Norway’s Pay-As-You-Earn (PAYE) scheme makes taxation easier for non-resident and temporary workers. Instead of filing complex tax returns, workers pay a flat tax directly from their salary. This guide breaks down the rules, benefits, and limitations of the PAYE system in Norway for 2025 and beyond.
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🇳🇴 What Is the PAYE Scheme in Norway?
The PAYE scheme, introduced on 1 January 2019, is a simplified tax system for limited tax liable workers in Norway. It is designed for short-term and temporary employment, ensuring taxes are deducted automatically from wages without the need for an annual tax return.
📌 Who Qualifies for PAYE?
You may qualify for PAYE if you are a non-resident worker and:
- Your salary is below bracket tax level 3 (NOK 670,000 for 2024; subject to annual adjustments).
- You work in Norway temporarily and do not plan to exceed the residency thresholds (183 days in 12 months or 270 days in 36 months).
- You are not working offshore or as a seafarer (these are excluded).
💰 PAYE Tax Rate and How It Works
Under PAYE, your employer withholds a flat 25% tax (which includes social security contributions) directly from your salary. This makes PAYE simple and predictable:
- No deductions are available under PAYE.
- You do not need to file a tax return — the tax withheld is final.
- PAYE ensures fewer administrative burdens for temporary workers.
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📋 Example of PAYE Calculation
Let’s assume you earn NOK 500,000 in Norway in 2025. Under PAYE:
- Gross salary: NOK 500,000
- Flat PAYE tax (25%): NOK 125,000
- Net income after tax: NOK 375,000
No additional tax return is needed, and the payment is considered final.
⚖️ PAYE vs. Ordinary Taxation in Norway
| Category | PAYE | Ordinary Taxation |
|---|---|---|
| Tax Rate | Flat 25% (includes social security) | 22% + bracket tax rates + social security |
| Deductions Allowed | No | Yes (minimum deduction, interest expenses, etc.) |
| Tax Return Requirement | No | Yes, must file annually |
| Best For | Temporary & short-term workers | Residents & long-term employees |
📌 Pros and Cons of PAYE
Advantages
- Simple flat tax rate with no surprises
- No annual tax return required
- Ensures compliance for non-resident workers
Disadvantages
- No access to deductions (e.g., housing, interest, union fees)
- Not beneficial for high-income earners above NOK 670,000
- Not available for offshore workers or seafarers
✅ Conclusion
The PAYE scheme in Norway is a straightforward option for temporary and non-resident workers earning below the income threshold. While it removes the hassle of annual tax returns, it also limits access to deductions. Understanding whether PAYE or ordinary taxation is better for you depends on your income level, duration of stay, and eligibility for deductions.
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