you have a little bit back to play with.Originally posted by harrison View Post
I'd recommend going for the experience though, despite the taxes, taxes and high cost of living it's still a fantastic place to live and work.Leave a comment:
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Find an accountant in Norway and ask them, they'll have a better idea of Norwegian tax than a UK accountant will and there may well be a thousand little tax laws that could effect you that a UK expert may not be aware of. If you're going to be tax resident there, which you will be if you're there for that long, then your starting point for tax purposes should be there.Leave a comment:
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Working in Norway!
Hi All.
I run a Limited Company here in the UK. I have been offerered what seems like a lucrative 3 year contract in Norway.
Can i operate my Limited Company there?
Can anyone advise what is the best (most tax effecient) way of operating there?
How much of my day rate can i expect to lose in tax?
Will I be taxed on apartment and utilities that are in the deal?
Thanks in anticipation!
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