As we have now passed the submission deadline for 2019 Norwegian Tax Returns, employees who have worked in Norway during 2019 will receive their 2019 Tax Assessment Notice (TAN) at any point between now and October 2020, if not already.
What checks should I undertake?
All the figures shown on your TAN should match what was submitted on your 2019 Norwegian Tax Return. Checks should be carried out to ensure all allowances claimed on your tax return have been granted, Norwegian National Insurance has been exempt / charged correctly and you have received the correct number of months personal allowance. If you do come across any discrepancies while reviewing your TAN, you should lodge an appeal as soon as possible. This should be done online. Once your appeal has been received by the Norwegian authorities and your position has been updated, a revised TAN will be issued to you.
The final TAN acts as the evidence that is required to claim credit in the UK for the Norwegian tax you have paid throughout the year. Due to the double tax treaty between the UK and Norway, if you are a UK resident employee, you are entitled to claim relief against a portion of your UK income tax liability because you have paid Norwegian tax. If your employer has a Net of Tax Credit arrangement in place with HMRC, your Norwegian tax will have been offset against your UK PAYE on a monthly basis through their UK payroll. If this is not the case, the claim to reduce the amount of UK tax due must be made on your UK tax return.
If the value of your Norwegian tax is less than the value of your UK tax liability, HMRC will allow for a full offset resulting in no net pay impact. In cases where you are due more tax on your Norwegian earnings than you are on your UK earnings, only part of your Norwegian tax liability can be offset against your UK PAYE. In these circumstances, the excess Norwegian tax can either be paid by your employer on your behalf and treated as a benefit, or it can be suffered by you personally. This depends on your employer’s tax policy.
Although the TAN details the Norwegian tax you have paid throughout the year, it also includes any National Insurance payments you have made as these are often not separated out alongside the tax payments in Norway. If you have paid Norwegian National Insurance, it is important that this portion is identified and the amount is not claimed as a credit in the UK. Only income tax can form part of a double tax relief claim.
Finally, if you only worked onshore in Norway during 2019 and your Norwegian income has not exceeded NOK 639,750 during the year, you may have been automatically included on the PAYE for Foreign Workers Scheme in Norway which means your Norwegian tax has been calculated at a flat rate of 25% including Norwegian National Insurance or 16.8% if you are exempt from Norwegian National Insurance. This is a new scheme that also removed the requirement for a 2019 Norwegian tax return to be submitted. Per guidance issued by the Norwegian authorities, it is expected that a statement will be issued to employees who have been included on this scheme and the checks mentioned above should be carried out when this is received.
Should you require any assistance or have any questions relating to your Norwegian Tax Assessment Notice or how to claim a credit on your UK tax return, please contact Kris Walker or your usual AAB contact.