Income, self-employed

Self-employed model

was inducted from 01.01.2006 and replaces the split model. The model sets the rules for taxing profit that exceed a risk-free return.

Entrepreneurial income

is a result of the activities of the self-employed person, and is estimated from the income statement form. Entrepreneurial income is transferred to the tax return and is included in the calculation of general income.

Agriculture deduction

was introduced in 2000 as a deduction in positive entrepreneurial income from farming, market gardening and fur farming.

Taxable ordinary income after special deductions

can be defined as the sum of wages, capital income and entrepreneurial income less interest on debt and different income deductions. Ordinary income after special deductions is the basis for assessing income tax.

Personal income

is a description of income from wages, pensions, benefits, and the part of entrepreneurial income ascribed to personal effort on the part of the self-employed person. Personal income from self-employment is thereby an estimated personal income calculated on the basis of the entrepreneurial income from the business, corrected for deductible interest on debt, capital yields/costs of a pure financial type, deductible risk-free return, and utilised negative personal income from previous years. Personal income makes up the basis for calculating the national insurance contribution and surtax.

Assessed taxes

include wealth and income taxes of municipalities, counties and the central government as well as members' contributions to the National Insurance Scheme.

Risk-free return

is used to reduce personal income. The risk-free return is computed by multiplying the net value of the business assets by a risk-free rate.

Deduction for wages and salaries

Calculated personal income is reduced with a deduction for wages and salaries if wage earners are employed by the business. The deduction for wages and salaries cannot bring the calculated personal income and wages from the enterprise for each active owner below a limit set annually, nor can it bring calculated personal income below nil or increase the negative estimated personal income. The deduction is eliminated from 2012.

Utilised negative personal income from previous years

Negative personal income can be carried forward, and can be deducted from positive estimated personal income in subsequent years.

A self-employed person

is defined as a person who conducts business at his own expense and risk, and is required to document entrepreneurial income as an addition to the tax return form.

The business (enterprise)

of a self-employed person must be clearly separated from the self-employed person as an individual. A self-employed person can operate one or more businesses (enterprises), and a business can be operated by one or more self-employed persons (co-ownership/joint operation/general partnership). The statistics provide figures on both self-employed persons and their business.

Type of main income

indicates what type of income provides the biggest contribution to the self-employed person's total income. The type of main income is not influenced by the working hours of the self-employed person or wage earner. If the largest portion of a self-employed person's income is received from wages, benefits and pensions, his/her type of main income is wages and pensions.

The split model

is the rules for calculating personal income from business. The split model is used for self-employed persons and active shareholders of joint-stock companies. Persons who are partners in businesses assessed as a partnership (shared liability partnerships, limited partnerships and so on), are also covered by the split model. In brief, the model splits an enterprise's income into two parts, capital income and personal income. The model was replaced by the self-employed model from 01.01.2006.

Capital yield basis

is a net valuation of the assets of a business. The value of the assets can be set according to various principles, including tax-related value and accounting value. The portion of the income attributed to return on invested capital is calculated from the capital return basis. The calculation is done with a capital return rate adopted for each income year. The remaining income is characterized as calculated personal income (see above).

Industry is mainly defined by the industry of the enterprise of the self-employed as registered by Statistics Norway's Central Register of Establishments and Enterprises. The industry groups can be found in the Standard Industrial Classification or Standard Industrial Classification (SIC2007) in KLASS.

Name: Income, self-employed
Topic: Income and consumption

Division for income and social welfare statistics

National level

Frequency: Annual

Timeliness: The statistics is published about 50 weeks after reference year.

Not relevant.

Statistics files with data from tax returns, depreciation forms, forms for calculating personal income, and income statements, that have been through the linking and estimation programs, are stored.

The survey shows the effect of the tax system on self-employed persons. The statistics give information on self-employed persons' incomes and deductions from the ordinary tax assessment, which are the basis for calculating the taxable revenues. These include operating income and operating costs from the income statements, information on depreciation and depreciation basis from depreciation forms, and information on the basis for personal income and capital yields from personal income forms.

The survey has been conducted annually since fiscal year 1991 for the Ministry of Finance.

Major users are the Ministry of Finance and the research activities in Statistics Norway. Data from the survey are included in tax models and are used for tax research, distribution analyses and various analyses of tax models. In addition, the data are used in the national accounts on business activities in the household sector.

No external users have access to the statistics and analyses before they are published and accessible simultaneously for all users on ssb.no at 8 am. Prior to this, a minimum of three months' advance notice is given in the Statistics Release Calendar. This is one of Statistics Norway’s key principles for ensuring that all users are treated equally.

The statistics are related to the Tax Statistics for Personal Taxpayers.

Statistics Act (21 June 2019) § 10.

Not relevant.

The population is all physical persons who operate businesses at their own expense and risk. The tax return statistics define the population as all persons with entrepreneurial income, entrepreneurial deficits and/or estimated personal income from such business activities. The unit of analysis is both sole proprietorships (businesses) and self-employed persons.

From the income year 2004 the tables include residents aged 17 years or older by the end of december.

