Differentiated rates for social security contributions - merger of the municipalities Mosvik and Inderøy

The authorities of the Norwegian municipalities Mosvik and Inderøy decided on 14 June 2010 to merge the two municipalities into one, with anticipated effect as from 1 January 2012. The decision is in accordance with the result of a consultative referendum held on 31 May 2010.

According to the Authority’s decision of 19 July 2006, approving the Norwegian system of differentiated social security contributions for the period 2007-2013, employers located in the municipal Inderøy are generally subject to social security contributions at the rate of 14.1 per cent. In the municipal Mosvik the general rate is 10.6 per cent.

The Ministry of Finance assumes that the Authority’s decision on the applicable rates in the respective geographic regions will prevail in a case such as the present where the formal municipal boundaries are altered. This presumption would imply that employers located in the geographic region presently defined as the municipality of Mosvik will continue to apply the 10.6 per cent rate after the merger, and the employers in the present geographic area of Inderøy will continue to apply the 14.1 per cent rate.

According to our knowledge, there was in 2005 informal contact between the Authority and the Ministry of Local Government and Regional Development in a similar case dealing with a merger between the municipalities Skjerstad and Bodø. In this case, undertakings were subject to different maximum rates of regional investment aid depending on the municipality in which they were located, and the question was whether such different rates for the relevant regions could be applied similarly after the merger. According to a co-ordinated understanding between the Authority and the Ministry of Local Government and Regional Development, the different rates applicable for the two geographic areas, were continued after the merger (in the period 2005-2006), despite the fact that the new municipality now comprised both areas.

In our view, the above interpretation applied by the Authority is rational and would lead to a parallel comprehension in the case of differentiated social security rates approved for the municipalities Mosvik and Inderøy. If so, the present rates of social security contributions should be continued within the existing geographic demarcation lines for the years 2012 and 2013. The Ministry of Finance would appreciate the Authority’s view on this matter at its earliest convenience.

Yours sincerely,

Jon Tingvold
Deputy Director General

                                                                  Astrid Erlingsen
                                                                  Legal Adviser

Copy: Ministry of Local Government and Regional Development, att.: Hans Petter Gravdahl

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