Living in Norway, Earning in the UK

[pk844]

Hi

I've seen a similar post on this subject but no reply with any info so I wonder if anyone can help !

I am a UK domicile, living in the UK at present but will be moving to Norway full time shortly and taking up residency (July 2011). But I will be earning money via consultancy in the UK for a UK based firm. The money will be paid into my UK accounts and I will then transfer to Norway as needed.

Simple question but how/where do I get taxed ???

Any help gratefully received !

[maths]

Will you be self employed or employed?

If employed, a UK or Norwegian company?

Where will you carry out the work, UK and/or Norway?

[pk844]

I'll be self employed by the UK company but working from Norway.

Thanks.

[Little Ash]

Basically whether you are tax resident in Norway will depend on the number of days you spend in Norway. See http://www.skatteetaten.no/Upload/Brosjyrer%20og%20bok/OmSkatt-Eng-LR.pdf.

From what you say it sounds like you will be living more or less permanently in Norway and will therefore be regarded as "tax resident" in Norway by the Norwegian authorities which means you will probably have to pay tax like any other Norwegian regardless of the fact that you are still 'earning' your wage and being paid in the UK.

Tax that you have to pay includes income tax or 'inntektsskatt' (the equivalent of PAYE + national insurance in the UK), and wealth/asset tax or 'formuesskatt' which is currently payable annually at 1.1% of the value of all your assets (i.e. savings, investments, property etc). Formuesskatt is based on the value of your assets on 31st Dec each year. A word of caution - even if you only become 'tax resident' in Norway from July 2011, you will still be liable to pay the same amount of formuesskatt for the 2011 tax year as if you had become 'tax resident' at the start of Jan 2011 i.e. it takes no account of the fact that you will have only been 'tax resident' for 6 months of the tax year.

Another point worth mentioning - it is not possible to shelter any of your savings from Norwegian tax by keeping them in the UK (without not declaring any assets to the Norwegian authroities which of course would be illegal). For example, if you have tax-free ISA savings in the UK and you are deemed to be 'tax resident' in Norway, the Norwegian authorities will not recognise the UK ISA savings' tax-free status so the UK ISA savings will be liable to both income tax and 'formuesskatt' in Norway. The Norwegian tax system does not incentivise one to save for one's future in the same way that the UK system does.

When you come to Norway it will probably be worth you taking a trip down to your local tax office to get them to help you out. They are obliged by law to act in your best interests.

If you would like any more info, let me know.

[pk844]

Thanks Litte Ash, that's really helpful. Much appreciated.

[maxc]

This is an old thread, but in case Little Ash is still around:

The residency rules I can find on the web say that you're not tax resident until January 1st of the year you first hit 183 days. So in the example of a August 1st 2011 arrival, you're not resident until January 1st 2012.

That seems pretty clear in the case of income tax but does it somehow work differently with formuesskatt as you are saying, so that you end up paying formuesskatt on your tax return for the year of arrival even if you arrived in Norway less than 183 days before the end of the year?

Thanks for any guidance -- there's amazingly little information on formuesskatt online.

[Little Ash]

Hi maxc. You will appreciate that I am not a tax expert and I am only going on my own experience so pls check out details with a tax expert/your local tax office in Norway. However I have had to pay 'formueskatt' for the 2010 tax year even though I was only tax resident for 2 months of the year. Unfortunately when it comes to 'formueskatt' the Norwegian tax system is set up on a 'tough luck' basis i.e. you pay the same amount of 'formueskatt' regardless of how long you have been tax resident in the country within a given year. So in theory even if one were to become tax resident on 30/12, you would still end up paying a full year's formueskatt.

If you find out any different pls let me know but I have been paying someone at a major firm of international accountants/tax lawyers (at vast expense) and this is the advice I have been given.

[etf]

Hi maxc

I'm not sure whether your internet seaches have already uncovered PWC's Norway guide for expatriate employees, but if not, it might be worth a look. You can access the guide through the useful links section of the website below.

Kind Regards

etf

http://theexpatriatetaxfactory.com

[maxc]

Thanks Little Ash, I'm in a very similar situation so it's good to hear your experience. Given the amount of money involved I'm going to check this out thoroughly and I'll post anything I discover back here.

Something that doesn't add up is that none of the wealthy foreigners I've met here are paying any significant formueskatt, according to their public tax records at least. Norway doesn't seem like the kind of country where people would cheat, so perhaps there's something going on with dual residence, moving assets into holding companies or suchlike.

@etf, thanks for the link to that doc, interesting. But it's yet another example of glossing over formueskatt as if nobody really pays it.

[Little Ash]

Maxc - Thanks for your post. I think there are probably legitimate means of reducing one's liability to formueskatt but as always you have to be willing to pay the price in the first place to get access to the necessary professional advice. Whether it is worth the cost of course depends on the amount of assets one has and therefore one's level of liability to formueskatt in the first place. And then finding someone who can actually offer good advice is the next challenge. Personally I am happy to pay for decent advice that is going to come up with suggestions for reducing my taxable liability and save me money, but I am not convinced that my current advisors are doing this; I suspect I may be simply paying for someone who is basically processing my tax return for me; an issue I need to address sooner rather than later.

I believe that a favourite method employed by Norwegians for reducing one's liability to formueskatt is to invest in property and borrow to finance the purchase. Benefits include i) unlike most forms of asset which are valued at face value/market price, the taxable value of property assets (likningsverdi) are substantially less than the market/real value; and ii) the capital borrowed can be offset against your assets thereby reducing your taxable asset base (loan interest payments can also be offset against income). Coming from the UK the Norwegian system to me seems crazy as it appears to encourage people to invest in property (thereby artificially inflating property prices) and take on excess borrowings - isn't the UK now suffering the adverse effects of something similar in the recent past?! I have heard recent talk of a property 'problem' or 'bubble' from locals here. This and Norway's attitude towards saving for the future is one of the areas that I have found the largest cultural difference with the UK. It takes a lot of getting used to.

Anyhow, enough for now. Would be interested to know if you find any decent ways of reducing one's liability to income tax or formueskatt. If you would like, I would be happy to share my experience of moving to Norway and getting yourself set up over here (I am currently waiting for the arrival of my Norwegian driving licence and have recently shipped my personal effects over from UK if you need any advice on that). My email address is beaugeste@ymail.com. All the best.