Feriepenger payout - when, how much, and what about tax?
The holiday season in Norway always raises many questions and doubts about feriepenger, or holiday pay. During the year, when we work or receive benefits, the employer or NAV pays us extra funds. These funds are intended to replace our salary when we are not working because of holiday. What are the payout rules? When does an employer pay feriepenger? How much is each employee entitled to? Do you have to pay tax on holiday pay?
You will find the answers to these questions right here.
How much feriepenger am I entitled to?
As a standard, every employee is entitled to at least 10,2% feriepenger.
Why minimum? Let us look at this more closely. If you work in Norway, you are entitled to:
- 10,2% feriepenger if you are under 60 years old,
- 12,5% feriepenger if you are over 60 years old.
Of course, these are the minimum statutory requirements; if the company is covered by a collective agreement, the rates may be different.
So, for example, if you are 40 years old and in 2022 your total earnings were 500 000 NOK, your employer should set aside 51 000 NOK for your feriepenger and pay it out in 2023.
When is feriepenger paid out?
By law, feriepenger should be paid when you take holiday, in proportion to its duration.
In principle, as employees we are entitled to:
- 25 working days of holiday if you are under 60 years old,
- 31 working days of holiday if you are over 60 years old.
Working days are counted from Monday to Saturday - Sundays and public holidays are not included.
So, for example: you are 65 years old and want to take 20 days of holiday. At that point, your employer should pay you approx. 64% - assuming the previously mentioned 51 000 NOK of feriepenger has been set aside, the employer should pay out approx. 32 640 kr in holiday pay.
In practice, it often looks a little different: employers usually pay feriepenger in full in one specified month (often June or July). Fortunately, this does not affect the amount we ultimately receive - regardless of when feriepenger is paid and in how many parts, in the end we should always receive the same amount.
Another moment when feriepenger should be paid out is when the employment relationship with a given employer ends. In this situation, we should receive the full amount of earned holiday pay together with the final salary payment.
Do you pay tax on feriepenger?
Yes, you will always pay tax on feriepenger - regardless of when it is paid.
The idea that feriepenger is tax-free is a popular myth. But as with myths, there is a grain of truth in it. The origin of this incorrectly passed-on information comes from the interchangeable use of the terms "tax" and "tax advance".
The tax on feriepenger is collected every year in the annual tax return. There are no exceptions to this.
However, what is often not deducted when feriepenger is paid out is the tax advance. Advances are deducted from each regular salary payment (with exceptions, for example before Christmas) and from each benefit payment.
When it comes to feriepenger payments, the tax advance is normally not deducted at all when feriepenger was earned in the previous year. There are exceptions to this, so the tax advance is deducted when:
- we are on a code table: 7150, 7160, 7350, 7500, 7700, 6350, 6500, regardless of which year the feriepenger was earned in.
- we are on the 25% kildeskatt system (PAYE).
So if we are on the standard table (for example 7100 or another one not listed above) or on a standard percentage tax card (for example 30%), feriepenger is paid without a tax advance. Unless it is paid in the same year in which it was earned - then the tax advance should be deducted.
We would also like to remind you that, regardless of whether the tax advance is deducted or not, in the end (after settlement with the tax office) the same amount of money will remain in our pocket.