The Norwegian government plans to introduce new tax breaks for foreigners. They are to include those employees who are employed on the basis of short-term contracts. It is estimated that the introduced changes will give this group tax exemptions at the level of NOK 50 million. Norway's budget will also be diminished.
Revised budget
These changes were included in the revised state budget. A simplification of the tax system is planned for foreign employees who do not reside permanently in Norway and whose stay is related to the short-term performance of official duties. According to the new regulations, such people will be subject to a fixed tax rate of 25 percent. Additionally, they will not have to provide their own settlements to the Norwegian Tax Office. They will therefore lose the opportunity to use other deductions and reliefs that they were previously entitled to.
Changes prepared for a long time
It is worth mentioning that the Tax Office has been preparing these changes for a long time. Paradoxically, this can also bring some savings. According to officials, people staying briefly in Norwegians have many problems with making tax settlements. As a result, many mistakes were made, which forced the Tax Office to do additional work. Simplifying this system for foreigners on short contracts is intended to change this.
The fact that the matter has been consulted for a year already proves the long-term preparation for changes. It was then approved by the trade unions. At the same time, they warned against too low the tax rate.
The advantage of foreigners
Roger Bjornstad, chief economist at LO, emphasizes, however, that the changes introduced will give an advantage to foreign workers over those who find employment in companies in Norway. It is estimated that the new tax breaks will reduce the state budget by NOK 50 million. Therefore, this money will stay either in the pockets of employees or employers. It also points to the positive aspects of simplifying the tax system for foreigners. They will no longer be forced to complete Norwegian declarations, which are complicated.
The other side of the coin
Marie Sneve Martinussen, vice-president of the left-wing Rodt party, also points to the possible negative consequences of the implemented simplifications. As he says, the proposal is an incentive to use foreign workers. He also believes that these changes will favor employment with the use of foreign employment agencies. In her opinion, the proposed tax of 25 percent is too low.
Discounts for foreigners. Not all new rules for everyone
However, not all foreigners are employed on the basis of short-term contracts. Persons earning more than NOK 600 per year will not be covered. Meanwhile, the Norwegian Economic and Industry Federation called for everyone to be subject to tax relief, regardless of their income. Moreover, they believe the rate of 25 percent is too high. The optimal solution would be to introduce a rate of 22 - 25 percent.
