The labor costs of professionals from the construction, plumbing, electrical and related industries are not the lowest in Norway. Many people have experienced a situation where the issued invoice exceeded expectations as to the expenditure to be incurred. This is why, in many cases, customers want to settle accounts with entrepreneurs without a sales document. It is worth knowing that such activities will not bring significant savings.
"Why so expensive?"
Professionals from various industries often encounter the question "Sir, why is it so expensive?" The answer lies in the costs of doing business in Norway. It is worth knowing that VAT and income tax are not the only expenses incurred by an entrepreneur. Norwegian regulations also oblige him to other benefits - especially if he employs employees.
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Invoice components
The average annual salary in Norway is 500. NOK. It is logical that in order to secure such wages for its employees, the company must earn more to remain profitable. The following components are of particular importance, which must be taken into account by the enterprise in estimating the costs of the services provided:
- average annual salary,
- entrepreneurs' tax (mostly at the level of 14,1%),
- social benefits (e.g. Christmas parties, Christmas gifts, lunch, meals, etc.),
- pension contributions (the minimum rate is 2% of the annual salary),
- professional insurance from NNW,
- company administration,
- business travels,
- rental of office space and provision of IT infrastructure.
The above items are expenses that must be covered by the services provided by the company. All in all, all additional costs are close to 50% of the average salary. This means that if an employee is to earn 500. Per annum, this enterprise must record an income of PLN 750 thousand on its work. NOK per year. In this case, the cost of the person's working hour is NOK 442, assuming 100% occupancy per year.
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Profitable cost of the work of a specialist
It is worth being aware that no employee is able to offer 100% occupancy during the year. It is enough to mention that approx. 20% of working time is the time necessary for commuting to the client, parental and sick leave, etc.
In total, it turns out that, under an optimistic assumption, an employee may spend 1350 hours a year on business. Taking the above components into account, therefore, it follows that an hour of working time costs NOK 555, excluding VAT. Thus, 700 NOK gross guarantees an income, thanks to which the company does not suffer losses.
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Enterprises that charge less than NOK 700 per hour for their services are on the verge of profitability. In practice, this means that in the event of any minor stumbles or financial difficulties, these companies are close to bankruptcy. They are therefore unable to offer high quality because the revenues are not sufficient to ensure a fair remuneration for the people employed.
