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  • Service: Tax, Global Indirect Tax
  • Type: Regulatory update
  • Date: 6/1/2013

Norway: VAT essentials 

Essential information regarding VAT as it applies in Norway.


Scope and Rates

What supplies are liable to VAT?


Value-added tax (VAT) is due on any supply of goods or services made in Norway, where it is a taxable supply made by a taxable person in the course or furtherance of a business carried on by said person.


Supply includes all forms of supplies for a consideration. However, certain actions carried out for no consideration such as withdrawal (self-supply) of goods or services for private use, are also liable to VAT.


In addition, importation of goods and services are normally also liable to VAT.


What is the standard rate of VAT?


The standard rate of VAT is 25 percent.


Are there any reduced rates, zero rates, or exemptions?


Yes. There is a reduced rate of 15 percent for food.


There is a reduced rate of 8 percent for the provision of broadcasting services provided by the Norwegian Broadcasting company (NRK), the right to attend cinemas, passenger transportation services, letting out rooms from hotel businesses and vacation property, admission to museums, galleries, amusement parks, adventure centers and bigger sport events, and communication of such services.


There is an extensive list of zero-rated supplies, including:


  • exports
  • supplies relating to ships and aircraft
  • bulk postings of letters and other transportation services to and from a foreign country
  • paper versions of books, magazines, and newspapers
  • electric power consumption in the northern counties (Finnmark, Troms, and Nordland
  • repairs under guarantee.

Please be aware that certain conditions and documentation rules apply.


The list of exemptions (without credit) includes:


  • services by authors through exploitation of the copyright to their own literary and artistic work
  • health services
  • some supplies made by non-profit organizations
  • social services
  • sale of stamps, coins, notes, etc. as collectors’ items
  • land (there are certain exceptions that are automatically liable to VAT)
  • education
  • finance
  • insurance
  • lottery
  • burial and cremation

Note: it is not possible to recover VAT incurred in making exempt supplies.


What are the other local indirect taxes beside VAT?


Customs duties, various special duties, stamp duty are the most relevant other indirect tax.

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Registration

Who is required to register for Norwegian VAT?


Norwegian Entities


If a business makes taxable supplies in Norway over the VAT registration threshold of NOK 50,000, it will be required to register and account for Norwegian VAT.


For charitable and public utility institutions and organizations the registration threshold is NOK 140,000.


For entities selling admission to sporting events, the registration threshold is NOK 3 million, except for the two top divisions in football for men and the top division in ice hockey for men where the standard thresholds apply.


Non-Norwegian Entities


The registration rules that apply to Norwegian entities apply also to non-Norwegian entities which are making taxable supplies in Norway. A foreign business without a fixed place of business in Norway, must register with a Norwegian VAT representative. The foreign business and the VAT representative are jointly and severally liable towards the VAT authorities.


The form to apply for Norwegian VAT registration is available on the Norwegian tax authority's website.


Are there penalties for not registering or late registration?


Yes. If the VAT authorities have been, or could have been deprived of tax, an additional tax of up to 100 percent may be imposed. Since the VAT returns are delivered late in such a situation, the output VAT on each return can also be increased by at least NOK 250 up to 3 percent of the reported VAT amount nevertheless with a maximum of NOK 5,000. In addition, there will be interest to pay with a rate of 8.50 percent (as at 1 June 2013). Under certain circumstances, it could be possible to apply for remission of the additional tax and interest or parts of it.


Is voluntary VAT registration possible for an overseas company?


In general, an overseas company cannot choose whether he/she should register for VAT or not in Norway.


However, for certain type of sales, such as letting of real estate to VAT registered entities, companies can choose to register for VAT. This is possible for an overseas company as well.


Are there any simplifications that could avoid the need for an overseas company to register for VAT?


Yes. Foreign businesses selling services capable of delivery from a remote location may not have to register for VAT. Instead the customer (as businesses or public entities) will have to charge and report VAT on the purchases (reverse charge). This does not apply, however, for a foreign business that is supplying electronic services to private persons (VOES). From 1 July 2011, foreign businesses who provide such services to private persons have to register for VAT either through a standard registration (with VAT representative) or through a simplified registration and reporting system.


Does an overseas company need to appoint a fiscal representative?


An overseas company that has no fixed place of business in Norway must appoint a VAT representative with joint and several liabilities towards the tax authorities.

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VAT grouping

Is VAT grouping possible?


Yes, provided various criteria are met. Primarily there must be an element of common control/ownership (at least 85 percent of the capital in each company must be owned by one or several of the collaborating companies). VAT grouping is normally accepted only for companies, including branches or VAT representative registrations of foreign companies. In addition the companies must be cooperating. However, in 2007 the Ministry of Finance has to some extent also made group registration possible for other VAT registered entities than companies.


