November 06, 2023
As is the case every year, in 2023, employees in Norway will receive a specific tax benefit due to the collection of half income tax advance. This means that in November and December, the income is subject to only half of the standard tax rate. The remaining tax is deducted in other months.
It is essential to be aware that when we talk about "half tax" or "half income tax advance," it's more of a simplification. In reality, in November or December, the employer can collect only half of the employee's income tax advance.
Who is qualified?
To qualify for this tax benefit, employees must have a total income exceeding a specified threshold (Grunnbeløpet) *, which is adjusted annually by Norwegian authorities. Not all types of income are eligible for exemption. It is advisable to contact the tax office for precise information.
Key to understanding the mechanism of half income tax advance is that the total tax amount for the year remains unchanged. The reduced advance in November and December is offset by tax deductions in other months. Careful expense planning is essential to avoid surprises when regular advance deductions resume. Withholding only half of the income tax advance can lead to a tax underpayment for the year 2023.
Remember! It is the Norwegian employer who decides whether to collect half of the advance in November or December.
Benefits of Half Income Tax Advance
Withholding only half of the income tax advance at the end of the year, of course, increases net income during the holiday season. The additional income is often used for holiday shopping and holiday preparations.
Employees Using Pay-As-You-Earn Tax (kildeskatt) and employees posted to Norway
Employees using the Pay-As-You-Earn tax system (kildeskatt på lønn) are not entitled to have only half of the income tax advance collected before the holidays. Employees seconded to Norway and paying taxes there must discuss their situation with their employer or the tax office.
What is Grunnbeløpet (G)?
Grunnbeløpet, often denoted as "G," is a crucial figure used in Norway to calculate various welfare benefits and payouts administered by NAV (Norwegian Labour and Welfare Administration). It serves as a reference point for determining eligibility and benefit levels for many social programs in the country.
As of May 1, 2023, Grunnbeløpet (G) in Norway stands atNOK 118,620. This annual adjustment is determined by the Norwegian Parliament (Stortinget) to account for inflation and economic changes.
As of May 1, 2023, Grunnbeløpet (G) in Norway stands at
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