# PAYE (kildeskatt) for foreign workers in Norway: 25% flat tax and 2026 threshold

The PAYE scheme (kildeskatt) gives foreign workers in Norway the opportunity to pay a flat tax rate of 25% instead of a standard tax return. This guide explains the threshold, advantages and disadvantages.

Canonical: https://samfunnprep.no/en/articles/kildeskatt-paye-utlendinger
Language: en
Publisher: SamfunnPrep
Author: Hlib Suslov
Published: 2026-07-06T15:10:02.061+00:00
Modified: 2026-10-16T05:19:55.145275+00:00
AI use policy: https://samfunnprep.no/ai-policy.txt

## Key takeaways

- 25% flat tax — no tax return The PAYE scheme allows foreign workers in Norway to pay a fixed 25% tax rate without filing a standard tax return — practical for short-term stays.
- 2026 threshold: NOK 725 050 Above NOK 725 050 in gross annual income, you automatically fall outside PAYE and must switch to standard taxation with a tax return.
- PAYE can be more expensive with many deductions If you have commuting allowances, interest deductions or dependents, you should calculate standard taxation — deductions can reduce total tax below 25%.

Are you a foreigner planning to work in Norway? Then **PAYE (Pay As You Earn / kildeskatt)** might be a simple tax scheme for you. This guide explains the PAYE scheme for 2026: who can choose it, the 25% rate, the threshold of NOK 725 050, advantages and disadvantages, and how to switch to a standard tax return if PAYE doesn't suit you.

## What is PAYE / kildeskatt and who can choose it?

**PAYE (Pay As You Earn)**, also called **kildeskatt**, is a simplified tax scheme for foreign workers with limited tax liability to Norway. Instead of filing a standard tax return, you pay a **flat rate of 25%** of your gross salary.

The scheme is established in **the Tax Act § 2-3 first paragraph letter h** and came into force on 1 January 2019 to simplify the tax settlement for short-term workers. The Tax Administration estimates that around 100 000 foreign workers use PAYE every year.

### Who can choose PAYE?

You qualify if:

- You are a **foreign national without tax residence in Norway** — normally the first 4 years, before you become «tax resident» under the Tax Act § 2-1
- Your **gross annual salary is below NOK 725 050** (2026 threshold)
- You **work in Norway** (not just board positions or capital income)

### Who CANNOT use PAYE?

- **Norwegian citizens**
- **Persons with tax residence in Norway** (after 4 years or 183 days of residence in a single year / 270 days over three years)
- **Seafarers and foreign workers on the continental shelf** (special rules)
- **Self-employed / sole proprietors** — see [freelancer or sole proprietor](https://samfunnprep.no/en/articles/frilanser-eller-enk)
- **Persons with income over NOK 725 050** (2026 threshold)
- **Persons who choose to receive social security benefits from NAV** (sick pay, unemployment benefits)

## 2026 Threshold: NOK 725 050 — what does it mean?

**Gross annual salary exceeds NOK 725 050** = you **can no longer use PAYE**.

The threshold is adjusted annually by Parliament. History:

| Year | Threshold |
|---|---|
| 2023 | NOK 642 950 |
| 2024 | NOK 670 000 |
| 2025 | NOK 700 000 |
| **2026** | **NOK 725 050** |

### What happens if you exceed the threshold?

If your income crosses the threshold during the year:

1. The Tax Administration notifies you (via [Digipost or Altinn](https://samfunnprep.no/en/articles/digital-postkasse-digipost-ebok))
2. You receive a standard tax return for the entire year
3. PAYE deductions from previous months are counted as advance tax
4. You file a tax return in April the following year — normally you either receive a tax refund or owe additional tax

### What is included in the calculation?

- Base salary and hourly wages
- Bonuses, commissions, fees
- Benefits in kind (car, housing)
- Foreign service allowances and travel allowances above the statutory rate

**Not included:** Pensions from abroad, unemployment benefits from your home country, capital income.

## Advantages and disadvantages: PAYE vs. standard tax return

### Advantages of PAYE

- **No tax return to file** — save time and administrative costs
- **Automatic final settlement** — no surprise tax liability
- **Simpler for short-term stays** (1–3 years)
- **25% may be lower than marginal tax** for income in the bracket NOK 686 500–725 050 (where marginal tax is approx. 41%)
- **Tax card does not need updating** with salary changes
- Suitable if you live in employer-provided housing (free accommodation)

### Disadvantages of PAYE

- **No deductions** — you cannot deduct:
  - Commuting allowance (accommodation and meals)
  - Interest deduction on mortgage
  - Childcare / after-school program deduction
  - Deduction for donations to voluntary organizations
  - Trade union membership fee deduction
  - Travel to/from work
- **No tax refund** for low income or many deductions
- **Not suitable if you own a Norwegian property** or have family in Norway
- **25% is often higher** than marginal tax for income below NOK 292 850 (where marginal tax is approx. 27%)
- **Can create challenges** with [application for permanent residence](https://samfunnprep.no/en/articles/varig-oppholdsrett-eos) because a standard tax return provides better documentation of finances

### Concrete comparison: example with NOK 500 000 gross income

**Under PAYE 25%:**
- Tax: NOK 500 000 × 25% = **NOK 125 000**
- Net income: NOK 375 000

**Under standard tax return (only basic deduction/personal allowance):**
- General tax (22%): NOK 500 000 – (NOK 104 450 basic deduction) – (NOK 108 550 personal allowance) = NOK 287 000 × 22% = NOK 63 140
- Progressive tax: approx. NOK 12 000
- Social security contribution (7.8%): NOK 500 000 × 7.8% = NOK 39 000
- **Total: approx. NOK 114 140**

In this example, a standard tax return is approx. **NOK 10 000 lower**. If you have more deductions (commuting allowance, interest, trade union), the difference increases further.

