What is employer's social security contributions?

Employers' tax is a tax that employers in Norway must pay to the state based on the salary payments to their employees. This tax constitutes a significant part of the total salary costs for companies and is an important source of revenue for the state. The tax varies geographically and has several exceptions and exemptions, making it a complex but essential element of Norwegian payroll management.

Section 1: Basics of Employer Contributions

1.1 What is Employer's Contribution?

Employers' tax is a tax on wages that employers pay to the government as a percentage of the total wage payment to employees. The tax is calculated on the gross salary and other taxable benefits, and varies between 0% and 14.1% depending on where the business is geographically located.

The tax was introduced as part of the financing of national insurance and other public welfare schemes. It is a direct cost for the employer and is in addition to the salary paid to the employee.

1.2 Historical Development

The employer's contribution has undergone several changes since its introduction. The system of geographical differentiation was established to stimulate business development in rural areas by providing lower contribution rates outside the central areas.

Important milestones:

• 1975: Introduction of employer contributions as part of national insurance financing
• 1990s: Establishment of geographical differentiation with zones
• 2004: Introduction of EU/EEA-adapted rules
• 2015: Integration into the A scheme and the A report

Section 2: Geographic Zones and Rates

2.1 Zoning

Norway is divided into five geographical zones for employer's social security contributions, each with its own tax rate. The division is based on regional development considerations and EU/EEA regulations.

2.2 Current Rates (2024)

Zone	Geographic area	Tax rate	Description
Zone 1	Oslo, Baerum, Asker	14.1%	Highest rate - central areas
Zone 2	Other Eastern Norway, Western Norway	10.6%	Standard rate for most areas
Zone 3	Trøndelag, Northern Norway (parts)	6.4%	Reduced rate for less central areas
Zone 4	Northern Norway (parts)	5.1%	Low rate for district municipalities
Zone 5	Finnmark, North Troms	0%	Exemption for northernmost areas

2.3 Basis of calculation

The employer's contribution is calculated from the following salary components:

Taxable benefits:

• Cash salary (fixed salary, hourly wage, piece rate wage )
• Overtime pay
• Bonuses and commissions
• Holiday pay
• Sick pay from the employer (employer period)
• Benefits in kind (company car, free telephone, etc.)
• Pension contributions from employer

Section 3: Exemptions and Exceptions

3.1 Age-Based Exemptions

The employer's contribution has special rules for older workers as part of employment policy.

Exemption for employees over 62 years of age:

• Complete exemption from salary for employees who are 67 years of age or older
• Reduced fee for employees between 62-66 years of age (only 4% fee regardless of zone)
• Applies only to ordinary employment relationships (not consultants or freelancers)

3.2 Other Exemptions and Exceptions

Type of exemption	Description	Terms
Apprentices	Exemption for the first two years of the apprenticeship	Approved apprenticeship contract
Scientists	Exemption for foreign researchers	Special conditions, limited time
Sailors	Reduced fee for employees on ships	Norwegian-registered ships
Small payouts	Exemptions under certain amount limits	Under NOK 1,000 per month

3.3 Practical Examples of Calculation

Let's look at specific examples of how employer contributions are calculated in different situations:

Example 1: Standard employee in Oslo * Monthly salary: NOK 50,000 * Zone: 1 (Oslo) * Tax rate: 14.1% * Employer's tax: NOK 50,000 × 14.1% = NOK 7,050

Example 2: Employee over 67 years of age in Bergen * Monthly salary: NOK 45,000 * Zone: 2 (Bergen) * Age group: Over 67 years old * Employer's tax: NOK 0 (complete exemption)

Example 3: Employee 63 years old in Trondheim * Monthly salary: NOK 55,000 * Zone: 3 (Trondheim) * Age group: 62-66 years * Employer's tax: NOK 55,000 × 4% = NOK 2,200

Section 4: Reporting and Payment

4.1 The A-message as a Reporting Channel

Employer contributions are reported monthly through the A-melding as part of the A-ordning . This system simplifies reporting significantly compared to previous schemes.

