It was a controversial policy, the subject of much debate, and it was noted that further changes could not be ruled out. The Directorate of Taxes has now proposed legal amendments to the VAT Act. This will once again allow foreign carriers to choose not to register for VAT in Norway, but instead apply for VAT refunds from abroad.
Based on the controversy on the initial decision to disallow VAT refunds from foreign carriers, the Directorate of Taxes has now submitted a consultation paper proposing to reinstate the exemption from the liability to register for VAT. It also proposes to reinstate the right to refund VAT through a refund scheme for suppliers of cross-border direct transportation.
The proposed amendments will mean that suppliers of cross-border transportation services to and from Norway will not be obliged to register in Norway. They may choose to register if they want to, or they may apply for VAT refunds through the refund scheme for foreign companies. Any changes will be valid from 1 January 2013. As a consequence of the proposed amendments, some rules of transition have been suggested in the consultation paper. These include:
- VAT refund applications for 2010 filed within the due date of 30 June 2011, but have been rejected, will now be granted (provided that the conditions for a VAT refund otherwise are met). It is not possible to submit new applications for 2010.
- The VAT refund application deadline for 2011 is 1 March 2013.
- The VAT refund application deadline for 2012 is 30 June 2013.
In addition the Directorate of Taxes has also clarified the following:
- If the new rules and regulations are passed, the Tax Office for VAT refund matters will reconsider all applications for 2010 and 2011 from suppliers of cross-border transportation that have received rejections due to the liability to register. One does not need to send an additional inquiry.
- Applications for 2011 and/or parts of 2012 that have been submitted but not processed, will remain unprocessed by the tax office until the contents and date of commencement of the possible new rules are determined.
The tax authorities’ interpretation of the VAT Act and inconsistent attitude regarding foreign carriers’ right to a VAT refund has been complex.