Employment Income in Norway: Taxable Benefits and Allowances Explained

If you earn a salary in Norway, understanding what counts as taxable employment income is crucial. From cash wages to benefits like housing, cars, and travel, the Norwegian tax system includes a wide range of allowances in your tax base. This guide explains the rules for employment income taxation in Norway, helping you avoid mistakes and optimise your tax position.

📌 What Counts as Employment Income in Norway?

Under Norwegian law, all types of remuneration from employment are taxable unless specifically exempted. This includes both cash salary and benefits in kind. Employers are required to withhold taxes and social security contributions on these amounts through the advance tax system.

💰 Taxable Benefits and Allowances

Here are the most common taxable benefits Norwegian employees receive:

• Salary and Wages: The primary source of employment income, fully taxable.
• Company Car: A taxable benefit based on the vehicle’s value and usage, added to gross income.
• Housing Allowances: Cash received to cover rent is taxable. Only certain expatriate cases may allow partial deductions.
• Free Housing: If provided by the employer, the market value is considered taxable income.
• Travel Benefits: Free or subsidised travel for personal use counts as taxable income.
• Bonuses and Commissions: Included in taxable salary for the year they are received.
• Sickness Benefits: Payments in lieu of salary during illness are subject to income tax.
• Equity Compensation: Stock options or similar benefits are taxed at the time of exercise or sale.

🏠 Special Rules for Housing Benefits

If an employee receives cash housing allowances, the gross amount is taxable. For married assignees whose family lives abroad, deductions for actual housing costs may apply, meaning only the net profit is taxed. Personnel staying in hotels, guest houses, or barracks are only taxed on the net cash benefit.

📊 Social Security Contributions

In addition to income tax, employees must pay social security contributions:

• Standard Rate: 7.8% of personal income.
• Reduced Rate: 5.1% for individuals under 17 or over 69 years old.
• Exemption Threshold: Income up to NOK 99,650 is exempt.

These contributions are withheld alongside regular taxes and fund the Norwegian National Insurance Scheme.

📑 How Employers Handle Taxation

Employers in Norway are legally obligated to withhold both income tax and social security contributions before paying employees. This ensures compliance and reduces the risk of underpayment. Foreign employers with Norwegian workers must also comply with these rules, even if headquartered abroad.

⚖️ Deductible vs. Non-Deductible Expenses

While benefits increase taxable income, some work-related costs may be deductible:

• Union Dues: Deductible up to NOK 8,000.
• Pension Contributions: Deductible under approved pension schemes.
• Travel to Work: Certain commuting costs may be deductible if they exceed standard allowances.

However, personal expenses, fines, and penalties are not deductible.

📌 Key Takeaways

Employment income in Norway is broadly defined and includes cash wages, benefits, and allowances. Understanding which items are taxable helps you plan deductions, comply with filing requirements, and avoid surprises at tax time. Expats, in particular, should pay attention to housing and travel benefits to ensure accurate reporting.