2023 Tax Guide for US Expats Living in Norway
- Living as an Expat in Norway
- Norway at a Glance
- US Expat Taxes in Norway
- Who has to File Taxes in Norway?
- Who Qualifies as a Tax Resident in Norway?
- Income Tax in Norway
- Other Tax Situations in Norway
- What Tax Forms Do Americans Living in Norway Have to File?
- Credits & Deductions Available to Expats Living in Norway
- Do the US and Norway have a Tax Treaty?
- Does Norway have a Totalization Agreement with the US?
- Navigating Tax Compliance for US Expats in Norway
Living as an Expat in Norway
Home to stunning fjords and phenomenal northern lights, Norway is a beautiful place to call home. With plenty to do and explore outdoors, it’s no surprise that many US expats work in this scenic country. Norway is home to over 5.5 million people and is a popular place for digital nomads around the globe to work. And if you’re one of them, it’s essential to understand how Norway taxes for US expats work.
Taxes can already be overwhelming, but things can get more complicated when you’re on the hook for both Norway and US income taxes.
Known for its inventive seafood dishes and stunning 16th to 19th-century architecture, Norway is home to over 10 million people and has become a more popular destination for Americans and global travelers. With warm, temperate weather from spring to fall and a prime position along the Atlantic Ocean, it’s no wonder many US expats settle in Norway. And Norway’s taxes for US expats are essential to understand when living in this vibrant country.
Figuring out how much you owe in taxes can be complicated — not only do you have to pay Norway taxes, but you also have to pay US taxes.
Norway at a Glance
- Primary Tax Form for Residents: Selvangivelse (Tax Return)
- Tax Year: Calendar year (January 1 to December 31)
- Tax Deadline: April 30th of the following year
- Currency: Norwegian krone (NOK)
- Population: Approximately 5.4 million
- Number of US Expats: Around 5,000
- Capital City: Oslo
- Primary Language: Norwegian
- Tax Treaty: Yes
- Totalization Agreement: Yes
US Expat Taxes in Norway
Thankfully, Norway’s tax system bears similarities to that of the US, so navigating the tax landscape shouldn’t be too challenging. As a US expat living in Norway, staying on top of your tax obligations in both countries is essential. Moreover, the US-Norway tax treaty ensures you don’t pay taxes twice on the same income. Under this treaty, you can claim deductions and credits to minimize your tax liability and avail of tax exemptions on certain types of income.
It’s worth noting that Norway imposes high taxes, particularly on personal income, but it also offers a robust social welfare system and a high quality of life. As a resident, you may be required to pay national insurance contributions, which provide access to healthcare, unemployment insurance, and retirement benefits. Additionally, Norway has a wealth tax that applies to residents with significant net wealth.
To stay compliant with your US tax obligations, you must file a tax return every year with the IRS, reporting your worldwide income.
Who has to File Taxes in Norway?
If you’re a Norway resident, you must file a tax return and pay income tax on all your income, including income earned abroad. This includes income from employment, self-employment, business profits, capital gains, and rental income. As a resident, you must also pay national insurance contributions, which provide access to social security benefits like healthcare, pensions, and unemployment benefits.
Non-residents, on the other hand, have different tax obligations in Norway. If you earn income in Norway, you may be subject to tax on that income, depending on the nature of the income and the length of your stay in the country. For example, if you’re a non-resident employee working in Norway for more than 183 days a year, you’re liable to pay income tax on your employment income in Norway. Non-residents must also pay taxes on income from Norwegian rental properties, Norwegian business activities, and certain capital gains.
Who Qualifies as a Tax Resident in Norway?
Since you’re taxed differently depending on whether you’re a resident or non-resident in Norway, it’s crucial to understand how to determine your residency status.
Norway Resident Qualifications
You’re considered a resident of Norway if:
- You live in the country for over 183 days during a particular tax year.
- You live in the country for more than 270 days during any 36-month time period.
If either of the above applies to you, you’re likely considered a Norwegian resident, meaning all your wages are subject to income tax.
Non-resident Qualifications in Norway
If you have not lived in Norway for more than 183 days in a calendar year or more than 270 days in a 36-month time frame, you’re likely considered a non-resident in Norway. Only your Norwegian-earned wages are subject to income tax.
If you’re a temporary foreign worker in Norway or new to Norway, you may qualify for PAYE (Pay As You Earn), which taxes you after your salary has been paid. In this instance, you do not need to file a tax return. You can opt out of the PAYE scheme if you plan to live in Norway — you’re only eligible if you’re a temporary worker or during your first year in the country.
Dreading the last minute scramble pulling together your tax documents? Despair no more! This simple checklist lists the documents you need to have on hand when preparing to file.
Income Tax in Norway
General income, which includes employer wages, business income, and capital, is taxed at a flat rate of 22% in Norway. A progressive tax comes into play if you earn more than $190,350 (roughly equivalent to $18k – $19k USD).