The participants of the VAT group are jointly and severally liable for their VAT handling in the periods they are group registered.


Please be aware that it is necessary to send an application to the VAT authority in order to form/join and dissolve/leave a VAT group.


Can an overseas company be included in a VAT group?


A foreign company registered in Norway through a branch or a VAT representative may be included in the Norwegian VAT group that is, for the activities performed in Norway. The foreign company itself cannot be part of the VAT group when it comes to the activities performed outside of Norway.

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Returns

How frequently are VAT returns submitted?


Most registered businesses are required to submit VAT returns on a bi-monthly basis. However, if its input VAT regularly exceeds the output VAT by at least 25 percent, a company may apply to submit monthly VAT returns. In addition, if the input VAT regularly exceeds the output VAT by at least 50 percent it may apply to submit weekly VAT returns instead.


If the turnover is less than NOK 1,000,000 in the prior year, a company may apply to submit annual VAT returns.


Failure to furnish VAT returns and settle any outstanding amounts on time may result in a penalty of 3 per cent of VAT due (minimum NOK 250), up to a maximum of NOK 5,000. In addition, late payment interest up to 0.71 percent - (as at 1 June 2013) per month may be imposed.


Are there any other returns that need to be submitted?


No.


If a business receives a purchase invoice in foreign currency, which exchange rate should be used for VAT reporting purposes? (e.g. central bank’s exchange rate applicable on the date of the invoice)


The VAT amount on a purchase invoice from a supplier registered for VAT in Norway has to be stated in NOK in order to be deductible. When VAT shall be calculated on services purchased in a foreign currency from abroad according to the Norwegian reverse charge mechanism, the consideration of the invoice and the VAT must be calculated into Norwegian kroner (“NOK”) using the daily exchange rate of the Central Bank of Norway.

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VAT recovery

Can a business recover VAT if it is not registered?


Yes. Overseas businesses without sales liable to VAT in Norway are entitled to a refund of VAT paid on purchases of goods and services in Norway or on imports of goods into Norway provided that the VAT relates to business carried out abroad and the business would have been liable to register in accordance with the Norwegian VAT Act if it had been carried out in Norway and the VAT in that case would have been deductible.


Under these provisions there are strict time limits for making claims. The claim covers the calendar year and should be submitted at the latest by the 30 June of the following year. The delivery dates are normally decisive, not the invoice dates, which means that a delivery made in November 2012 and invoiced in January 2013 should be included in the application for 2012.


The application for a refund is made on form RF-1032. Access the form RF-1032 via the website.


Does your country apply reciprocity rules for reclaims submitted by non-established businesses?


No.


Are there any items that businesses cannot recover VAT on?


Yes. There are certain items that businesses cannot recover VAT on. For example:


  • exempt supplies: where VAT relates to both taxable and exempt supplies, an apportionment is needed.
  • Non-business (including private) activities: where VAT relates to both business and non-business activities, an apportionment is required.
  • Motor cars (excluding commercial vehicles): with certain exceptions businesses cannot recover VAT on the purchase of a motor car registered as a passenger vehicle or on lease/hire charges etc. VAT incurred on the purchase of vans or on lease/hire charges etc. is recoverable on normal conditions.
  • Business entertainment: VAT is generally not recoverable on business entertainment costs.
  • Margin scheme for second hand goods. For goods sold under this scheme VAT is to be accounted for on the sales margin; however, VAT is not deductible on the purchase of the goods. (Note: this scheme is seldom used in Norway, due to the complexity of the rules.)

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International Supplies of Goods and Services

How are exports of goods and services treated?


Goods


If a company exports goods to a customer (business or private) outside of Norway, then it does not need to charge VAT, but certain documentation such as the export declaration and the invoice must be kept in order to support the zero-rating.


Services


If a company supply services to a customer (business or private) outside of Norway, then it does not need to charge VAT; but it has to make sure that in all cases it keeps proof of export of services to support the zero-rating.


In general, services performed abroad can be treated as zero-rated on the condition that it is stated on the invoice when and where the service is rendered. When it comes to services performed in Norway for customers established or settled abroad, it is a condition that the seller can document that the services are fully for use abroad. In addition, if the service is in regard to work on goods, it is a condition that the goods are customs export cleared and that the customs declaration is kept as accounting material.


However, where services capable of delivery from a remote location are supplied, it is sufficient that the services according to the agreement and invoice are delivered to and received by a business established abroad to treat them as zero-rated (reverse charge mechanism). The seller must be able to document the name and the address of the customer abroad.


How are goods dealt with on importation?


Customs will calculate and determine the customs duties and import VAT at the time of importation when goods are cleared for free circulation in Norway. The declared consignee of the goods is the debtor towards the customs authorities. The latter is responsible for the payment of customs duties and import VAT.


How are services which are brought in from abroad to be treated for VAT purposes?


