Taxes and payrolls: the Norwegian labour market
Each labour market has some peculiarities. It may be tricky for foreigners to understand fully the payment methods, the taxes and other benefits related. In TalentUp we are starting a series of different blog articles, one for each country. This article analyses the Norwegian labour market.
Even if the national currency is the Norwegian Kronar (NOK), the whole article is in EUR to compare easily across countries and exchange rates.
General data about the Norwegian labour market
| Minimum wage | Not defined |
| Payment basis | Monthly |
| Maximum working hours a week | 40h |
| Maximum overtime hours a week | 10h |
| Maximum overtime hours a year | 200h |
| Working hours compensation | Paid at 140% regular pay |
Payroll taxes in Norway
Social security contributions are made by the employer and the employee and are used for funding unemployment, pension, maternity/paternity leave, and sickness or injury.
| Contingencies | Employer % | Employee % |
| Social Security (depending on zone) | up to 14.10% | 5.10% – 8.20% |
| For income exceeding 65,170.93€ | 5.00% | |
| Total | 14.10% – 19.10% | 5.10% – 8.20% |
Once contributions are paid, employees need to pay an income tax that varies depending on their gross salaries.
| Gross salary | Income tax |
| 16,540.38 to 24,256.62€ | 1.7% |
| 24,256.62 to 56,020.94€ | 4.0% |
| 56,020.94 to 84,218.23€ | 13.4% |
| 84,218.23 to 173,789.16€ | 16.5% |
| More than 173,789.16€ | 17.5% |
Contingencies from self-employees
The individual contribution to Social Security made by self-employed people in Norway is 11.1%.
Example of net salary in Norway
As a reference, we use the average salary of a software engineer. In Norway, on average, software engineers earn annually 91,400€.
| Employer | Employee | |||
| % | € | % | € | |
| Gross salary (annually) | 91,400 | |||
| Social Security (depending on zone) | up to 14.10% | 12,887.4 | 5.10% – 8.20% | 4,661.4 to 7,494.8 |
| For income exceeding 65,170.93€ | 5.00% | 4,570 | ||
| Total | 14.10% – 19.10% | 12,887.4 to 17,457.4 | 5.10% – 8.20% | 4,661.4 to 7,494.8 |
| Income tax | 5,141.64 to 5,599.45 | |||
| Net salary (annually) | 78,305.75 to 81,596.96€ |
The employer contributes 12,887.4 to 17,457.4€ to social security and the employee 4,661.4 to 7,494.8€.
After paying the income tax, the employee has a net salary of 78,305.75 to 81,596.96€ coming from a gross salary of 91,400€.
Unemployment regulation in Norway
If an employee wants to quit their job, they need to give one month’s notice and submit a written resignation.
If an employer wants to terminate an employee, the notice period varies based on the employee’s age and seniority:
| Time worked | Notice period |
| Still in the probation period (usually 6 months) | 14 days |
| Less than 5 years | 1 month |
| Between 5 an 10 year | 2 months |
| More than 10 years | 3 months |
Moreover, depending on the age:
- If the employee is over 50, 4 months’ notice is required.
- If the employee is over 55, 5 months’ notice is required.
- If the employee is over 60, 6 months’ notice is required.
The notice period begins on the first day of the month following when the notice was given.
Different kinds of leaves in Norway
The minimum annual paid time off is 21 working days. Having said that, most companies offer 25 working days. For employees over 60, the entitlement increases to 31 days per year.
There are 10 public holidays.
In Norway, employees receive sick pay from their employer at 100% of their salary for the first 16 days of sickness. The maximum sick leave period is 52 weeks. From the 17th to the 52nd day of sickness, sick leave is compensated by a Social Security sickness benefit capped at approximately 60,252 EUR.
Paid parental leave
Female employees in Norway are entitled to 59 weeks of paid maternity leave, which is compensated by national insurance. During this time, the national insurance will pay mothers 80% of their regular income. However, if the employee chooses to take a shorter leave of 49 weeks, they will receive full compensation at 100% of their income.
Fathers receive two weeks of unpaid paternity leave.
A parent can take an additional year of unpaid leave after maternity leave.
Other common Norwegian benefits
| Benefit | % of companies with this benefit |
| Equal Opportunity Employer | 11.8 |
| Diversity | 10.9 |
| Company Events | 9.2 |
| Professional Development | 7.6 |
| Cutting Edge Technology | 6.7 |
How to employ a Norwegian worker
Based on internal law, the threshold for becoming subject to corporate tax is rather low.
The starting point is that any foreign enterprise will become subject to Norwegian corporate tax if it conducts business activities within Norway or if it hires out employees to work in Norway.
The basic rule in the tax treaty is that a foreign enterprise becomes subject to tax if it has a so called “permanent establishment” or “PE” in Norway.
Some platforms (Papaya Global among them) offer the Employer of Record (EoR) service helping companies hire countries where they do not have any office.
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