Here’s how the progressive income tax rate works in Norway:
Resident Income Tax Rate in Norway
On top of the flat 22% general income tax rate, the income bracket tax rates are:
|Income tax bracket||Personal income bracket tax rate|
|NOK 190,350 – NOK 267,900||1,7%|
|NOK 267,901 – NOK 643,800||4%|
|NOK 643,801 – NOK 969,200||13.4%|
|NOK 969,201 – NOK 2,000,000||16.4%|
|NOK 2,000,001 and up||17.4%|
Other Tax Situations in Norway
In addition to the standard general and personal income tax rates, self-employed individuals must pay 11.2% in self-employment tax towards Social Security contributions.
Companies in Norway pay a flat 22% tax rate on all taxable corporate profits.
Value-added Tax (VAT)
This type of tax is paid by consumers when buying goods or services in Norway. VAT is then passed on from merchants to the Norwegian Tax Administration. It’s similar to sales tax in the US.
Most items and services are subject to a flat rate VAT of 25%. Some items and services qualify for lower VAT rates, including:
- Trains, taxis, planes – 12%
- Hotels, boarding houses, rent – 12%
- Grocery food items or carryout restaurant orders – 15%
Norway residents and non-residents pay municipal and state wealth taxes. The municipal rate is 0.7%, and the state wealth tax rate is 0.25% for assets over NOK 1.7 million (NOK 3.4 million for married filers). The state rate increases to 0.40% for assets exceeding NOK 20 million (NOK 40 million for married filers).
There is no inheritance tax in Norway.
In Norway, property tax ranges between 1% and 4% and is determined by the municipality where the property is located.
Employees in Norway contribute 8% of their gross monthly salary towards Social Security. Employers contribute 14.1% of each employee’s salary.
What Tax Forms Do Americans Living in Norway Have to File?
Americans living abroad in Norway need to file income tax returns in both countries. One exception: temporary and new expats under the PAYE scheme do not need to file a tax return.
The Norwegian tax year is the same as the US: January 1 – December 31. Expats and residents of Norway will receive their tax return in March or April and must confirm the correct information, then submit the final return by April 30. You can submit your tax return online at the Norwegian Tax Administration’s website.
The primary US tax form that expats in Norway will need to complete is Form 1040, the standard tax form for US citizens and residents. This form must be filed by all US expats regardless of where they live.
US expats in Norway may also need to file Form 2555, which allows them to claim the foreign earned income exclusion. This exclusion can help reduce their US tax liability by excluding a portion of their income earned in Norway from US taxes.
It’s important to note that Norway has a tax treaty with the US, which can help US expats avoid double taxation on their income. This treaty provides for reduced withholding taxes on certain types of income earned by US expats in Norway.
Credits & Deductions Available to Expats Living in Norway
US expats living in Norway may be eligible for certain tax credits and deductions that can help reduce their overall tax liability. The foreign tax credit is one such benefit, which allows expats to offset taxes paid to Norway against their US tax liability.
In addition, expats may also be able to claim the foreign-earned income exclusion, which allows them to exclude a portion of their foreign-earned income from US taxes. The foreign housing exclusion can also be claimed to cover the cost of housing while living abroad.
Expats may also be eligible for deductions, such as the standard deduction or itemized deductions, depending on their individual circumstances. Other deductions may include expenses related to self-employment, moving expenses, and charitable donations.
Do the US and Norway have a Tax Treaty?
Yes, Norway and the United States do have a tax treaty with the United States. Under this treaty, US citizens and residents in Norway can avoid paying taxes on the same income twice – once to Norway and again to the US.
The tax treaty also provides for reduced withholding taxes on dividends, interest, and royalties earned by US expats in Norway. This means that you can keep more of your hard-earned money and minimize your tax liability. Moreover, the treaty also provides for tax credits and exemptions, which can further reduce your tax burden.
It’s important to note that while the tax treaty can help you avoid double taxation, you still need to file a tax return in both countries to claim the benefits of the treaty. Failing to do so could result in penalties and fines. Additionally, the tax treaty doesn’t cover all types of income, so it’s important to seek professional guidance to ensure that you’re not missing out on any tax breaks or deductions.
Does Norway have a Totalization Agreement with the US?
Yes, the US-Norway totalization agreement helps protect a US expat’s Social Security obligations. It functions similarly to the tax treaty, preventing expats from paying duplicate Social Security contributions to both countries.
Navigating Tax Compliance for US Expats in Norway
If you’re a US expat living in Norway, filing your tax returns can be more complex. However, we hope that this guide has helped you understand your tax liability better. If you still have any questions or require guidance on filing your Norway tax return for the first time, we’re here to help.
Contact us, and one of our customer champions will gladly help. If you need very specific advice on your specific tax situation, you can also click below to get a consultation with one of our expat tax experts.