The statistics is based on information from ordinary tax assessment. The data is obtained from the Norwegian Tax Administration from tax returns, depreciation forms and forms for calculating personal income for self-employed persons.

The classification of industries is based on information from Statistics Norway's Central Register of Establishments and Enterprises.

From the income year 2009 self-employed persons with operating income under NOK 50 000 are exempt from reporting income statements.

The sample consists as of the income year 2003 of all self-employed persons who have delivered their tax documentation electronically through Altinn.

Mandatory electronic submission of income statement as of the income year 2015

From 2015 onwards, all self-employed must submit their tax information electronically. At the same time, the Norwegian Tax Administration has launched a simplified reporting solution for self-employed with simple tax relations.

Income statistics for self-employed has until then been a sample survey in which electronically submitted income statements were weighted to give figures on self-employed in sole proprietorships in total. Since from this year on we had access to all submitted income statements electronically, the statistics based on the income statements consisted of an approximate full count, with the exception of those with no obligation to dispatch an income statement due to low annual turnover or those subject to best judgment tax assessment. This change resulted in a minor disruption of the time series, and complicates direct comparisons with previous years. For example, that year there was a considerable increase of over 10 per cent in the number of submitted income statements within arts, entertainment and recreation, education, and information and communication.

New tax return for sole proprietorships from 2022

From the income year 2022 onwards, all sole proprietorships are obliged to submit a business specification with their tax return, and the statistics from this year also include sole proprietorships that previously did not submit a business statement due to low turnover. This led to an increase of about 40,000 sole proprietorships from 2021 to 2022, with most of them having wages, benefits, or pensions as their main income.

The data is collected electronically from the Norwegian Tax Administration. There was a change in how these data were organized, taking effect from 01.01.2009. This may have influenced the comparability with previous years.

A number of checks and corrections are made to ensure consistency both within a single form, between the main form and the supplementary forms, and to uncover incomplete reporting and repeated observations. The main part of the checks and revisions are done by automatic procedures.

The sample is weighted (until 2015 figures, see below), and stratified by the industry, the source of the main income, age and the magnitude of entrepreurial income of the self-employed persons. The calculation of weights is detailed in Notater 2001/66: Oddbjørn Haugen, Utrekning av vekter til inntekts- og formuesundersøkingane 1999 (in Norwegian only).

Most of the amounts are referring to the person unit. Relevant figures from the income statement forms are aggregated at enterprise level, even though part of the amounts is part of the husband's/wife's taxable amount.

The statistics are comparable from 1993 to 2002. There have been minor changes in the tax rules for this period, which have influenced the data basis and therefore the continuity of the statistics. There were major changes in the forms documenting the self-employed tax assessment in 2003. Self-employed within primary industries were, for example, until then obliged to deliver separate income statements. As of 2003, all self-employed delivered the same type of income statements, and only one form per person. Several items were shifted to new forms. There were also at this time changes in Statistics Norway's data collection process. Previously, data was collected for a sample of 5 000 self-employed. As of 2003, all self-employed who delivered tax documentation electronically through Altinn, were included in the data (this consisted of almost 100 000 self-employed in 2003). As of 2004 transport and communication was split from independent occupations into their own industry class. Also this year, self-employed without known industry affiliation were not included in independent occupations. From 2012 the social security contribution rate in primary industries was altered to the same rate as other industries. Therefore it is from 2012, on the basis of the tax assessment, only possible to split type of main income in two: main income from wages and pensions, or main income from self-employment.

The primary data are obtained from tax returns and tax return attachments (depreciation forms, forms for calculating personal income, income statements and others). These forms can contain errors made by the individual taxpayer filling out the form. A number of the errors are discovered and corrected by the tax offices.

Errors of no practical importance to the tax assessment are frequently not corrected by the tax offices. A number of these errors are corrected by our checks to ensure the most uniform and consistent treatment.

Instances of errors in collecting and processing the data can happen. Examples include coding errors, revision errors, data processing errors etc.

Some forms are discarded due to inconsistency within the data or absence of important data. This is relatively rare compared to the total amount of forms.

Variance All sample surveys are associated with uncertainty. In general; the fewer the observations, the less certain the results. Figures for groups with relatively few observations can be highly influenced by extreme observations, i.e. observations that deviate greatly from the average. Having an approximate full count as of the income year 2015, this source of error is eliminated.

Bias The sample includes all self-employed persons delivering documentation electronically for their tax assessment through the public portal Altinn. Bias among those delivering electronically will therefore give bias in the sample. Having a near full count as of the income year 2015, this source of error is eliminated. But even though delivering the income statement electronically became mandatory, it was still voluntary for sole proprietorships with a turnover below NOK 50,000 to do so. Those who do deliver are however included in the data. Moreover, detailed data from those subject to best judgment tax assessment is unavailable.

Data registry errors The quality of the linked data from different statistical and administrative registers also have an impact on the quality of the final result.

The statistics is based on data obtained late in the autumn (after the income year) after the tax assessment is finished, and a fair number of tax-related complaints and reporting errors from taxpayers have been dealt with. The published figures do not take into account that some amounts can be changed at a later time due to complaints or that the tax authorities themselves discover errors.