Double taxation
If you have income or wealth abroad, you can risk that your income and wealth will be taxed both in Norway and in the other country.
Here you'll find out what you need to do to avoid double taxation.
Does this apply to me?
This applies to you if you're resident for tax purposes in Norway and have income or wealth in Norway.
Methods to avoid paying double taxes
Norway has its own rules to avoid double taxation. How you avoid double taxation depends on the Norwegian Taxation Act and the tax treaty between Norway and the individual country.
The methods are:
- credit deduction
- tax reduction
- tax reduction pursuant to the one-year rule
- tax reduction pursuant to a tax treaty
- the allocation method (the exemption method)
View the tax treaties between Norway and the individual country at regjeringen.no.
Find out which methods to apply on salary from different countries. (overview in the guide Skatte ABC, in Norwegian only).
Below you'll find information about which of the methods apply to your income or assets, and what you need to do.
What you need to do
Credit deduction
A credit deduction means you're entitled to a deduction from Norwegian tax for the tax paid abroad. The deduction is limited to the Norwegian tax on the same income.
For example, you must claim a credit deduction if you have a pension from another Nordic country and have paid tax in the other country.
You can claim a credit deduction if:
- the same income/wealth is taxed abroad
- the income/wealth is taxed in the same year in Norway and abroad
- the taxed is assessed and paid abroad
- the tax is similar to the tax in Norway
- For example, you cannot claim a credit deduction for duties, fees, property tax, and the like.
Maximum credit deduction for tax paid abroad
- You can claim a deduction from your Norwegian tax of the same amount as you've paid in tax abroad.
- The deduction for foreign paid income tax cannot exceed the tax amount you pay in Norway.
- If you did not receive a credit deduction in your Norwegian tax for the full amount you paid abroad, you can claim the remaining credit deduction in a later year.
- Tax treaties determine how much tax the other country can calculate on, for example, interest and dividends. Norway cannot grant you deductions for more than what's been decided.
Examples
You have paid NOK 100,000 in tax abroad. The Norwegian tax is NOK 100,000.
You can claim a deduction of NOK 100,000 in Norwegian tax.
You have paid NOK 60,000 in tax abroad. The Norwegian tax is NOK 100,000.
You can claim a deduction of NOK 60,000 in Norwegian tax.You have paid NOK 150,000 in tax abroad. The Norwegian tax is NOK 100,000.
You can claim a deduction of NOK 100,000 in Norwegian tax. You can claim a deduction for the amount you do not receive this year, NOK 50,000, for later years.
Carrying forward deductions you are not able to use to later years – Carrying forward credit deductions
You can claim a credit deduction for foreign tax that you did not receive a deduction for in your tax assessment. You can do this up to five years in the future.
The right to carry forward the deduction also applies if Norway and the other country have different rules about timing.
If the credit deduction to be carried forward applies to several previous years, the oldest year must be deducted first.
Reversal of credit deductions
Foreign tax that is not deducted in Norwegian tax can be reversed to previous years.
The deduction cannot be higher than the maximum credit deduction the year before.
You can only reverse an unused credit deduction if you can substantiate that you will not have income from abroad for the next five years.
You must be able to prove that foreign tax has been assessed and paid.
The supporting documents must be in a Nordic language or in English. If you have supporting documents in another language, you must obtain a translation made by an authorised translator.
How to enter a credit deduction in your tax return
Log in and enter your income and wealth abroad. You must claim the credit deduction in your tax return yourself. You do this by adding "Method in the event of double taxation" and select "Credit deduction".
Watch the video showing how you can claim a credit deduction in your tax return.
Tax reduction
A tax reduction means we first calculate tax on all income, both income earned in Norway and another country. Then the tax calculated on the income earned in another country is removed. The tax reduction means there'll be no Norwegian tax on the salary income that's taxed abroad.
For example, you must claim a tax reduction if you have salary from another Nordic country and have paid tax in the other country.
Tax reduction under the one-year rule
You can claim a tax reduction on salary income earned in another country under the one-year rule.
The conditions of the one-year rule
You've had a continuous work stay in another country for at least 12 months and you have not stayed in Norway for more than 72 days in the income year.
Tax reduction pursuant to a tax treaty
You can also claim a tax reduction if it follows from the tax treaty. This applies, for example, to salary income earned in another Nordic country.
How to enter a tax reduction in your tax return
Log in and enter your income and wealth abroad. You must claim the tax reduction in your tax return yourself. You do this by adding "Method in the event of double taxation" and selecting "Tax reduction pursuant to a tax treaty" or "Tax reduction pursuant to the one-year rule".
The allocation method
The allocation method (exemption method) means that an income earned abroad is exempt from taxation in Norway.
This method is applied to various incomes, such as pensions.
For salary income, it’s only the tax treaty between Norway and Malaysia that applies this method.
How to enter the exemption method in your tax return
Log in and enter the income. You must claim exemption from taxation pursuant to the allocation method in your tax return yourself. You do this by adding "National insurance and tax exemptions" and selecting "Non-taxable, etc.".
You can apply for a mutual agreement procedure (MAP)
If you're taxed on the same income or wealth in Norway and another country, you can submit an application and ask the tax authorities in the two countries to agree on who is entitled to tax you.