Standard deduction for foreigners

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From 1 January 2006 the deduction is 10% of gross income for residency periods of maximum 2 years. This reduces tax by up to 2,8 percentage points.

The two years are counted from 1 January in the year where you have reached 183 days’ residency in Norway. So if you arrive after 1 July in year “one” you can also claim the deduction for year “2” and “3”. (These details may be subject to changes when all the regulations are finalized).

The standard deduction may not be combined with allowances for extra costs for living abroad such as the EU's "mobility allowance".

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Official information about the standard deduction 

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If the above link does not work, here is an unofficial translation of part of “Utland – Informasjon til selvangivelsen 2004” issued by the Directorate of Taxation in January 2005:

Chapter 9. Income/deductions and property/debt - entry in the self-assessment form
Post 3.3.7 Other deductions

This post is used for the standard deduction for foreign workers with temporary residence in Norway.

Foreign workers with temporary residence in Norway (not over four years) have the right to a standard deduction at the tax assessment for the first four years. The deduction is 15 per cent of gross work income. (People taxable in Norway for income earned on the Norwegian continental shelf and foreign sailors also have the right to this, and are not subject to the four year limit.)

People staying in Norway for more than six months can choose between the standard deduction and deductions for real costs included in the standard deduction.

The most relevant deductions which are not eligible when the standard deduction is used are:

• deductions for real costs of the kind included in the “minstefradrag”
• deductions for work travel
• extra costs incurred by residence outside one’s home, including meals, housing and travel home. This also includes deductions for commuting from a home abroad.
• interest on mortgages, including deductions for assumed advantages of cheap loans from employers
• tax-deductible maintenance contributions (“underholdsbidrag”)
• special deductions for care, infirmity, illness-related costs and age
• tax deductions for savings in the saving scheme ”boligspareordningen for ungdom (BSU)”
• parental deductions (“foreldrefradrag” – post 3.2.10 on the self assessment form)
• payments to individual pension agreements (IPAs) according to the tax act
• loses through sale of equity
• losses for companies
• share-holder contributions

People who are wage earners and resident in Norway for less than six months can choose between the standard deduction and deductions for costs related to the income which is taxed in Norway. The deductions which are forfeited when the standard deduction is used are:

• deductions for real costs of the kind included in the “minstefradrag”
• deductions for work travel
• extra costs incurred by residence outside one’s home, including meals, housing and travel home. This also includes deductions for commuting from a home abroad
• interest on mortgages, including deductions for assumed advantages of cheap loans from employers
• interest payments on loans tied to property in Norway (not covered by income from this property)

Regarding coverage of expenses for meals, lodging and visiting trips when commuting from abroad, and the relation to the standard deduction, see point 8 above (i.e. at http://www.skatteetaten.no/upload/PDFer/Utland2004.pdf).

People resident in Norway the whole income year, have the right to a full “minstefradrag”* and “personfradrag”** (minimum- and personal deductions), in addition to the standard deduction. People resident in Norway for part of the income year have the right to corresponding fractions of the minimum- and personal deductions.

The following deductions may be claimed in addition to the standard deduction, if the other requirements are met:

• deductible contributions to Norwegian public or private pension schemes tied to an employee-employer relationship (post 3.2.12 on the self-assessment form)
• deductible union contributions (post 3.2.11 on the self-assessment form), and the special seaman’s’ deduction

People who are resident in Norway more than six months and who have received profits from Norwegian equity, also have the right to ”godtgjørelsesfradrag”.

Comments not in the original text:
* The minimum deduction is shown in post 3.2.1 in the self-assessment form
** The deduction is tied to the percentage of the year spent in Norway, and the tax-class (“skatteklasse”) -  which is given at  the top of the self-assessment form. Single people are in tax class 1, couples are in 1E or 2F, single parents are in class 2 – which gives a lower tax. The actual amount set by the tax class is not shown on the self-assessment form, but is included in the calculaton of the amounts shown on the “Preliminary calculation of taxes and fees”.

The original text in Norwegian may be found on the internet at http://www.skatteetaten.no/upload/PDFer/Utland2004.pdf

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Editors: Organisasjons- og personalavdelingen
Document created: 21.03.2005, modified: 01.02.2006