Generally, employers and employees are free to agree remuneration for board and lodging in connection with work-related travel. However, there are clear rules regarding what can be paid without deducting tax (not subject to payroll withholding tax). Self-employed persons are only entitled to deductions for their documented expenses for subsistence and accommodation.
Reimbursement of employees' travel expenses
If you have employees who travel as part of their work it is important to have an agreement in place concerning how they will be reimbursed for the expenses they incur in connection with their trips.
There are many ways in which you can reimburse travel expenses: For example, the employer can:
- Reimburse actual expenses (refund)
- Reimburse expenses in accordance with the Directorate of Taxes' allowance rates not subject to payroll withholding tax (expense allowance)
- Reimburse expenses in accordance with specific agreements, e.g. the government's travel expenses scale (expense allowance)
- A combination of the above
If you have more than one employee who travels in connection with their work, it may be a good idea to invest in travel expenses software.
Reimburse actual expenses (expense refund)
Actual expenses attributable to business travel may be reimbursed tax-free when documentation of the expenses (receipts) is available. The name and purpose of the journey must be stated either on the receipts themselves or on attachments to them. This will for example apply to flights, hotels, taxis, etc.
Road tolls can be paid without a receipt, but must then be documented in a travel expenses form.
If an employer reimburses an employee for their expenses for food against bills, the employee will not be entitled to subsistence allowance.
The Directorate of Taxes' travel rules and rates for travel in Norway and abroad (expense allowance)
Every year, the Directorate of Taxes establishes rules and rates regarding what can be paid free from payroll withholding tax free of payroll withholding tax means that the amount can be paid without the deduction of tax from it for the reimbursement of expenses in connection with travel.
|Text||The Directorate of Taxes' allowance rates for subsistence allowance not subject to withholding tax - domestic and abroad 2021|
|Daily subsistence allowance; overnight in hotel||NOK 609,-|
|Daily subsistence allowance; overnight accommodation without cooking facilities||NOK 170,-|
|Daily subsistence allowance; other accommodation with cooking facilities||NOK 94,-|
|Daily subsistence allowance; long-distance lorry drivers||NOK 300,-|
|Subsistence allowance - 6 to 12 hours travel||NOK 200,-|
|Subsistence allowance - over 12 hours travel||NOK 400,-|
|Night allowance (inland)||NOK 435,-|
|Kilometre allowance (including electric cars)||NOK 3,50|
|Passenger supplement per km per passenger||NOK 1,-|
|Supplement for travel on forest and construction roads per km||NOK 1,-|
|Supplement for carrying equipment and materials per km||NOK 1,-|
If you pay allowances which exceed the rates not subject to payroll withholding tax, the excess will be subject to payroll withholding tax. However, this does not apply for payment of night allowance. If night allowance is paid at a higher rate than NOK 435 per day, the whole amount will be subject to payroll withholding tax.
Daily subsistence allowance - travel involving overnight stays
In the case of travel involving one or more overnight stays, the place where the overnight stay is made (type of accommodation) will determine what can be paid as a subsistence allowance not subject to payroll withholding tax.
In order for a journey to be considered as a journey involving an overnight stay, the employee must spend more than five hours of the night away from home. In this context, 'night' is considered to be the period between 22.00 and 06.00.
- A day lasts for 24 hours from the start time of the journey.
- Journeys lasting more than six hours into a new day will give entitlement to the full daily subsistence allowance according to the same rate as the previous day.
- Journeys lasting less than six hours into a new day will not give entitlement to subsistence allowance.
Daily subsistence allowance - travel not involving overnight stays
In the case of journeys not involving an overnight stay, daily subsistence allowance will be payable at the Directorate of Taxes' rates, provided that the assignment location is situated more than 15km from the starting point of the journey and the journey lasts more than six hours. However, it is a prerequisite that the employee incurs added subsistence expenses in connection with the journey.
Employees who carry out travel and transport assignments as part of their ordinary work will not normally incur added subsistence expenses in their work, and will therefore not be entitled to daily subsistence allowance. This applies for example to drivers, cabin crew, crews on ships, etc.
If one or more meals are reimbursed against bills or paid for as a treat, deductions must be made from the allowance. The deductions must be made as a percentage of the subsistence allowance concerned, and will apply to both day trips and journeys involving overnight stays.
- Deduction for breakfast – 20 percent of the subsistence allowance
- Deduction for lunch – 30 percent of the subsistence allowance
- Deduction for evening meal – 50 percent of the subsistence allowance
Deductions for meals must only be made in the case of proper meals. In other words, employees are able to eat until they are as full as would normally be expected. Airline food, for example, is not considered to be a proper meal.
An employee is away for 26 hours, stays at a hotel and has one breakfast and one lunch covered during the trip. The following can be paid without payroll withholding tax being deducted:
|Daily subsistence allowance with overnight stay at a hotel||NOK 609,-|
|Deduction for breakfast (20%)||- NOK 122,-|
|Deduction for lunch (30%)||- NOK 183,-|
|Subsistence allowance not subject to payroll withholding tax payable||NOK 304,-|
An employee is away for 32 hours, stays in private accommodation and has an evening meal on the course he is attending covered. He is away for more than six hours into the second day and is therefore entitled to subsistence allowance for two days. The following can be paid without payroll withholding tax being deducted:
|Subsistence allowance in connection with private accommodation (2 * NOK 95)||NOK 188,-|
|Deduction for one evening meal (50% of NOK 94)||- NOK 47,-|
|Subsistence allowance not subject to payroll withholding tax payable||NOK 141,-|
Night supplement (applies to domestic travel only)
If an employee arranges accommodation themselves on domestic business trips (e.g. private accommodation), an undocumented night supplement not subject to payroll withholding tax of NOK 435 per day may be paid. This is in addition to any subsistence allowance. If the employee stays overnight in private accommodation abroad, no night supplement not subject to payroll withholding tax may be paid.
In the case of overnight stays on trains, boats, etc. in Norway, undocumented night supplements may not be paid when a birth is included in the price of the ticket.
Kilometre allowance (car allowance)
If an employee uses his or her own car on a journey made on behalf of their employer, a tax-free kilometre allowance of NOK 3.50 per kilometre may be paid. The rate also applies when using an electric vehicle.
It is important to distinguish between job-related travel and travel to/from work. Business travel is considered to be job-related travel and can be paid free of payroll withholding tax up to the rates specified in the tax rules. Travel to/from work is defined as travel between your home and your permanent place(s) of work and thus constitutes private travel. If an employer pays an allowance for travel to/from work, this will be considered fully taxable income.
Requirements concerning travel expenses claims
When an employee is reimbursed for all or some of their travel expenses based on standard rates (e.g. subsistence allowance or kilometre allowance), this must be documented by a travel expenses claim. Receipts which are to be reimbursed directly must be enclosed with the travel expenses claim.
The government's travel expenses scale (expense allowance)
The government's travel expenses scale is an agreement which normally only applies to government employees. However, some private and public sector companies have adopted these travel rules through special agreements.
In most cases, allowances paid under the government's travel expenses scale are higher than the Directorate of Taxes' rates not subject to payroll withholding tax. If you pay allowances based on the government's travel expenses rates, the payments must normally be split into a component which is subject to payroll withholding tax and a component which is not.
The government's travel expenses scale also distinguishes between subsistence rates in Norway and abroad. The tax rules do not make this distinction.
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