For many years, employees in Norway have been able to enjoy a higher salary in December. This is due to the regulations that allow employer to pay half of advance tax. In 2016, Norwegian Tax Administration allowed this principle to be applied to November instead of December.
It is a mistake, however, to say that the tax thus reduced is a gift from the state. This payment is only postponed in time. In Norway, all pay income tax on total income earned during the tax year. December earnings are included here as well. The final settlement takes place after completing the tax return in the following year. Therefore, regardless of whether the employer deducts half of the tax advance in November or December, we will pay the same amount of tax annually. For the remaining months, the employee pays a slightly higher tax advance.
”Half tax” applies to employees with a fixed salary, hourly pay, piecework or commission system. It includes regular salary, permanent allowances and benefits in kind. However, benefits such as bonuses and overtime should be taxed in full. The situation is different in the case of employees who have chosen the form of taxation 25% kildeskatt. Then the employer pays the tax advance on the same terms as in other months.
If you are concerned that you have paid too little advance tax during the year, you can ask your employer to deduct the entire tax advance for December. You will then avoid a situation, when your annual settlement shows an underpayment.
You can find more on https://www.regnskapnorge.no/faget/artikler/skatt/slik-fungerer-halvt-skattetrekk/