Are you an employee or running a business?
Determine if your intended work is a commercial activity or an employment relationship. The Norwegian Tax Administration may decide that the nature of your activity is such that you should have been employed rather than self-employed. This distinction is important in determining which rules apply to you.
Self-employed
Several conditions have to be met in order for you to be considered to be running an independent business.
To be considered self-employed, your enterprise should:
- be carried on at your own expense and risk
- have a certain scope
- be likely to generate a profit over time
- be aimed at having a certain duration
When determining if a person should be considered self-employed it is, among other things:
considered if the person is responsible for the result of his/her work, has employees working for him/her, runs the enterprise from a fixed place of business, are financially liable for the enterprise and uses own assets and machinery when performing the work.
Are you being told to register a sole proprietorship?
If you end up in a situation where someone asks you to register as self-employed in order to get a job with them, it is important to be aware that no one else can decide this for you. This is something that you must want to do, while at the same time making sure that the criteria for self-employment are fulfilled.
The Tax Administration has launched a wizard on their website that can indicate if you are self-employed or not.
The Norwegian Tax Administration – Employee or self-employed?
Employee
If you only work for one client who will provide equipment and determine when and how the job is to be carried out, you will probably be considered an employee and you need to have an employment contract and receive a salary.
- These factors may indicate that your situation in reality is an employment relationship:
- You are required to personally place your labour at the disposal of the principal, and cannot use own employees to conduct the work
- You are subject to the principal´s management and control of the work
- The principal provides workspace, machinery, or other necessary factors for you to perform the work
- The principal is responsible (carries the risk) for the outcome of your work
- The relationship between the parties is somewhat reliable, and can be terminated in a specific timeframe
- The work is mainly performed for one principal
The list is not exclusive, and other factors may be of importance. Whether or not you are considered an employee is determined by an overall assessment of your specific situation. The parties themselves cannot make an agreement contrary to the realities of the actual relationship and against the intentions of the legislation.
Per is in the process of completing his studies and has been offered a job with his previous employer. They want Per to register a sole proprietorship and send invoices for work he has performed. He will have a permanent office at the workplace and must comply with the company's work hours. Per himself has no plans to be self-employed and wants to be paid a salary.
How will this situation be assessed?
In this instance Per should probably be paid a salary. The reason for this is that he has no plans of finding more customers, he has to abide by the enterprise's work hours and the enterprise itself provides the equipment required to perform the work. The enterprise is also responsible for the result of work performed. Per is employed, enters into an employment agreement, receives a salary and is considered an employee.