**Conclusion:** Always calculate both alternatives before you choose.

## Tax card and employer: how PAYE works

### How do you choose PAYE?

1. **Upon first arrival** in Norway you apply for a **tax card** from the Tax Administration at **skatteetaten.no/skattekort**
2. When applying for a tax card you get the choice between **PAYE** and **standard taxation**
3. If you choose PAYE, you receive a **tax card with deduction rate of 25%**

### How is the tax deducted?

- **The employer deducts 25% of gross salary** each pay period
- The tax is sent directly to the Tax Administration via the **A-message**
- You receive a pay slip showing the PAYE deduction
- **No additional paperwork** at year-end — the scheme is self-settling

### What about social security contribution?

The 25% rate **includes the social security contribution** (7.8%). You have the right to social security benefits such as:
- Sick pay
- Maternity/paternity pay
- Unemployment benefits (with longer stay)

Note: If you want to apply for **unemployment benefits from NAV**, you may lose the right to PAYE and must switch to standard taxation.

### Foreign identification

Even though you are not tax resident, you must have a **D-number** or **Norwegian national ID number** to work legally. You get a D-number from the Tax Administration by appointment. Remember to bring:
- Passport
- Employment contract
- Proof of legal residence (work permit or EEA registration)

## Switching from PAYE to standard taxation: when and how

### Voluntary switch

You can switch from PAYE to standard taxation at any time:

1. Go to **skatteetaten.no** → «Change tax card»
2. Select «Standard taxation»
3. A new tax card is issued within 1–2 weeks
4. The employer deducts tax according to the new card from the next salary

**Note:** The switch applies to the entire calendar year retroactively. If you have had PAYE the first months, you must file a tax return in April where the PAYE deduction is counted as advance tax.

### Automatic switch to standard taxation

You must switch to standard taxation when:

- You have **tax residence in Norway** (183 days in the year or 270 days over 3 years)
- You exceed the **NOK 725 050 threshold** (2026)
- You become **self-employed / sole proprietor**
- You apply for **unemployment benefits from NAV**
- You receive **Norwegian pension income** or other forms of Norwegian taxation that don't fit PAYE

### After 4 years

After 4 years in Norway (and continuing to work here) you become **tax resident** under the Tax Act § 2-1. Then you must:

- File a standard tax return from the year you become tax resident
- Pay tax on **all income from around the world** (not just from Norway)
- Report foreign assets (bank accounts, shares, property)
- Check tax agreements between Norway and your home country to avoid double taxation

## Practical advice and pitfalls

### Always calculate both alternatives

Use the **Tax Administration's calculator** at skatteetaten.no/kalkulator to compare PAYE vs. standard taxation. Enter your expected income, commuting allowance, interest deduction and other deductions.

### Foreign tax treaty

Does Norway have a **tax treaty** with your home country? Check regjeringen.no. Tax treaties can provide:
- Relief from double taxation
- Reduced rates on capital income
- Credit for tax paid in your home country

### Tax residence test

183 days in one calendar year **or** 270 days over three calendar years makes you **tax resident**. After that:
- **Worldwide tax liability** to Norway
- No longer entitled to PAYE
- Must file a standard tax return

### Final settlement when leaving

If you leave Norway during the year:
- Report moving to the Population Register ([see report moving](https://samfunnprep.no/en/articles/melde-flytting-norge))
- Switch to standard taxation for the year
- Final settlement after Norwegian tax return in April the following year

## What does NAV and social security contribution say?

As a PAYE worker you are **insured in the Norwegian social security system** if you:
- Are employed by a Norwegian employer
- Have work lasting at least 7 days in Norway

This gives you the right to:
- **Sick pay from NAV** (after employer period)
- **Maternity/paternity pay** (with qualification)
- **Unemployment benefits** (with longer stay)
- Accident insurance through your employer

**EEA citizens:** Norway has an A1-certificate scheme that lets you maintain social security coverage from your home country while working temporarily in Norway. Check with NAV.

## Summary

**PAYE (kildeskatt) 2026** is a flat 25% tax scheme for foreign workers with gross income below **NOK 725 050** who are not tax resident in Norway. Advantage: no tax return, automatic final settlement, simple for short-term stays. Disadvantage: no deductions (commuting, interest, dependents) and can be more expensive than standard taxation with low income or many deductions. **Always calculate both alternatives** using the Tax Administration's calculator before you choose. You can switch to standard taxation at any time via skatteetaten.no. After 4 years in Norway you automatically become tax resident and must file a standard tax return.

## FAQ

### What is the difference between PAYE and standard tax return?

PAYE: 25% flat, no tax return. Standard: all income and deductions, possible refund.

### Who can choose PAYE?

Foreign nationals with limited tax liability and gross annual income below NOK 725 050.

### Is PAYE always cheapest?

No. Many deductions can make standard taxation cheaper. Calculate both.

### What happens above NOK 725 050?

You must switch to standard taxation. The Tax Administration notifies you.

### Can I switch back?

Yes, voluntary switch is possible via the Tax Administration.

## Sources

- [Kildeskatten (PAYE) — Skatteetaten](https://www.skatteetaten.no/person/utenlandsk/skal-du-arbeide-i-norge/kildeskatten)
- [PAYE-ordningen for utenlandske arbeidstakere — regjeringen.no](https://www.regjeringen.no/no/tema/okonomi-og-budsjett/skatter-og-avgifter/paye-ordningen)

Citation: Hlib Suslov, "PAYE (kildeskatt) for foreign workers in Norway: 25% flat tax and 2026 threshold", SamfunnPrep, 2026-07-06T15:10:02.061+00:00, https://samfunnprep.no/en/articles/kildeskatt-paye-utlendinger