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PR(98)12: Norway’s system of differentiated social security contributions from employers is found partly incompatible with EEA rules

2.10.2002

The EFTA Surveillance Authority has in a decision of today, required the Norwegian Government to amend its system of differentiated social security contributions from employers.

In May 1997, the Authority proposed a set of appropriate measures to Norway outlining a way for the system of employers’ social security contributions to be compatible with the State aid rules of the EEA Agreement.  The Norwegian Government was, however, of the opinion that the system fell outside the scope of the State aid provisions and declined to comply with the Authority’s proposal.  In November last year, the Authority decided to open a formal investigation which was concluded by today’s decision.

The substance of the matter concerns the regionally differentiated social security charges levied on employers in relation to the salary of each employee.  Lower contribution rates are applied in respect of employees residing in remote regions.  In the opinion of the Authority, such lower rates involve State aid which is incompatible with the EEA rules to the extent the measures cannot be justified as transport aid to sparsely populated regions.

The Authority’s decision requires Norway to rectify the situation by 31 December 1998.

The Norwegian Government may maintain the present system of differentiated social security contributions from employers for a majority of economic sectors in sparsely populated areas.  The geographic extension of zones with lower rates would have to be approved by the Authority.

Enterprises in certain sectors, however, are not eligible for transport aid and can therefore not benefit from the lower tax rates.  That applies to enterprises in the electricity sector, in the oil sector, and to some enterprises in the mining and minerals industry.  Furthermore, it applies to shipbuilding and steel production, to enterprises in freight transport by road (having more than 50 employees), to enterprises in telecommunications and in financial services.  Branch offices in the latter sector only providing local services may, however, benefit from lower rates.

For further information, please contact Amund Utne of the Competition and State Aid Directorate on tel. 286 18 50.




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