Tax for sole proprietorships

Advance tax

You must pay tax in the same year you earn the money. There is no automatic issuance of invoices for advance tax unless you inform the Norwegian Tax Administration that you are generating a profit. Therefore, you must report changes in income yourself to have your advance tax calculated. You can do this by accessing your tax card and entering your expected profit.

On My page, you’ll find information about yourself and your taxes

Amend tax deduction card/advance tax

If you anticipate running a loss in the first year, you should not submit the form for calculating advance tax. Instead, the loss should be specified in your tax return.

The Norwegian Tax Administration – Advance tax for sole proprietorships

How much tax do I have to pay?

The Norwegian Tax Administration bases its calculations on your total income, both from your business and any other sources, when determining the percentage of tax on your profits.

For most people, the tax rate will be somewhere between 33 and 50.6% of the profits.

The tax will be somewhat higher for business income than for the corresponding salary income because the tax on business income includes a higher National Insurance rate; the National Insurance rate for salaried employees is 7.8%, while that for business income is 11%. Tax must be calculated on all profits. There are therefore no separate threshold amounts which must be passed before the obligation to pay tax is triggered.

Tax rates 2024 (Ministry of Finance) (in Norwegian only)

Tax rates 2023 (Ministry of Finance) (in Norwegian only)

How to pay the tax

When the Norwegian Tax Administration has calculated the amount of tax you need to pay, you will receive an invoice for each instalment approximately three weeks before the due date. You can find the invoice in your online banking if you use eFaktura. Otherwise, you will find it in your Altinn inbox. If you have opted out of electronic communication, the Norwegian Tax Administration will send you the invoice by regular post.

Periods are due:

• 15 March
• 15 June
• 15 September
• 15 December

You must pay the tax by the deadline to avoid additional tax for late payment. If the Norwegian Tax Administration has not received payment for an instalment within seven calendar days after the deadline for paying advance tax, you will receive a notice of enforcement for the remaining advance tax for the entire year.

If you realise that you haven't paid enough tax during the year, you can make an additional tax payment by 31. May of the following year. This way, you avoid paying interest on the amount you owe. The additional payment is called an additional advance payment.

The Norwegian Tax Administration on how to pay additional advance tax

Withdrawing a salary

Even though you work in the business, withdrawals or transfers of money to yourself are not considered as salary. Therefore, you are not required to pay employer's contribution tax for this. You should also not deduct payments to the owner. Such payments will therefore not affect the taxable result.

Example

The enterprise's profitProfit is when the revenue in a period is bigger than the expenses in the same period. before payment to owner- NOK 50,000
Your withdrawal from the enterprise - NOK 30,000
Taxable profit - NOK 50,000

Spouses and cohabiting partners working in the enterprise

If you are married and your spouse works in the business, you should not consider payments to your spouse as salary. Spouses are not considered employees, and you will not be able to deduct the payment in the enterprise's accounts. Instead, the enterprise's profits/loss can be distributed between you and your spouse following an overall assessment of your work input and that of your spouse. If you do not distribute the amount, the income will be allocated to the owner of the enterprise.

For cohabiting partners, the rule is different.. Cohabiting partners who work for their partner's sole proprietorships must be employed. They will receive a salary, and the payments can be deducted in the enterprise's accounts. You are also obligated to pay employer's National Insurance contributions, withhold tax (withholding tax), and report through the a-melding.

Reporting to the Norwegian Tax Administration

Profits/loss are reported annually through the business information statement in the appendix to the tax return.

Starting from 2023, sole proprietorships subject to audit requirements must submit the business information statement through an accounting or annual settlement program. The tax return can be submitted simultaneously through the system or later at skatteetaten.no.

The Tax Administration on the tax return for sole proprietorships

Deductions

As a general rule, you can claim deductions for expenses related to the operation of your business. You must document all expenses and acquisitions with original receipts and record them in the enterprise's accounts. There are specific rules for deductions for the use of a car, telephone and internet expenses (ICT services), and deductions for home office.

Expenses for courses to keep up with developments in your professional field are normally deductible. However, education and further education cannot be deducted.

Deduction wizard for sole proprietorships

Start-up expenses

In the first year in which you are treated as a business, you can have up to the previous five years approved as start-up years for the enterprise. You could therefore be entitled to deductions for purchases for your enterprise during this period.

The Norwegian Tax Administration - about the start-up period

Courses for new businesses

The Norwegian Tax Administration arranges courses for entrepreneurs who have just started a business. These courses are free of charge, and you can attend either digital webinars or physical courses in Oslo.

You can choose between courses tailored for sole proprietorships or limited liability companies. The courses are also available in English.

The Norwegian Tax Administration - Courses for new businesses

The Norwegian Tax Administration has also created instructional videos covering many of the topics from the course. These can be useful when, for example, you need to pay taxes, register for VAT, or submit your tax return.

Course for persons who have started, or are about to start, a sole proprietorship

Course for those who have started, or are about to start, a private limited company