From the 1st of January 2025 the additional employer’s national insurance of 5 % will be removed in Norway. This will give several benefits to Norwegian companies. In this article we will discuss the background to this tax, why it is being removed, and what effect the change will have on Norwegian companies.
What are the employer’s national insurance contributions?
Employer’s national insurance contributions are the taxes paid by employers on wages in Norway to finance the national insurance system. Welfare benefits such as sickness benefits, pension and other social security benefits are financed through this tax. Rates vary from 0% to 14,1% depending on the type of industry and where in the country the company is located.
What are additional employer’s national contributions?
In 2023 a temporary law change was introduced with 5 % additional employer’s national insurance contributions on salaries over NOK 750 000. This law change was introduced to increase the contribution to the extraordinary expenses in the state budget. In 2024 limit for additional employer’s contributions was adjusted by NOK 100 000, so that it applied from the first NOK over NOK 850 000.
Discontinuation of additional employer’s national insurance contributions
From the very beginning, this law change was defined as “adapted to the situation and a temporary measure”. There is a good reason why this fee will be discontinued from the 1st of January 2025. The law change was criticized because it has led to increased costs for employers when hiring highly qualified employees. Now that it is being discontinued, it will have several positive effects on Norwegian companies.
Benefits for business
It will certainly be easier for employers to recruit qualified workers, because of labor costs which will be significantly reduced. It will also reduce the likelihood of downsizing. Since labor costs will be lower, it increases the possibility of new hires and higher salaries or other benefits for current employees.
Employers should also evaluate if the 2025 budgets should be adjusted. Many companies use to pay out bonuses to their employees in December in Norway. Because of the discontinuation of additional employer’s national insurance contributions, it may in some cases be reasonable to wait with the payment until January 2025.
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If you want to make sure that reporting of employer’s national insurance will be done correctly during your payroll, just contact us here.
