Pay taxes in Norway, live in UK

xylophone

You are paying a specialist tax accountant!

He should have all the information you need at his fingertips!

jennifernil

Engeroosi wrote: »

Ok more questions regarding my work situation.

I have been informed by my company that if I fill out an E101 form then I will save 7.8% on tax, surely there has to be a consequence of this? Can anyone shed some light on this?

Thanks in advance

Form E101 is something you normally obtain from HMRC, it states that you are paying National Insurance in UK. You can therefore apply for exemption from paying this in Norway. This is the 7.8% saving they mean.

Are you paying NI in UK to preserve your rights here?

If so, you can request the form (sometimes your employer may have to request it) and submit it to (I think) NAV in Norway, then they will tell your Norwegian employer that they do not need to make the deduction there.

You should generally pay the NI in the country in which you reside, so should be able to get the form. Would it save you money?

The rules are set up more for UK companies sending people to work abroad, as this is not exactly your situation, they may apply differently.

Some info here.....

http://www.hmrc.gov.uk/cnr/osc.htm

Check whether there is a reciprocal agreement in place.

However......

Are you going to be doing this work for several years? If so, you could be able to claim some pension from Norway when you retire. The pensions there are much higher than here, so it could be worth your while to continue to contribute.

You would need to check what the minimum numbers of years of contributions is to qualify for a pension from Norway. (I think it used to be 3 years, but this may have changed)

Some info here......

http://www.norway.no/temaside/tema.asp?id=1400

There are several links to follow for more details, in English.

Eellogofusciouhipoppokunu

I worked for Statoil in Norway and was liable to pay tax only if I worked 'in country' for more than 6 months, not including days that you fly in/out on. You have the choice of whether to pay their form of National Insurance or ours (which is much cheaper). Given the state of the UK state pension, I'd suggest you might want to hedge your bets and pay into the Norwegian fund! You can always make voluntary contributions to the UK one and end up with 2 state pensions. Tidy.

Engeroosi

I think the rate is pretty much the same for UK and Norway, I dont currently pay any in the UK and pay all in Norway, have done for nearly 2 years now I guess so might as well leave as it is and claim the Norwegian pension etc. Also how much voluntary contribution would I have to make to the UK to be entitled to a pension here. I have worked all my life and paid NI in UK for 10 years or so.

dshart

As UK and Norway have a reciprocal tax arrangement any tax paid in Norway is treated as if it had been paid in the UK.

When your accountant submits your self assessment they will list your total earnings and tax deducted. As you are resident in the UK your total earnings are due UK tax at the appropriate rate. As you will have already paid tax to Norway the UK tax man will take this into account and as long as the tax paid in Norway is equal to or greater that what would have been owed in the UK then there will be no further UK tax liability.

As the tax rate in Norway is generally higher than in the UK, you are most likely to have paid more to Norway than is due in the UK, but you cannot claim this extra back. One way you can get some of it back is to carry out work in the UK so you have an additional tax liability in the UK, that way when they look at the total tax liability for the year and deduct the tax paid to Norway you will get a refund of some of the UK tax paid.

To try and show that as an example say you earned 100k and the tax rate in UK is 20% and in Norway 30%, thus you would have paid 30k tax even though you only owe 20k in UK. The UK tax man would look at that and be happy no further tax is due. But if you earned another 50k in the UK then your UK tax liability would be 30k but as you have paid 30k to Norway there would be no further UK liability and if any tax had been deducted at source on your UK earnings then the UK tax man would refund that, in this example it would be 10k so the UK earnings would be tax free. Your accountant should be able to explain better.

One other thing to remember is to ensure you complete any Norwegian tax returns you are sent, as the fines and penalties for not submitting your return on time are very high. If you have not received a Norwegian tax return then my advice would be to chase it up as I received fines totalling about £6k for failing to fill in a return even though they had sent the return to an address I had not lived at for 14 years (they had the address from a previous time I had worked in Norway). It took me a year of fighting and appealing before they reduced the fines.

Eellogofusciouhipoppokunu

Engeroosi wrote: »

I think the rate is pretty much the same for UK and Norway, I dont currently pay any in the UK and pay all in Norway, have done for nearly 2 years now I guess so might as well leave as it is and claim the Norwegian pension etc. Also how much voluntary contribution would I have to make to the UK to be entitled to a pension here. I have worked all my life and paid NI in UK for 10 years or so.

You need 30 years of contributions to get the full UK pension. You can get a state pension forecast from the UK government to see exactly how many years you have put in. From memory, the voluntary contributions were around £300 per year.

You also need to check out Norway's rules to get a full pension and see if you will have enough time to build up a full fund. The worst case scenario would be to fall in between the two and end up with partial pensions in both countries.

John_Pierpoint

Can I assume from your posting that you are 30 something?

If I was thirty something and paying into a state pension scheme, I think I would look at this map:
http://en.wikipedia.org/wiki/File:Cumulative_Current_Account_Balance_per_capita.png
(Greece sticks out like a sore thumb)
The full list is here:
http://en.wikipedia.org/wiki/List_of_countries_by_current_account_balance

Then I would try and project myself forward up to 40 years and ask myself what sort of world I would be living in.

There seems to be one country with a small, well educated and stable population, a well managed sovereign wealth fund and a stable political system.

That country could be Switzerland, it is not Arabia or Libya and cannot be the UK. So if I was able to find such a country, and I was 30 - 40 years younger, I know where I would keep my state pension. (Shame about the weather).

My maternal family consisted of 2 aunts and one uncle. One "emigrated" and died in USA in near poverty, but at least she avoided UK rationing, but still got a modest UK state pension until she died. ( prior to 2008 when the UK realised it was no longer a petro- currency) to add to subsidies from her family. The state pension was based on nursing for a few years following the end of WW2.

Mind you if all the oil and coal reserves, currently capitalised into the share values of the primary energy companies, gets burnt; all our climates are likely to be considerably different from the current situation.

Funny old world.

jennifernil

A partial pension in 2 or more countries need not be all bad.

My OH is Norwegian, he has worked in UK since he was 28, so only has 37 years NI here as against the 44 (?) he needed for a full state pension (retired 2007). He has about an 85% pension here.

He also had credits (army and being a student) and 3/4 years of working in Norway, so gets some state pension from there too.

What he gets from Norway is far more than he has lost here, so that has worked out well for him.

We have a friend who has state pensions from 3 countries, again he is better off. I think it would depend on the countries involved.

John_Pierpoint

Just in case of confusion the UK rules have changed for the current crop of "youngsters" earning their state pension.
How many qualifying years do you need?

The number of qualifying years you need for a full basic State Pension depends on your age and whether you're a man or a woman.
Men born before 6 April 1945 usually need 44 qualifying years.
Women born before 6 April 1950 usually need 39 qualifying years.

Men born on or after 6 April 1945 need 30 qualifying years.

Women born on or after 6 April 1950 need 30 qualifying years.

To find out more about the State Pension, you can download the leaflet 'State Pensions – Your guide'.

"Self Employed" National Insurance payments are cheaper than voluntary contributions - should you want to offer your services in the UK.However who knows what sort of transnational integration of the tax systems will evolve over the next generation?[At least the UK and Norway are not part of the Euro integration]

Engeroosi

I am now thinking of making enough contributions to the UK as well as keeping up payments in Norway, are the pensions guaranteed to still be in place in 40 years though? I am nearly 29 years old.