Reply to: Unpaid Invoice LTD Company - Norwegian Tax

[Sue B]

No problem CB hope it works out for you in the end. If I can help further let me know.

[computerbarry]

so will swerve your Legal Action Question and restrict my comments to the Tax side of things

fair play, I did think this might cause an issue.

They will generally allow these expenses up to around 20-25% of your gross

More 25% but that sounds about right. Thanks.

There are a number of Norwegian Tax Codes and I imagine you will have been taxed on 7150. This code includes Norwegian Social Security contributions. I assume this because I doubt you will have had an A1 certificate which is exemption from the Social Scheme.

Yes 7150 is on my tax deduction card along with my id/d-number. No A1 certificate.

However, there is no clear financial benefit to using your UK Ltd even once it is registered in Norway. After 61 days in Norway you will be classed as resident in Norway on your global income and therefore taxable in Norway on any Dividends you have drawn down in the UK.

I've heard this before and might need to reassess my situation I end up going back.

However, there is no clear financial benefit to using your UK Ltd even once it is registered in Norway. After 61 days in Norway you will be classed as resident in Norway on your global income and therefore taxable in Norway on any Dividends you have drawn down in the UK.

Again, something I'll need to look into but as you can see Sue the work involved just to get paid is a lot of messing around.

Thanks for the quick response, I've contacted The danish company for further information regarding the tax issues and will look into the commuter status and will wait to hear back before I proceed.

I'll post back with any updates, good learning exercise I think for both of us, even if it is an expensive one

Best,
CB

[Sue B]

Sorry forgot to add re: expenses

If you do qualify for commuter status you can deduct the cost of your travel from UK-Norway, Accommodation in Norway and subsistence allowances (at Norwegian rates not UK).

Historically, expenses fraud has been rather too common for the Norwegian Tax office and the reliefs are given grudgingly. For example, to offset a flight, you will need to provide credit card or bank statement confirming you have paid for the flight, and a boarding card to prove that you actually did take the flight and it was to your home country.

Accommodation is similar, official receipts/tenancy agreement along with proof of payment.

They will generally allow these expenses up to around 20-25% of your gross. If you put in receipts for much more than this they would likely be queried. Why would you spend more than a quarter of your salary just to earn it?

If you do not qualify for commuter status you will be unable to offset any of these costs.

[Sue B]

Hi CB,

I did try to reply with multi quotes but haven't got the hang of that so will just try to answer as much as I can if that's ok?

I can't and won't comment on the agency and what they did or didn't do because I wasn't party to the original conversations, so will swerve your Legal Action Question and restrict my comments to the Tax side of things

I understand that the Danish Company has taxed you as an employee. That being the case, you need to see your 'payslips' to see how the tax has been calculated. There are a number of Norwegian Tax Codes and I imagine you will have been taxed on 7150. This code includes Norwegian Social Security contributions. I assume this because I doubt you will have had an A1 certificate which is exemption from the Social Scheme.

In addition, there are various way to reclaim expenses you have incurred (wholly exclusively etc). But in order to process expenses as tax deductions, you need to have commuter status. There are two different kinds of commuter status based on your but basically you would need to prove that you are habitually resident back home somewhere in EU/EEA and go home at between once every 3 weeks and once every 2 months. You can then offset costs such as travel and accommodation with receipts but be warned, there are a lot of restrictions on expenses and a great deal of paperwork is required to get them.

If you have a D Number already make sure you have given this to the Danish company who withheld and paid the tax to ensure there is an audit trail. It is not the same as a Norwegian Organisation Number, which you will need to apply for if you are definitely going to use your UK Ltd Co over there.

However, there is no clear financial benefit to using your UK Ltd even once it is registered in Norway. After 61 days in Norway you will be classed as resident in Norway on your global income and therefore taxable in Norway on any Dividends you have drawn down in the UK.

To retrospectively register your UK Ltd in Norway, get a Norwegian Bank Account, apply for JLSE, unpick any UK CT/Div calcs in the UK, then redo the last three months for Norwegian Salary/CT/Div etc, is a huge job and I don't think you will benefit financially anyway (caveat, I don't know for sure, I haven't seen the figures, but as mentioned in a previous reply, the returns you see via UK LTD don't exist in Norway).

With regard to tax rebates, if you pay Norwegian Income Tax at source, but remain resident in the UK on your global income, then you would need to file a SA in the UK with your Norwegian Source income, calculate the UK tax due and offset what you have paid in Norway. But you need to match the income. You have been taxed as an employee and therefore paid Norwegian Income Tax. You would need to have a UK Source Income Tax liability to offset this.

In summary, unless you want to pay a lot out to both a UK and a Norwegian Accountant to undo all this, for very little return, I think you are stuck with a Norwegian Income Tax Liability. You may be able to reduce this a bit by filing a Norwegian Self Assessment to clarify your income and expenditure with them.

