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New immediate financial measures in response to the outbreak of the coronavirus

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This Monday, the Government introduced further measures to mitigate the negative financial consequences of the coronavirus (COVID-19). 

This article is updated as of 16 March 2020, 10:00 pm CET.

Corporate Tax

One of the new measures adopted was to postpone the payment of advance tax for corporations for the second term. The due date was initially April 15, but this is now postponed until further notice is given. 

VAT - emergency assistance to hotels, airlines, other operators with passenger transport, cinemas etc. and deferred payment of VAT

The changes in the VAT system are currently limited to two specific measures: 

  1. Deferred payment deadline for the first term. The payment was due this year on April 14, but is now postponed. A new date for payments is not  yet decided upon.
  2. The low value-added tax rate is reduced from 12% to 8%, which will affect the following services: 
  • Passenger transport services (passenger cars on ferries, taxi rides, bus trips, etc.) 
  • Transport of vehicles (e.g. ferry service including transportation of the driver) 
  • Rental of hotel rooms 
  • Movie tickets 
  • NRK (the Norwegian Broadcasting Corporation) license
  • Museum tickets 
  • Entrance tickets to amusement parks and adventure centers (e.g. water parks) 
  • Access to football matches, handball matches, and other sport events. 

The reduction in the rate is proposed from 1 January 2020. As the reduced rate is effective from 1 January 2020, it means that businesses within the tourism sector will receive a tax advantage corresponding to the difference between 12% and 8% from the beginning of 2020. 

We assume that the companies that sell low rate services have already invoiced their services by 12%. This means that the companies have levied too much tax and raises the question of how incorrectly levied VAT shall be treated. 

Normally, incorrectly levied VAT will be a benefit for the government, unless the seller corrects the "error" by issuing a new sales document to the buyer with the correct percentage of 8%. In addition, the seller is normally required to repay the incorrectly charged fee to the buyer. 

However, such a correction (new sales document and repayment to the buyer) will erode the whole point of the tax relief in this case, which is to ease the burden on the seller (the taxi driver, the hotel, etc). We view this measure as a help package to the seller and not to the buyer. Although these issues were not addressed directly in the Parliamentary resolution, we assume that the seller will not issue a new sales document, nor repay the incorrectly levied fee to the buyer. 

The change in rate may provide a slight improvement for some industries. However, it is unclear how long deferral will be given on payment of the required VAT. It is therefore necessary that the government clarifies the intention behind the postponing of this deadline or whether the requirement for payment may lapse. This is to be able to assess the importance of the measures for most companies in Norway.

Sick Pay

In Norway, there are long traditions for state funded sickness benefits to employees who become disabled due to illness. The rules regarding sickness benefits are somewhat different for employees, freelancers and self-employed persons. 

For employees, sickness benefits are usually paid from the employer during the employer-financed period (the first 16 calendar days), before the National Insurance takes over the sickness benefit payments during the sickness benefit period. Self-employed persons and freelancers are not entitled to sickness benefits until these are paid from the National Insurance after a waiting period of 16 calendar days. 

In connection with the pandemic situation we are now facing a number of businesses that are experiencing many employees getting sick. At the same time, many of the same businesses strive to keep going, and high sickness costs contribute to weaken the company's liquidity at a time when revenues are failing. 

To this end, the Norwegian political parties have agreed on some measures aimed at reducing the businesses’ costs related to sickness benefits: 

  • The employer-financed period of sickness benefits related to the corona pandemic is reduced from 16 to 3 calendar days.
  • The National Insurance provides sickness benefits connected with the corona pandemic to self-employed persons and freelancers as of the fourth day of sickness.

Care benefit

In principle, an employee, freelancer or self-employed person has the right to care benefit if he or she is absent from work due to a child's illness or need for health care. This also applies in the case of a childcare worker’s absence due to their own or their children’s illness. 

This benefit is called care benefit as it is the child's need for care which is the cause of the absence from work. In connection with the spread of the coronavirus, NAV (the Norwegian Labour and Welfare Organisation) has clarified that workers, freelancers and self-employed persons can use “care days'' and receive care benefits when kindergartens or schools are closed in connection with the corona pandemic. 

For employees, care benefits are provided from the employer up to 10 benefit days. For any care days beyond this, employers, self-employed persons and freelancers can apply for reimbursement from the National Insurance.

In order to reduce the businesses’ costs related to care benefits, the political parties have now agreed on the following measures:

  • The employer-financed period of care benefits linked to the corona pandemic is reduced from ten to three days.
  • The National Insurance provides care benefits for self-employed persons and freelancers as from the fourth day with a similar coverage rate as for sickness benefits for self-employed persons.

Temporary lay-off

The Government has introduced interim amendments to the temporary lay-off regulations, which will enter into force immediately from 16 March 2020.

  • The employer-financed period is reduced from 15 to 2 days 
  • The government covers full salary from day 3 to day 20 of temporary lay-offs 
  • The daily unemployment benefits scheme is changed so that employees can receive a higher share of income
  • The income limit for entitlement to daily unemployment benefits are reduced
  • The waiting period is set aside

In short, this means that the payment scheme during temporary lay-off will be as follows:

  • The employer pays full salary the first two days of lay-offs. 
  • The government by/ NAV covers full pay day 3 to 20 of lay-offs. 
  • From day 21 and up to 26 weeks, unemployment benefits are handled by NAV.

