Have you ever wondered how much it cost to run a seller business in Norway?

I know how much it cost and I thought it would be wise to share this with the world, I don’t know the details of other countries, but I can give you some numbers and examples that are 100% true if you ever consider running a reseller business here.

We all know tax payments, fees and all that, but most people don’t really get how much work it really is to run something with a reasonable profit. So let me give you a full detailed example.

Importing goods from China to Norway and resell it to a customer in Norway

As a businessman you are, you look at some cheap products in China and chooses to import 100 pieces of 15 USD radio with functions of a radio selling for 50 dollars in the current market. This ends up being 1500 USD (this including shipping).

The package arrives at the border (Norway) and the customs will take on its legal right to VAT of 25%. This VAT is returned to you upon selling it to the customer.

Let’s say you want to compete in the current market and you price your 15 USD radio to 45 USD, slightly lower than the 50 USD that the others have. A nice profit you imagine it will give you.

In the end you end up selling 90 radios for 45 USD each, there was also 10 radios not working or returned because of manufacturing errors (these are 15 USD x 10 = 150 USD in losses).

45 USD – 15 USD = 30 USD in earnings per radio sold.

30 USD x 90 = 2700 USD in earnings for 90 radios.

2700 USD – 150 USD = 2550 USD in total earnings (100 pieces including losses).

So you sit back and think you’ve made a good profit, but you haven’t started with taxes yet.

We have to take away sales tax of 25% of the 2550 USD. This sales tax ends up being 2550 – 20% = 2040 USD. The other sales tax (when imported) is also withdrawn in this example.

So you are now 2040 USD richer? No, there is more taxes than a simple sales tax.

We as everyone else got a corporate income tax, so when you are earning money you have to pay 28% of your earnings in the corporation/firm before they are released to the company account.

2040 USD – 28% = 1468,8 USD in corporate income.

OK. Now my profits are looking not that impressive anymore, is there more taxes?

Yes.

You’ve just paid the corporate tax, which means you can freely spend the money inside the firm on investments and such, but if you want to take out a salary (for personal food, electrical bills and stuff) then there’s two ways to get your payment.

1. You pay another 28% tax on the 1468,8 USD, resulting in a payout of 1057,54 USD in actual earnings for your personal wallet. All taxes paid!
2. You take out the money as a original salary. This meaning that the “firm” (which in this case is yours) pay another 14,1% salary tax and 2% (minimum) pension tax/investment on your behalf. 1468,8 USD – 14,1% = 1261,7 USD in payout before income tax.

If you earn around 200 000 NOK (36400 USD) then your income tax will be 22% of the whole income. Resulting into 1261,7 USD – 22% = 984,13 USD in actual earnings for your personal wallet. All taxes paid!

If you earn around 400 000 NOK (72800 USD) then your income tax will be 32% of the whole income. Resulting into 1261,7 USD – 32% = 857,96 USD in actual earnings for your personal wallet. All taxes paid!

With way number 1 you loose all pension rights on your income and you pay more taxes if you got a low income. This option is only good for those earning more than a normal salary (Norwegian salary).

With way number 2 you get all rights to pension savings on your income and your income is taxed with your level of income (meaning low income gives lower taxes, but normal income gives 36% income tax). So this option is for those earning less than a normal income.

So basically your risk of 1500 USD investment, turning it into a 2550 USD earnings without calculating any costs around storage, heating, time usage, office tools etc. You end up with a maximum of 1057,54 USD in your pocket with no pension rights and no cost estimate on storage and time usage spent selling these. That is for you to decide if starting anything around here is worth it.

Would you start up a company here? Is your country as bad as mine?