Norway is rich in resources, beauty, and a high standard of living. As Americans flock to the country to enjoy these benefits, it is important for expats to know the tax laws in both their home and host country. Fortunately, we have outlined the 8 things you need to know about your expat taxes in Norway.
1. Who Qualifies as a Norwegian Resident?
As an expat you will become a permanent resident of Norway when you are in Norway for more than 183 days during a 12-month period, or for more than 270 days during a 36-month period. If you are in Norway for less than 183 days during your first calendar year there, you will be considered a non-resident during that first year.
2. Taxation of Foreign Income in Norway
Residents of Norway are taxed on their worldwide income, except for a tax exemption for certain foreign oil workers. Nonresidents living in Norway are taxed on income they receive from Norwegian sources.
3. Norway’s Tax Treaties
Norway has tax treaties with many countries, whereby most foreign income is exempted from Norwegian tax and is taxed by the source country. Norway allows its taxpayers a foreign tax credit to offset double taxation on foreign income that is not exempted by a tax treaty.
4. Tax Rates
For 2019, Norway’s income tax system includes a base rate of 22%, in addition to a “step tax” which applies different tax rates for particular income brackets, ranging from zero to 16.2%.
5. Tax Deadlines
You will receive a personal tax return from Norwegian tax authorities each spring. You must complete and submit the tax return by April 30. These returns report information from the prior calendar year.
6. Norwegian Social Security
Most people working in Norway are required to be covered by the Norwegian National Insurance Scheme, which includes a national pension and medical plan. Employees contribute 8.2% of their earnings to the plan and self-employed persons contribute 11.4%.
However, you may be exempt from the National Insurance scheme according to the terms of the agreement between the US and Norway.
7. Other Taxes in Norway
Norway charges a 25% value added tax on most good and services, except food, which is 15%. A 12% tax applies to transportation costs, hotel accommodations, and cinema tickets. Health expenses, other entertainment costs, and periodicals are exempt from VAT taxes.
Norwegian residents pay a wealth tax on their assets. The tax is charged on the net value of your assets and is 0.85%.
8. Filing US Taxes as an American in Norway
If you are a US citizen or resident, you will still be required to file US taxes each year. If you have assets in foreign bank accounts, you may be required to report those as well. Specifically, anyone with 10,000 dollars or more in a foreign bank or financial institution during a calendar year will be required to file the FBAR.
Fortunately, there are a few ways you can lower or eliminate your US tax obligations. The first is the Foreign Earned Income Exclusion, which allows you to exclude a certain amount from your foreign earned income on your US expat taxes.
The second is the Foreign Tax Credit, which allows you to offset the taxes you paid in your host country with your US expat taxes dollar for dollar.
And third is the Foreign Housing Exclusion, which allows an additional exclusion from income on US expat taxes for certain amounts paid for household expenses that occur as a consequence of living abroad.
If you have any questions about filing your US expat taxes, please contact us.
More questions about your expat income tax?
If you have additional questions about your expat income tax return, please contact our expert CPA’s and IRS Enrolled Agents today!