COVID-19 – Global Mobility Implications
Tax, Social Security and Immigration – implications due to changed situation
COVID-19 are making implications for global employees currently in Norway and abroad. This article will highlight the most relevant implications within tax, social security and immigration for both employees abroad, employees in Norway and employees repatriating to Norway.
Publish date: March 23, 2020.
Updated: March 30, 2020
1. COVID-19 – Tax implications
Because of COVID-19 some individuals will have more days of presence in Norway than intended.
Increased number of days can among others have the following implications:
- Tax Immigration to Norway: Undesirable or advanced Norwegian tax residency
- Tax Emigration from Norway: Delayed tax emigration from Norway
- One-year rule: Use of one-year-rule depends on the number of days in
Norway in the assignment period.
If an individual is a tax resident in Norway, one is liable for tax on income and wealth in Norway and abroad. It is especially worth mentioning that most tax treaties do not exempt from wealth tax even when residents aboard according to tax treaty.
1.2. Tax resident in Norway according to domestic law
Norwegian personal tax residence status is determined under the Norwegian Tac Act section 2-1. The tax act requires the individual to consider the number of days of presence they have in Norway.
If an individual stays in Norway for more than 183 days during a twelve-month period, he/she will become a tax resident in Norway. The same applies if he/she stay in Norway for more than 270 days during a thirty six-month period. All whole or part calendar days in Norway are included in the calculation of the number of days.
If an individual stays in Norway for more than 183 days during the year in which he/she move to Norway, he/she will be deemed tax resident from your first day in Norway. If the 183 days are split between two income years, he/she will become a tax resident from 1 January of the second year. (He/she will have limited tax liability in the year before. This means that he/she is only liable to tax on certain income linked to Norway.)
If an individual stays in Norway for more than 270 days during a thirty six-month period, he/she will be deemed to be tax resident from 1 January of the year in which the stay exceeds 270 days. (He/she will have limited tax liability in the preceding year(s).)
An individual can stay an average of 90 days per year in Norway without becoming tax resident in Norway.
1.3. Difficulty with tax emigration
An individual can only be deemed to have moved from Norway for tax purposes if he/she take up permanent residency abroad can. Temporary stays abroad do not cancel tax residence in Norway.
For one`s tax residence in Norway to cease when moving abroad, one must substantiate:
- that he/she have taken up permanent residency abroad,
- that he/she has not stayed in Norway for one or more periods which exceed 61 days during the income year,
- that neither the individual nor his/her close relatives (spouse, cohabiting partner, child) have a place of residence available in Norway.
If an individual has lived in Norway for less than ten years before the income year in which he/she take up permanent residency abroad, the tax residence in Norway will cease in the income year in which all three of these conditions are met.
This means that if your stay in Norway exceeds 61 days, your tax residence in Norway will not cease regardless of whether is because of the COVID-19 virus.
1.4. Tax reduction according to the one-year-rule:
If an individual is a tax resident in Norway and has worked outside of Norway of at least twelve months of continuous duration, he/she may invoke the one-year rule in The Norwegian Tax Act section 2-1 (10) letter a, if certain requirements are fulfilled.
It follows from letter b, that short-term stays in Norway are not considered to interrupt a continuous stay if the stay does not exceed six days of average in a month. However, if the stay in Norway is due to conditions that were unpredictable when the work outside of Norway commenced, and which neither the individual or his/her employer could control, the limit of days in Norway is nine days.
Individuals who are prevented from leaving Norway because of the COVID-19 virus may be regarded as present in Norway due to “Unpredictable circumstances” if they intend to leave Norway as soon as they are free to leave. However, this will depend on an overall assessment.
2. COVID-19 – Social Security implications
In addition to the obvious concerns relating to layoff, sickness benefit, and other immediate national Corona-measures, employer’s with employees abroad will face further challenges related to cross-border employment. Below you will find a Q & A on social insurance and tax topics related to cross-border employment.
2.1. Assignments within EU/EEA for EU/EEA nationals
Unexpected extensions exceeding 24 months
Posted workers for periods up to 24 months, Art. 12.
