From 1 January 2026, all employers in Norway will no longer be required to maintain a separate tax deduction account. Instead, tax deductions (withholding tax) must be paid directly to the Norwegian Tax Administration in connection with each payroll run. This article provides an overview of what a tax deduction account is, and what the change means for you as an employer.
What is a tax deduction account?
A tax deduction account is a restricted bank account that employers have been required to use to set aside tax withheld from employees’ salaries. The purpose is to ensure that these funds are kept separate from the company’s regular finances, so that the money is always available when the tax must be paid to the Norwegian Tax Administration. The funds cannot be used for operational purposes, and the account has been strictly regulated.
The scheme has existed in Norway since the 1950s. As digital solutions have gradually replaced manual processes, the need for such a separate account has been deemed less necessary. Many companies have found the arrangement time-consuming and administratively cumbersome, especially when it comes to monitoring balances and meeting term deadlines.
What changes on 1 January 2026?
From 1 January 2026, the requirement to maintain a tax deduction account will be abolished. At the same time, the deadline for paying withheld tax will change. Currently, tax deductions are paid on the 15th of every second month, but starting next year, they must be paid no later than the first business day after each payroll run.
For employers, this means you will no longer store withheld tax in a restricted account until the term deadline but instead pay it continuously. This requires payroll systems and routines that support ongoing payments and full oversight of all payroll dates to prevent delays.
Key points in the new system
The purpose of this reform is to modernize and simplify tax collection. The tax deduction account scheme was created for a time with manual processes and limited oversight. Today, both reporting and payment follow-up are digital, and the Tax Administration can monitor withheld tax in real time.
Introducing direct payment will:
- reduce administrative burden for employers
- ensure faster payment of withheld tax to the Tax Administration
- eliminate the risk of misuse of funds set aside for tax
- simplify everyday operations by removing the need for an extra bank account
In short, a system that is no longer considered necessary in a digital collection model is being phased out.
What do you need to do?
The change will simplify processes in the long term, but employers should prepare well in advance. This includes:
- Updating payroll and accounting systems to handle direct payment of withheld tax.
- Ensuring proper routines, especially for companies with multiple payroll runs each month, variable pay dates, or back payments.
- Training employees and payroll staff in the new deadlines and reporting requirements.
- Planning the closure of the tax deduction account after the final payment term for 2025, including any necessary application for release of funds.
- Implementing internal controls to ensure that tax deductions are paid correctly and on time.
What happens if an employer does not pay withheld tax?
Even though the new system will simplify the process, failure to pay withheld tax on time remains a criminal offense. Late or missing payments may result in fines, and the general manager can be held personally liable and face imprisonment of up to two years. It is therefore crucial to establish routines that make timely and accurate payment easy, and to ensure that systems and staff are well prepared.
Contact us
Do you have questions about how this change will affect your company? We are ready to assist you in ensuring everything is in place before 1 January 2026. We can review your current payroll processes, check that your systems are updated, and provide practical guidance on how the new system works in practice.
Our goal is to make the transition as smooth as possible for your company and ensure that both management and employees feel confident in their daily work. Feel free to contact us to schedule a meeting and find the best solution for your organization.