If the Norwegian Tax office believe that you are on a full employed contract, well ultimately Norwegian PAYE is 28-40% tax and Norwegian NI is more expensive than UK NI at 7.8% EE 14.1% ER with no upper earnings limit.

HTH

[computerbarry]

Here is a small section of what was said in the email Sue, this might help further.

I can confirm that the client (Danish Company) has taken your Norwegian Tax directly from us, because your tax registration in Norway was not completed in full and a signed Solidaransvar (Tax Exemption Form) not received. The Norwegian Tax Authorities pass on responsibility to the end clients to make sure that tax is paid by contractors and on occasion some clients do make the decision to deduct tax at source at 28% and pay it for the contractor if they do not feel that everything is in place. All contractors have to pay tax in the country that they work in, so this tax money is due for payment but by the client taking it at source it is being settled before the end of the year.

The norwegian tax affairs told me I was not a contractor else I would of been on their system.

A rebate can be applied for directly with the Tax Authorities to claim back any expenses incurred whilst working in Norway which can be offset against the tax. This process is not a long process. If started swiftly it will result in your tax bill being mitigated and reduced.

Clause 3.7 states:

‘The Service Provider is obliged to comply with such obligations as the Company agrees with the Client from time to time.’

clause 9.1 states:

‘The Service Provider shall indemnify the Company from all claims, actions or demands by third parties (which shall include the client) against the Company and from all damages, losses, costs, expenses and payments whatsoever suffered or incurred by the Company in respect of any breach of the Agreement by the Service Provider arising during the Agreement. The Company may satisfy this indemnity from any payments due to the Service Provider by the Company.’

clause 10.11 states:

‘The Company (UK Agent) shall be entitled to deduct by way of Set Off any loss that has been caused to the Company as a result of the Service Provider’s breach of agreement.’

You were informed in April that you were required to obtain an Norwegian organisational number, D number and sign a Solidaransvar form (tax exemption form and given guidance notes on how to complete this. As far as the updates as you have given to us you have failed to carry out this condition.

I was informed as I say above a week after I'd started, they say all this now but was a complete different story while I was working in Norway. I didn't even really speak to anybody from the UK agency, only for invoices and timesheets.

Then they give me some figures.

CB

[computerbarry]

The person you were talking to on the phone, was the Danish Company or UK agent?

UK agent.

If you had completed the JSLE you would be liable for the tax directly and there would have been no need for the umbrella/agent to withhold the money.

Ha, only if I had. Be a completely different story now Sue. I was only informed by the UK agency 1 week after I'd already started. I can't lie, they did give me the relevant forms even if it was late, but again, there was no urgency and had no help after I asked for it. It was a very daunting process, opening bank account, filling out forms, waiting 2-3 weeks for everything to be processed before you can get the numbers... and like a norwegian tax advisor once said, "its like a jungle out here." The UK agency told me I would be paid in full each month. Its only now they're using all this against me.

Normally, the CPTD (equiv. P60) is issued mid January and Self Assessments come out in April. Ask your accountant to obtain a Individual Norwegian Tax Reference for you (D Number). They/he/she will need to speak to the Norwegian Tax Office and ask them if you can file an assessment early.

I'm not familiar with (CPTD (equiv. P60)) but what you saying sort of makes sense after chatting with the norwegian tax affairs. I've been speaking with the norwegian foreign tax affairs last week, I have a D-Number already but don't have a Norwegian Organisation Number because I haven't registered my LTD company in Norway yet. They have no records for me on file. It seems I have been taxed as an employee for the danish company. Hence being taxed at source.

obtain a Individual Norwegian Tax Reference for you (D Number)

Is that the same as the company Norwegian Organisation Number for my company? I'm kind of wondering do I need to register my LTD company now? But, theres a good chance I'll be going back to Norway very soon so, what do you think would be the best way to do things?

Once you have proof of Norwegian Tax Paid you can offset this under double taxation rules, but only against UK sourced income tax, you will not be able to offset the Income tax paid in Norway against CT or Divs in the UK.

This will be my next step after I've sorted the above.

Are you saying I need to register the company to get this tax back?

To make matter worse Sue, I finally got the confirmation from the UK agent telling because I did not have the JSLE completed they have deducted the tax (as stated in their Clauses, also posted in their email) (I've added some notes in the post below.), exactly as you mention above. AND NOW. Ha. They say they'll need to invoice me for the extra tax they've paid, couldn't get any worse.

Just looking for the best/quickest way to get my expenses back, would I get all the money I spent on expenses back or just a %?

On another note, I'm looking at taking some sort of legal action against this UK agency because I was mis-lead from the start, and was not completely supported when I did ask for their guidance. Do I have any weight on this or do you think I'm fighting a no win battle here?

