The PAYE scheme is a tax scheme for foreign workers who have short work stays in Norway. For you as an employer, the PAYE scheme means you have to deduct tax according to a fixed rate and report both salary and deducted tax to the Tax Administration. You must calculate and deduct PAYE tax from all salary and all remunerations that are taxable for the employee. For the employee, the tax is settled when you report salary and deducted tax, so it is important that you submit accurate reports.
The tax rate is a fixed rate of 25 %, and this rate includes this contributionand social security as well. However, if the employer pays this contribution in their home country, the tax rate can be reduced to 16,8 % in Norway through the application of the A1- scheme. Through the A1-scheme, the employer is also exempted from paying the employment taxes in Norway as these taxes are paid in the home country
We will help you with both the application of the PAYE scheme and the A1-scheme. There is no need of paying employment taxes and social security in two countries, but you do need to apply for an exemption in Norway, otherwise the tax authority will act upon it.
When using the PAYE scheme, the taxable amount is set and there is no need of doing the tax declaration for the foreign employee, which might be a relief for the employee as he do not know how to treat a tax declaration in Norway.