The Pay-As-You-Earn (PAYE) scheme in Norway is designed to simplify taxation for temporary and non-resident workers. If your salary is below the defined thresholds, you may pay a flat tax rate with no need to file a tax return. This guide breaks down the PAYE thresholds for 2025 and 2026, who qualifies, and the benefits and drawbacks of this system.
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📌 What Is the PAYE Scheme?
Introduced in 2019, the PAYE scheme is a simplified tax system for limited tax-liable, non-resident workers in Norway. Under PAYE, income tax is settled immediately through a flat rate deduction from salary, and the tax is considered final — meaning no tax return needs to be filed.
📌 PAYE Thresholds for 2025 & 2026
| Year | Maximum Salary for PAYE | Flat Tax Rate (includes social security) |
|---|---|---|
| 2025 | NOK 670,000 | 25% |
| 2026 (expected) | Likely NOK 690,000 (adjusted for inflation) | 25% |
If your annual income is below these thresholds, you qualify for PAYE. Offshore workers and seamen are excluded from the scheme regardless of income level.
📌 Who Qualifies for PAYE?
- Non-resident employees temporarily working in Norway.
- Individuals earning below the annual threshold (NOK 670,000 in 2025).
- Workers not engaged in offshore activities or employed as seamen.
Workers above the threshold or excluded categories must use the ordinary taxation system, which allows deductions but requires filing a Norwegian tax return.
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📌 Benefits of PAYE
- Flat 25% rate includes both income tax and social security contributions.
- No need to file a tax return — tax is final at payment.
- Easy compliance for short-term workers.
📌 Drawbacks of PAYE
- No deductions allowed (e.g., housing, travel, interest expenses).
- May result in higher tax liability compared to ordinary taxation for workers with deductible expenses.
- Once chosen, it generally applies for the whole year unless opting out.
📌 Example Scenario
Maria, a non-resident earning NOK 500,000 in 2025, qualifies for PAYE:
- Gross salary: NOK 500,000
- Paye tax (25%): NOK 125,000
- Net income: NOK 375,000
Since Maria has no deductions to claim, PAYE provides a simple, predictable tax outcome.
📌 Final Thoughts
PAYE thresholds for 2025 and 2026 make compliance easier for many foreign workers. However, expats with significant deductible expenses should evaluate whether opting out of PAYE and using ordinary taxation provides better savings.
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