Yes but the operative phrase here is operational, the Sharnhorst and Gneisenau were both damaged during the Channel Dash/Unternehmen Zerberus. After the completion of Unternehmen Zerberus the state of the Kriegsmarine surface fleet was as follows:

Bismarch Class Battleships:
Bismarck - Sunk in 41
Tirpitz - In Trondheim

Scharnhorst Class Battleships:
Sharnhorst - Damanged (would subsequently transfer to Norway)
Gneisenau - Damaged, effectively out of service permanently

Deutschland Class Battleships:
Hannover - Decomissioned
Schleswig-Holstein - Decomissioned/Training ship
Schlesien - Decomissioned/Icebreaker

Admiral Hipper Class Cruisers:
Admiral Hipper - In Norway
Blücher - Sunk in 1940
Prinz Eugen - In Norway

Deutschland Class:
Deutschland/Lützov - In Norway
Admiral Scheer - In Norway
Admiral Graf Spee - Scuttled in Montevideo in 39

Emden Class Cruiser:
Emden - Decomissioned/Training in the Baltic

Königsberg Class Cruisers:
Königsberg - Sunk in 1940
Karlsruhe - Sunk in 1940
Köln - In Norway

Leipzig Class Cruisers:
Leipzig - Training duties
Nürnberg - Refit/Transfered to Norway in Nov.

So yes, during parts of 1942 the entire operational German surface fleet was in Norway but only because "the entire operational German surface fleet" was a whopping 7 ships (not counting destroyers/torpedo boats or smaller craft). The reason for this was twofold, partly because Hitler suspected an allied invasion of Norway but also because attacking the north atlantic convoys was an attractive prospect, one which could be achieved without the threat of constant allied air attack of port facilities that operations from Brest meant.