Norway makes filing tax returns fairly painless, which is good because paying Norwegian taxes is painful. The average Norwegian pays 45% of their income in taxes. Since no one can do anything without using Norway’s version of a Social Security number, the government knows every financial move that is made by their tax payers. The banks and businesses have to report their dealings in great detail, so the Norwegian version of the IRS sends out everyone’s tax returns pre-done. They know everyone’s income, how much interest was paid, how much profit was made off the stock market or the sale of a house – it’s all well documented financial information. If there are no corrections to be made to the government’s version of the return, that’s it - not even a signature is required – it’s done. Everyone pays the amount of tax due, or waits for their refund to show up in their bank account – because the government knows that information, too. So, if the amount owed isn’t paid – the government is happy to extract it.
Even the eight kroner ($1.50) we were paid in interest (from a food co-op) was documented on our pre-done tax return. They don’t miss a thing. The returns are very streamlined, and not nearly as complicated as America’s. Even still, if someone needs help, every community has a place people can go, take a number, sit down and read a magazine while waiting their turn. When their number is called, they take their receipts and questions and go into an office where the agent fills out the forms and answers the questions – for free.
Each individual must file their own tax return – there’s no such thing as “married filing joint.” Everyone in Norway has their own bank account, too, because they don’t allow co-ownership.
One of the biggest differences in tax deductions deals with charitable contributions, which are limited to $2,000 a year. A fraction of a percent of taxes paid by every person in Norway goes to the State Church, unless a form is sent in that requests their portion of that tax money to go to a different church. All churches in Norway get the bulk of their operating expenses from the government, through this system, so individual contributions from parishioners aren’t nearly as critical as in the U.S. When we lived in Norway, we attended two different churches and gave money to them both, but only the money given to the church we filled out the form for, was deductible.
The good news about Norwegian taxes is that the first 40,000 kroner (about $8,000) isn’t taxed at all. So, if someone could figure out how to live in Norway for under $8,000 a year, they’d have it made.