Reporting process:

1. Payroll: Calculate salary and employer's social security contributions
2. A-melding: Report data to the Tax Administration via Altinn
3. Payment: Pay total withholding tax and employer's social security contributions
4. Bookkeeping: Register in the accounts

4.2 Deadlines and Payment Procedures

Month	A-melding deadline	Payment deadline	Note
January	February 5	February 15	First term
February	March 5	March 15
March	April 5	April 15
April	May 5	May 15
May	June 5	June 15
June	July 5	July 15	Holiday month - be extra careful

Important deadlines: * A-melding: No later than the 5th of the following month * Payment: No later than the 15th of the following month * Late fee: Charged for late submission or payment.

4.3 Accounting Treatment

Employer contributions must be treated correctly in the company's accounts as part of payroll costs.

Accounting example:

Debet: Lønnskostnad (inkl. arbeidsgiveravgift) kr 57.050
 Kredit: Lønn til utbetaling kr 50.000
 Kredit: Skyldig arbeidsgiveravgift kr 7.050

Section 5: Special Situations and Challenges

5.1 Businesses with Multiple Locations

Companies operating in multiple geographic zones must deal with different tax rates for the same payroll run.

Practical handling: * Separate payroll runs per location * Correct zone coding in the payroll system * Documentation of workplace for each employee

5.2 Consultants and Freelancers

Important distinction: * Employees: Employer's tax is applicable * Consultants/freelancers: No employer's social security contributions (but may be VAT) * Demarcation: Based on labor law criteria that define the type of employment relationship

5.3 International Relations

For businesses with foreign employees or that operate internationally, special rules apply.

Main rules: * Workplace in Norway: Norwegian employer's social security contributions are applicable * Short-term stays: Special exceptions may apply * Secondment: Complex rules depending on duration and agreements

Section 6: Future Changes and Developments

6.1 Political Discussions

Employer contributions are the subject of continuous political discussions, particularly related to:

• Competitiveness: High taxes can weaken the competitiveness of Norwegian companies
• District policy: Geographic differentiation as a tool
• EU/EEA adaptation: State aid approval requirement for low rates

6.2 Digitization and Automation

Technological developments: * Increased automation in calculation and reporting * Better integration between payroll systems and public systems * Real-time reporting and control

Section 7: Practical Tips and Best Practices

7.1 Routines for Correct Handling

Monthly routines: 1. Check zone coding for all employees 2. Calculate the correct tax based on all taxable benefits 3. Submit A-melding by the deadline 4. Pay the fee by the payment deadline 5. Record the transaction correctly in the accounts

7.2 Common Mistakes and How to Avoid Them

Common mistake	Consequence	How to avoid
Incorrect zone coding	Incorrect tax calculation	Update on move/change
Forgotten benefits	Too low a fee	Checklist of taxable benefits
Age group error	Wrong exemption	Update social security number and age
Late reporting	Fees and interest	Automatic reminders

7.3 Control and Compliance

The Tax Administration's control activity: * Automated checks of A messages * Spot checks of businesses * Book review with focus on payroll costs

Preparation for inspection: * Document all calculations and assessments * Keep pay slips and employment contracts * Ensure traceability between payroll system and accounting

Conclusion

Employers' contributions are a complex but fundamental part of Norwegian payroll management. With a correct understanding of the regulations, geographical differences and reporting requirements, companies can ensure correct calculation and reporting.

The geographical differentiation makes the system an important regional policy tool, while the integration into the A scheme has simplified administrative handling considerably. For companies, it is essential to have good routines and systems that ensure correct calculation and timely reporting.

By following best practices and staying up to date on regulatory changes, employers can avoid costly mistakes and contribute to a well-functioning system for financing Norwegian welfare schemes.

Related Articles

• A-scheme - The coordinated reporting system
• A-melding - Monthly reporting of wages and taxes
• Piecework pay - Special form of pay with tax consequences
• Employment type - Legal framework for employment and tax consequences
• Altinn - Digital reporting platform
• Accounting - Accounting treatment of payroll costs