The employer-financed period under lay-offs is reduced from 15 to 2 days. The employer will only be required to pay salary during the first two days after the lay-off is effective. The measures to reduce the wage obligation are intended to ensure the liquidity of the businesses and help to avoid termination of employment. When the employer's wage obligation is reduced, a larger proportion of the expenses related to lay-offs must be covered by the government. 

After the employer's salary obligation of two days expires, the government shall ensure full pay to laid-off workers from day 3 to 20 of the temporary lay-off. Although the changes take effect immediately, the payments will only be made after NAV has managed to get a technical solution in place for this. The changes are intended to ensure that employees are not unreasonably affected by reducing the employer's duty to pay. 

When the first 20 days of the temporary lay-off is over, employees can receive unemployment benefits from NAV. Here, the scheme has been changed so that employees can receive at least 80 % of the income from the unemployment benefit up to 3G, and 62.4% of the unemployment benefit over 3G and up to 6G. (1 G = the basic amount in the national insurance, now NOK 99,858 a year, NOK 8322 per month).

In addition, the income limit for entitlement to unemployment benefit is reduced to 0.75 G. Previously, an income of more than NOK 150,000 had to be earned during the last twelve months in order to be entitled to unemployment benefits. Now the limit has been lowered to NOK 75,000. 

Previously, there was a waiting period after the employer's payroll obligation ceased and before the employees received the first payment of daily unemployment benefits from NAV. This waiting period will now be temporarily set aside, which ensures that employees do not go any days without income. 

A lay-off can be partial (instead of wholly)  by reducing the working hours for employees. With the change the government now has made, employees will be able to receive daily unemployment benefits if working hours are reduced by at least 40%.

Self-employed and freelancers

Self-employed persons and freelancers are not regarded as employees within the meaning of the Working Environment Act. For these, the government has therefore introduced own measures. 

They can receive a temporary income equivalent to 80% of their average income over the last three years, up to 6G. This can be received from day 17 after the loss of income.

Self-employed persons and freelancers will be paid sick leave from day three. 

Furthermore, they can receive care benefits from day four.

Payroll Tax

At the Prime Minister's press conference on financial measures March 15, it was expressed that the deadline for paying the employer's National Insurance contributions (originally due on May 15) is postponed without a new date being set yet.

Economic rescue package

The Government has announced two measures totaling NOK 100 billion to help the Norwegian  companies in crisis. 

The first measure is to create a Government loan guarantee with a limit of 50 billion aimed at new bank loans to small and medium-sized enterprises in need of external financing. The purpose of the loan guarantee is to help small and medium-sized businesses with liquidity problems that have difficulty obtaining other external financing. 

The second measure is to restore the Government bond fund with a limit of up to NOK 50 billion. The bond fund is a tool for the bond market in Norway, where the fund will buy bond loans issued by Norwegian companies. The purpose of a Government bond fund is to provide increased liquidity and capital access in the bond market, where many of the largest companies lend money. 

See separate blog post about immediate economic measures in response to the outbreak of the coronavirus. 


This blog post is written by Erik Stenvik Granly, Ronja Sommer, Henrik Smeby, Anni Haugen, Ida Solberg Henning, Torbjørn Stokke, Marit Barth and Ståle Wangen.

Ståle Wangen

Ståle Wangen

Jeg heter Ståle Wangen og jobber som advokat i Advokatfirmaet PwC. Jeg leder PwC Norges avdeling for internasjonal skatt og jobber til daglig med å bistå norske og utenlandske virksomheter med skatteplanlegging, strukturering av kjøp og salg av virksomheter, internprising og andre spørsmål knyttet til bedriftsbeskatning i Norge og utlandet. Jeg har mer enn 20 års erfaring med skatterådgivning.

Skatteverdenen blir stadig mer internasjonal og kompleks. Ved kjøp og salg av varer og tjenester utenfor Norges grenser må norske virksomheter håndtere skatteregler både i utlandet og i Norge. PwC har kontorer i de fleste land og vi har et unikt nettverk av skatterådgivere som kan bistå med spesialkompetanse på de fleste områder. Jeg håper mine innspill kan gi deg en alternativ innfallsvinkel til ulike temaer enn hva tradisjonelle nyhetsbrev gir.

Ta gjerne kontakt dersom du har spørsmål, kommentarer eller innspill.

My name is Ståle Wangen and I work as a partner and lawyer in PwC Tax and Legal Services in Oslo. I am head of PwC Norway’s international taxation services, and I have more than 20 years of experience assisting Norwegian and foreign businesses with tax planning, cross border restructuring, mergers and acquisitions (M&A), transfer pricing and other issues related to corporate taxation

Tax world is becoming more international and complex. Norwegian companies must increasingly handle tax rules abroad. PwC has offices almost all over the world and we have a unique network of tax advisors who can assist with expertise in most areas.

Please feel free to contact me if you have any questions, comments or input.

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