Really appreciate the help and information Sue, thanks CB, hope the above is making sense.

[DirtyDog]

All my profits just taken.

I just ask that my invoice be paid and I pay my taxes at the end of the year, quite simple really. Instead my latest payment/invoice has been totally wiped out.

If you are not making a profit, because you have been taxed, then it looks like you miscalculated the rate when you started the contract. Whether you are being asked to pay it now or pay it later should be a moot point, unless you have already spent the money which would have been due to the Norwegian authorities at the end of the year.

Which begs the question - apart from the tiny percentage in interest that you would be earning between now and the end of the Norwegian tax year (or whenever the taxes become due), what exactly have you lost here?

[Sue B]

Hi Computerbarry,

The person you were talking to on the phone, was the Danish Company or UK agent?

The relevant clause in the contract is the Joint and Several Liability Exemption, which is a tri party agreement, normally between the client, the agent/umbrella and the employing company, that would be either your own Ltd or an Umbrella company.

If the umbrella company or the agency have entered into this exemption, they have indemnified the client from any taxes arising being passed up the contractual chain. The responsibility to pay the taxes you owe is theirs, which is why they have kept back your last invoice.

If you had completed the JSLE you would be liable for the tax directly and there would have been no need for the umbrella/agent to withhold the money. However, this is highly unlikely to have asked of you because companies without Norwegian Organisation Numbers cannot apply.

I think you definitely need some help unpicking this. There is a order to things.

Normally, the CPTD (equiv. P60) is issued mid January and Self Assessments come out in April. Ask your accountant to obtain a Individual Norwegian Tax Reference for you (D Number). They/he/she will need to speak to the Norwegian Tax Office and ask them if you can file an assessment early.

Once you have proof of Norwegian Tax Paid you can offset this under double taxation rules, but only against UK sourced income tax, you will not be able to offset the Income tax paid in Norway against CT or Divs in the UK.

This process may take some time.

HTH a bit.

[computerbarry]

Cool. Thank you.

This seems the only place to share the pain. Thats what the forums are for no.
And yes there are some clauses in the contract that was referenced in our conversation, but nothing in writing as yet.

I've been doing it all week, and last week.

Anyway, thanks again all, hopefully I'll get a better outcome in the coming weeks.

Best,
CB

[SueEllen]

Computerbarry if you look through your contract there is likely to be a clause where you have to indemnify them for tax that a relevant authority chases them for.

Whether there is such a clause or not you need to get written confirmation the agency has done this. If they refuse to put it in writing chase them for the money as you will need to pay it.

You will also need to sort your NI payments out.

And don't keep coming back and moaning just do it.

[computerbarry]

Frustrated more than anything. I've come here to share the outcome like I said I would in a previous post, though thanks for the concern Scratch It.

Were you seriously expecting to not pay tax?

Not at all. I just ask that my invoice be paid and I pay my taxes at the end of the year, quite simple really. Instead my latest payment/invoice has been totally wiped out. As I said above, this was not the agreement I had with the UK company.

CB

[Scratch It]

Im confused, are you expecting an expert in norwegian tax law to turn up? Pay a norwegian tax lawyer or accountant. Were you seriously expecting to not pay tax?

[computerbarry]

There we have it. Confirmation today that they will not be paying my invoice because all the tax has been taken by the authorities. Still nothing in writing everything has be discussed verbally. I've been told I need to contact the norwegian tax asap and try and get a fast track tax return.

The agreement between myself/ltd company and the uk company was that my invoice would be paid in full. I explained this from the start and explained I would not be going to Norway unless this happened. All my profits just taken.

The conversation on the telephone consisted of her using lots of big words and talking down to me now, trying to make it sound like they're doing me a favour. Surely I have some legal grounds between us for non-payment.

As I said, I've had no explanation of what I've breached in the contract and no explanation in writing why they haven't paid me.

[computerbarry]

I would have thought your Ltd would have to be registered.

Well, with the all the excitement of working in Norway and my first few invoices getting payed without problems this kind of slipped my mind... paying for it now. Only at the end do I realise the problems this is causing. This is needed along with a norwegian bank account to fill in what they call a 'application for exemption form'.

Anyway, just spoken with the agency and will give them the benefit of the doubt until the they have spoken with the correct people at the end of the week.

Thanks.

[BlasterBates]

Correct BlasterBates, but only as a contractor for that limited company. I will be paying what I owe, I just ask to pay it at the end of the year like I have done for years after all my expenses and correct payments have been worked out by my accountant.

Not always sometimes they want it up front. Depends on the usual complucated rules. You need to check up. It is possible the agency is being held reponsible if you don't pay. You might be a Ltd but they might view you as a temporary employee.

THe other thing is you're not registered as a company in Norway, from what I understand. To be a bonafide business I would have thought your Ltd would have to be registered.

Does need an expert accountant in Norway to help you out.