Norway is probably the last country you would expect to see featured on a site like Freedom Surfer. It is no tax haven, is not an attractive banking jurisdiction and is certainly not a good business jurisdiction if what you care about are low taxes and a relaxed regulatory environment. It has, however, a very accessible residency program for those who are self-employed. This combined with amazing nature and a high quality of life makes it a very interesting residency option for some, despite the above. This guide covers how to acquire residency using the self-employment option, how taxation and banking works in Norway.
Residency options
Norway is a member of both the EEA and the Schengen zone. It is NOT a member of the European Union, however, and EU citizens do not have the right to live and work in Norway indefinitely as they do in union countries. EU citizens can only work in Norway for up to 90 days (or stay in the country for up to six months if looking for work). Once those 90 days are over, they must apply for residency using the same categories as non-EU citizens. This brings us to the next point, how does Norway’s immigration system works and how to qualify for residency.
While there are multiple ways to qualify for residency in Norway, the one of interest to us is the self-employment option. To qualify, you must register a sole-proprietorship in Norway and prove that you either have the education or experience necessary to run and grow the business. You must also prepare a business plan detailing how you will grow your business. Your likely revenue has to be at least ~280000 NOK. Please note that while EU citizens need to register a sole-proprietorship, they are exempted from the other requirements (and registration is fairly easy).
Applying for residency using the self-employment option is fairly simple but must be done in your home country (or your country of residency, if different from your country of citizenship). EU citizens can apply directly in Norway. The process varies depending on your nationality, you can click here to access the procedure for your nationality.
After three years in Norway as a resident under the self-employment option, you will become eligible to apply for permanent residency. For EU citizens, the wait period is five years. For your application to be successful, you must not have spent more than 7 months out of the country during the three year period (15 months if you can prove that 8 of those months were business-related). You must also have completed and passed a Norwegian language and social studies course. As a permanent resident, you will have the right to remain in the country indefinitely as well as work without any restrictions.
After eight years in the country, you can apply for citizenship. If you have stayed that long, it definitely makes sense to go for it especially as Norway now allows dual nationality (since 2020). The application process is fairly straightforward and should present no issues if you already qualified for permanent residency (as the requirements are very similar).
Taxation
Norway’s taxation system is absolutely brutal, so much so that it is very likely that more than half of your income will go to the government (up to 80% in some cases). While we could argue about whether the social programs Norwegian residents benefit from are worth their high cost, it remains that in practice you will have to pay significant amounts in taxes and that the long-term burden will be heavy especially when considering the opportunity cost. To put this into perspective, over a period of ten years, someone earning 100000 USD per year in a tax haven will be a million USD richer than someone earning the same amount in Norway (when taking into account the profits realized from investing the money that would otherwise have gone to the Norwegian tax authorities into low-risk index funds generating returns at their historical average). It is up to you to decide whether the reward justifies the price.
Compliance
A Norwegian tax resident is someone who spends at least 183 days in-country in any given year or 270 days in-country in any period of 36 months. Norwegian tax residents are taxed on their worldwide income, net of expenses. The fiscal year is the calendar year. Tax residents must file a tax return by the 30th of April (unless no tax is owed). Income tax rates are progressive and go up to 38.7%. In addition to income tax, a social security tax of up to 14.1% must also be paid. Capital gains are usually taxed at the rate of 25%. Most items in Norway are subject to VAT at the rate of 25% (less for essential items such as food).
Powerful tax strategies
You can find powerful tax strategies in The Freedom Surfer course, especially in module two and three.
Banking
Norway is not a suitable banking jurisdiction for non-residents. It is possible to open an account but you will need to deposit a fairly large amount (often more than 100000 USD or an equivalent in NOK) and the whole process will take months. Things are not much better for residents and unfortunately you will likely have to open a Norwegian bank account if you become a resident (to pay bills, taxes and to prove your income).
Opening an account
To open an account, you will first need to apply for a National ID number. You will then need to apply at a bank (DnB is the most suitable option for expats). This will involve a visit to a branch and then a waiting period. On a more positive note, once your account is open, opening new accounts will become easier even at other banks as they will piggy back on the KYC checks done by the bank you first opened an account with.
International transfers
The local banks allow international transfers to be initiated online but the fees and exchange rates are rarely competitive. Wise and Revolut are better options in most cases. Both debit cards and local transfers are supported and you will struggle to find a better rate especially when changing to the USD, EUR and GBP.