The first questions on the lips of everyone considering a move to Norway are always the same. What exactly is the cost of living? Is it really as expensive as everyone says? Does a beer really cost $13/£8? What's a good salary? How much money do I need to live on?
The questions are simple but the answers are unfortunately not so simple.
The short version is that yes, Norway is an expensive country. But the truth is far more complex than that.
To be more precise, Norway is an expensive country to visit, because of exchange rates. If you come here to live and work, earning in Norwegian kroner and spending in Norwegian kroner, then you shouldn't compare prices with the UK or Mexico, for example. You should compare prices to your salary, and look at what's left over at the end of the month. After you've fully adjusted into the economy, you may be pleasantly surprised at how much disposable income you have even on what might at first seem like a modest salary.
Generally speaking, salaries are higher in Norway relative to other countries, particularly at the lower end of the pay scales. This means you have more money in your pocket to pay the higher prices, leaving things broadly even. It also explains why service-heavy industries in Norway are so expensive – think restaurants, bars, anything involving a significant human cost. However, senior management staff tend to be paid the same, or even less, than their foreign counterparts. Basically the range of salaries is tighter in Norway.
Lesson to learn: Bear the above in mind if you are considering working in Norway for a foreign employer!
Regardless of the relative cost of living, it will take you several months at least to overcome sticker-shock on the price of things such as groceries, meals out, and of course, alcohol.
MVA, or merverdiavgift, is a form of sales tax or value-added tax applied to goods and services purchased in Norway. MVA is applied to the vast majority of goods and services but unlike in the USA, the tax is always included in the price you see for consumer goods and services (for business-to-business transactions, prices are listed exclusive of MVA)
The standard rate of MVA is 25%, the same as the other Scandinavian countries. It is the highest rate in Europe apart form Hungary at 27%. A rate of 15% is applied to food and beverage sales while the lowest 8% rate is applied to public transport, accommodation, and cinema tickets, amongst others. Certain items such as health services and education are exempt from MVA.
Duty on alcohol is extremely high, and increases with the strength of the alcohol. That's why spirits are prohibitively expensive, compared to beer which is just expensive.
Soon we'll take a look at the average monthly expenses for a single person living in Norway.