You probably just realised that your salary seems higher in December. Some say the tax authorities only tax half of your salary in December and none of it in July. Well sadly none of this is true. No tax authorities, not even in Norway, ever gave one and a half month of tax free salary to a whole country.
The Nanny state
How does it work? The tax authorities tax your more on 10,5 months so that they can “give” you something like a tax deduction in July and in December. The state is in some way forcing everyone to save money so that they have more money in July to pay for summer holidays for the whole family, and in December to pay for Christmas presents. Nanny state, you said?
Many refuse to pay less tax in December
This will probably be hard to believe, but some Norwegians refuse the “tax refund” in December and ask their employer to be deducted the regular tax for December, so that the state owes them money. What will happen with this money is that when the current year is over, the tax authorities calculates whether you have paid too much or too little tax. Based on that, you will probably get the money back. If you have paid too much tax (all this is calculated on the year even before that and your tax card) then you get the money back, even maybe more. If you paid too little tax over the whole year, the money you refused in December is deducted from the money you owe the state.
Another saving mechanism for Norwegians, basically.
Should you trust the tax authorities?
I held a workshop for foreigners in Norway a few days ago, and asked them to raise their hands if they believe that if the Norwegian tax authorities owed them 200.000 NOK they would return it to them. Many raised their hands, but many also raised it when I asked them who believed the tax authorities would not return it.
I can assure you the tax authorities will return everything they owe you, but also take anything you owe them. If you don’t pay in time, you get interests on it. Moreover, if you disagree with their assessment you can claim it on your Selvangivelse (tax assessment, see here for more explanations about that).
Norway has strong rules on transparency and administration. Once they made a mistake on my tax assessment and I got it fixed in no time. They even organise free tax courses in Norwegian and in English when you create your own company (self employed or enkeltmansforetak).
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