This report covers the Norwegian authorities’ reassessment of the country’s current rules on reporting of foreign employees and contractors.
The European Free Trade Association Surveillance Authority (“ESA”) has alleged that the current regulations in Norway are in breach of the European Economic Area (EEA) regulations with respect to the reporting of foreign employees and contractors.1 This has prompted the Norwegian authorities to assess their current regulations.
Any changes decided may require employers to modify their administrative procedures and policies regarding information disclosure and reporting of foreign employees and contractors working in Norway.
For many years, Norway has had regulations in place for the reporting of foreign employees and contractors.2 The regulations include:
Norway’s Ministry of Finance has asked the Directorate of Taxes3 to suggest whether the current regulations should be altered. If new regulations are deemed to be necessary, their commencement date would be 1 January 2018.
One of the previous conditions for reporting contracts with foreign contractors electronically to the Central Office-Foreign Tax Affairs (COFTA) has been that the contracted services be performed on a site which is under the client's control in Norway. However, according to the proposed changes, all contracts must now be reported, independent of where they are taking place. The exception for reporting contracts that are carried out in places that are not under the contractors’ control is therefore cancelled.
The current regulations are such that the principal and the foreign contractor, that are obliged to disclose certain information to COFTA, have a “joint and several liability” to settle any tax claims, such as payroll tax, advance tax payments, social security contributions, etc. Thus, if the foreign contractor failed to properly report (whether intentional or due to negligence) to the tax authorities, the principal could be held responsible for any settlement of any claims on the foreign contractor.
Under the proposals, these rules are repealed – given the understanding that the rules of the Tax Administration Act on compulsory fines and violation charges can be applied accordingly. However, it is important to note that how to apply the sanctions under the Tax Administration Act remains to be clarified.
1 For “Complaints against Norway relating to reporting obligations when contracts are given to non-resident contractors,” on the Government of Norway’s website, click here. Also see from ESA “Complaints against Norway relating to the reporting obligations when contracts are awarded to non-Norwegian contractors” (PDF 1.18 MB) (dated 13 January 2016).
2 For information on the reporting obligation, click here.
3 For Prop.1 LS (2017 –2018) Proposisjon til Stortinget (forslag til lovvedtak og stortingsvedtak), click here (PDF 7.03 MB)
For additional information or assistance, please contact your local GMS or People Services professional* or one of the following professionals with the KPMG International member firm in Norway:
Tel. +47 4063 9478
Tel. +47 4163 9242
* Please note that the KPMG International member firm in the United States does not offer labour law services.
The information contained in this newsletter was submitted by the KPMG International member firm in Norway.
© 2020 KPMG Law Advokatfirma DA, a Norwegian member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.
Flash Alert is an Global Mobility Services publication of KPMG LLPs Washington National Tax practice. The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.