- No automatic extensions if the period is exceeding 24 months.
- Extension application must be filed towards Norwegian authorities to remain subject under Norwegian Scheme.
- Extensions are necessary even if the employee not is performing work.
- Employee will be entitled to new posting for a new 24 months period under Art. 12 If the employee returns to Norway and remains in Norway for more than two months before the new assignment.
Unexpected extensions exceeding five years - Art. 16
- An extension exceeding the general maximum period of five years can not be expected even for unexpected and unforeseen situations
- It is recommended that employers monitor any upcoming end dates and that applications for an exception are filed as soon as it is clear that the employee not are able to return within the five-year limit.
Multistate worker – change in the amount of work in the residing country
A multistate worker (employed individual that continuously performs work in several EU/EEA-countries) remains subject to the National Insurance legislation of the residing country, provided that 25 % or more of the work is performed in the country of residency.
- A National Insurance position based on less than 25 % work performed in the residing country, a situation of home office work may change the National Insurance position of the employee.
- A change of National Insurance position will directly impact the employer’s and employee’s liability to pay social security and employer’s contribution.
- A change of National Insurance position will directly impact the employee social security entitlements and employer’s entitlement for reimbursement (sick pay, unemployment benefit, etc.)
- To avoid unexpected and disadvantages social security position, it is advised to request Norwegian authorities to remain subject under the Norwegian social security scheme.
2.2. Assignments outside EU/EEA and countries without social security agreement or non-EU/EEA nationals
This applies to employees that are posted to countries outside EU/EEA and countries where Norway not have entered into a social security agreement with.
Mandatory NNIS membership for working periods abroad exceeding 12 months
- An employee is a mandatory member in the Norwegian National Insurance Scheme (NNIS) for working periods abroad up to 12 months, provided that the employer is obliged to pay NNIS employer contribution throughout the period abroad, and also provided that the employee intends to return to Norway permanently after the abroad period.
- unexpected extensions within the limit of 12 months would not change employee status with respect to retaining a mandatory NNIS member
- mandatory membership ceases due to unforeseen and unexpected extensions exceeding 12 months
- In order to secure an NNIS membership, we recommend requesting NAV for confirmation on continued membership, alternatively apply for a voluntary membership for the exceeding period.
Posted employees abroad and the right to NNIS sickness cash benefit during a stay abroad
Employee has an NNIS membership that includes the health part within the last four weeks directly prior to sickness occurred will be entitled to sickness cash benefit paid abroad if legal requirements with respect to employment activity, the medical situation as well as medical documentation is fulfilled.
Temporary Layoffs - payment
The Norwegian parliament passed a new law due to Corona situation regarding temporary lay-offs for 40% - 100% of a full-time position. In short, after 2 days notice period, the employer’s salary cost will remain for the first 2 days, thereafter the employees will receive a salary from the Norwegian National Insurance scheme, implemented as follows:
- the employer sends notice of temporary layoffs (currently 2 days notice period) to employees.
- the employee shall receive an ordinary salary during the following 20 days. The first 2 days are employer’s cost, the following 18 days shall be covered by the authorities, limited to a maximum salary level equal to 6 times the basic amount (app. NOK 600 000) per year.
- Thereafter the employee shall receive unemployment benefit based on ordinary social security rules. The unemployment benefit amounts to app. 62% of ordinary salary of maximum 6 times the basic amount.
- The layoff payment is available for up to 26 weeks over a period of 18 months.
Employees on assignments abroad and the right to unemployment benefits
- As a main rule, employees/individuals must live and stay in Norway to receive unemployment benefits
- Members in the Norwegian Scheme may be entitled to unemployment benefits paid abroad if the employee resides in another EU/EEA country and the employee normally has commuted between Norway and the country of residents
This means that an employee who is on assignment abroad must as a main rule return to Norway in order to qualify for the NNIS unemployment benefit.
3. COVID-19 - Immigration implications
3.1. Work and resident permits
Administrative services closures. The Norwegian government has closed all immigration service centers and police administrative services to mitigate the spread of COVID-19.
