Foreign employers planning to send employees to work in Norway need to take several factors into consideration. One important factor that is crucial to be aware of is social security and employer's national insurance contributions in Norway. Being aware of the social security obligations employees have when working in Norway is crucial to ensure compliance with Norwegian regulations. It is also often important in connection with project calculations to avoid encountering unforeseen expenses during the implementation of the project they undertake in Norway.
All employees with personal income in Norway who are members of the National Insurance Scheme are required to pay social security contributions. This tax is automatically calculated monthly based on the employee's tax card.
The social security tax is included in the total tax deduction that the employer must deduct from salary each month. The tax is earmarked for the financing of Norwegian social security schemes, including sickness benefits, pensions and unemployment benefits. It is therefore the employer's responsibility to ensure that the social security tax is correctly deducted and reported together with other advance taxes.
If an employee is liable to pay national insurance contributions in Norway, the employer must also pay employer's national insurance contributions for the employee. Employer's national insurance contribution is part of the financing of the National Insurance Scheme and is calculated on personal income and other taxable remuneration, both for employment and non-employment.
The rate of employer's contribution is set annually by the Norwegian Parliament. In addition, the tax varies depending on where in the country the employee works, through a zoning system.
It is the employer's responsibility to calculate, deduct and report employer's national insurance contributions correctly.
Also read: Employer's national insurance contribution in Norway
The answer to this question varies depending on several variables and different sets of rules:
Normally, all foreign employees must pay national insurance contributions and employer's national insurance contributions in Norway. However, there are exceptions where it must be documented that the employee is not covered by Norwegian social security legislation.
For citizens within Europe, there is an A1 form that proves whether the taxpayer is covered and pays social security contributions in another EU country and can get an exemption from social security contributions in Norway.
NAV in Norway co-operates internationally within the EEA area with several countries when it comes to the A1 form. For employees who will be working temporarily in another EEA country, the form is registered digitally with NAV. The information is then forwarded to the tax office, which can grant exemption from social security obligations in Norway.
It is important for employers to ensure that the A1 form is correctly completed and sent in good time before dispatch, to ensure that employees are not double-insured or incorrectly deducted for social security contributions.
In our experience, it can take a long time to get the A1 form, and a clear recommendation is to start this application process as early as possible.
If the employee is exempt, the exemption will apply to both social security and employer contributions.
For foreign companies operating in Norway, it's crucial to have clarity on which employees are covered by social security contributions to comply with Norwegian legislation and avoid costly sanctions. Incorrect assessments can quickly lead to claims for back payments, interest in arrears and penalty payments.
We therefore recommend that employers conduct a thorough assessment of employees who are to be sent to Norway, including their membership status in the National Insurance Scheme before the assignment is initiated.
If you would like assistance with this, we can offer an informal discussion to assess the situation.
Our clear recommendation is to make this assessment well in advance of starting projects in Norway, and to ensure that social security contributions are assessed at contract signing. Early planning makes it easier for employers to control the finances of the project and avoid unforeseen high costs.