From 13 March onwards, immigration service centers in Bergen, Kirkenes, Oslo, Stavanger, and Trondheim will be closed. During this time, foreign workers will not be able to file work permit applications or meet for appointments for effectuating their residence permits and order residence cards. The closure is currently set to last until 13 April.
Online filing. New temporary solution for online submission of residence/work permits in Norway
As of 24 March 2020, the Norwegian Immigration Directorate (“UDI”) have temporarily removed the requirement for personal attendance when submitting applications for residence permits and permanent residence to the police. This means that applications (all except application for citizenship) can be submitted online. When the application is submitted online, and all documents have been uploaded, the Immigration authorities expect the application to be registered within 10 days.
The UDI have published temporarily guidelines in UDI 2020-010. https://www.udiregelverk.no/rettskilder/udi-retningslinjer/udi-2020-010/
Extensions. Foreign workers with valid permits can file extensions online. If an application for extension is filed 7 days before the expiry date and a governmental fee is paid at the same time, the authorities will as a temporary solution consider the employee as entitled to continue their work in Norway.
Visa restrictions. The government has closed the border for foreigners without a residence permit in Norway, and no visas are issued for the time being. Foreigners without residence permit will be rejected at the border on the basis of the Anti-Infection Act. In addition, temporary entry and exit checks will be introduced on the internal Schengen border, according to the Ministry of Justice. The Directorate of Health advises against all travel.
Quarantine. All travelers who come to Norway from abroad will be quarantined for 14 days, regardless of whether they have symptoms or not. Foreign nationals who travel in connection with their work between home and a workplace, and in doing so, cross the borders between Norway, Sweden, and Finland are exempted. Foreign nationals who are essential to maintain the proper operation of critical public functions are also exempted. Persons covered by the exception shall, as far as possible, avoid close contact with other persons.
Valid permits. For employees in Norway that already have been granted a residence permit that gives the right to work, the employee can start working even though he or she has not met with the police to order the residence card/effectuate their permit. The conditions are that the employee has booked an appointment with the police to order a residence card (either via the application portal or otherwise).
3.2. New border control rules
Because of the coronavirus situation, the Government has adopted new border control rules, entry rules and rules on rejecting some foreign nationals.
Which foreign nationals are now entitled to enter Norway?
Those allowed to enter are:
- Foreign nationals who already have a residence permit and a valid entry visa.
- Foreign nationals who are visa-free and have been granted a residence permit.
- EEA nationals, and their family members who are covered by the right to free movement, who reside or work in Norway. This also includes EEA nationals who are posted workers in Norway who have begun a work assignment.
- Foreign nationals covered by the exemptions from the duty of quarantine in the quarantine regulations issued by the Ministry of Health and Care Services. This includes foreign nationals who are essential to maintain the proper operation of critical public functions.
- Foreign nationals who travel in connection with their work between home and a workplace, and in doing so, cross the borders between Norway, Sweden, and Finland.
- Foreign nationals who will only be staying in airport transit before departing Norway.
- Foreign nationals seeking protection (asylum).
- Embassy & Foreign Missions personnel who are notified to the Ministry of Foreign Affairs.
- Additionally, in special circumstances, the right of entry may be granted to other foreign nationals. This includes a number of circumstances involving special welfare considerations. The specific circumstances that may be applicable are further defined in the Ministry’s circular GI-4/2020..
- It is emphasized that the exemptions to the rules on a rejection of foreign nationals do not entail exemption from the quarantine rules in force at any given time.
3.3. Next steps
The new restrictions are in place until further notice. Employers of foreign workers in Norway can expect some processing delays of applications at this time. The COVID-19 outbreak is an emerging situation that is changing rapidly, and Deloitte will continue to monitor the situation and provide updates accordingly.
Deloitte can file applications for skilled workers and their family members. Please contact our immigration team if you have non-EU assignees that require a residence permit in Norway, and we would be happy to assist.
Coronavirus pandemic - what about mobile employees?
We have highlighted some legal consequences due to COVID-19, to consider for organizations with mobile employees and cross-border activities.Read more