If businesses or public entities (VAT registered or not) buy certain services (remote/intangible) from outside Norway, they will be required to apply the reverse charge mechanism. This is intended to take away any VAT advantage of buying those services from outside Norway. Private persons are not obliged to apply this reverse charge mechanism.


Under the reverse charge recipients are required to account for a notional amount of VAT on their VAT return covering the period in which they made the payment. VAT registered entities will be able to deduct this as input VAT on normal terms.


Entities not registered for VAT will have to account for the VAT on a specific form.


The reverse charge applies to those services that are capable of being delivered from a remote location, for example:


  • electronic services
  • tailored software
  • information services
  • advertizing services
  • legal services
  • consultancy services
  • telecommunication services
  • hiring out of labor.

When it comes to delivery of electronic services (VOES), the delivery to private persons in Norway is also liable to VAT. However, in this situation the supplier has to register for VAT in Norway through a VAT representative or through a simplified system for registration and reporting. If the service is fully for use abroad, the delivery is not liable to VAT.


If foreign companies perform physical services in Norway, they will have to register and charge VAT. If such physical services are performed abroad and transform into a physical object which is subsequently being imported into Norway by the foreign company and delivered to the customer, the foreign company will have to register and charge VAT. The import VAT can be deducted by the registered foreign company. If the physical object is imported into Norway by the customer, the customer will pay the import VAT and the foreign company shall normally not register for VAT.

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Invoices

Is a business required to issue tax invoices?


Businesses are required to issue invoices if they perform sales and they are required to state the VAT status of the supply.


What do businesses have to show on a tax invoice?


A tax invoice should contain at least the following data:


  • total amount payable
  • amount of VAT payable
  • name and organization number of the supplier followed by the capital letters MVA (when VAT registered)
  • name and address or organization number of the customer
  • description (quantity and nature) of the goods/services supplied
  • the place where the goods/services are delivered
  • invoice number
  • date of invoice
  • date of transaction
  • due date for payment

For companies registered with a VAT representative, the name and address of the representative


  • sales liable to VAT, zero-rated sales, sales outside the VAT scope and sales with different VAT rates invoiced on the same document must be specified and summarized separately
  • the VAT amount(s) must be specified in NOK (the exchange rate is the official rate on the date of the invoice)

Can businesses issue invoices electronically?


Electronic invoicing is normally accepted, and the requirements are the same as for paper invoices. However, based on the relevant circumstances, KPMG in Norway might recommend an approval from the VAT authority be obtained before going ahead with electronic invoicing.


Is it possible to operate self-billing?


No, the main rule is that the sales documents have to be issued by the seller.


However, from 1 January 2007 self-billing is accepted in some specific situations where the seller receives used goods as trade-in, and for purchasers who fully or partially calculate size, weight, quality or similar as bases for payment of commission or other consideration to the seller.


In other situations, it is necessary to apply to the Directorate of Taxes for acceptance of self-billing.


Can a business issue VAT denominated in a foreign currency?


Yes, but the VAT amount must be stated in NOK using the daily exchange rate of the Central bank of Norway.

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Transfers of Business

Is there a relief from VAT for the sale of a business as a going concern?


Yes.

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Options to Tax

Are there any options to tax transactions?


There are some provisions in Section 2-3 of the Norwegian VAT Act for electing to waive the exemption on certain transactions, review the following regulations:


  • voluntary registration of the lessor of buildings or plants for use in business that are registered under the VAT Act
  • voluntary VAT registration for non-businesses developing water supply and sewage
  • voluntary VAT registration for farming out agricultural holdings
  • voluntary registration for forest road organizations.

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Head Office and Branch transactions

How are transactions between head office and branch treated?


A head office and a branch are considered to be one entity in relation to Norwegian VAT. Therefore, transactions between a foreign head office and a Norwegian branch are not regarded as sales/supplies. These are regarded as supplies within a business.

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Bad Debt

Are businesses able to claim relief for bad debts?


Yes. If a bad debt is confirmed, then businesses are able to claim a VAT refund on the unpaid element through their VAT return. Note that certain conditions apply.

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Anti-Avoidance

Is there a general anti-avoidance provision under VAT law?


There is no general anti-avoidance provision under Norwegian VAT law. However, when there is a common interest between the supplier and the customer, there is a special provision stating that the VAT basis cannot be set lower than the sales value of the delivery that is the consideration for the delivery is not directly relevant. The VAT authority is authorized to decide bindingly what the sales value is.


In addition, the VAT authority has in its administrative practice stated that the VAT, if the situation or a measure has been given a legal form that does not correspond to the true nature or purpose of the transaction (pro forma), shall be levied as if the true form had been used.

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Penalty Regime

What is the penalty and interest regime like?


There are a number of penalties that apply in Norway for compliance failures. VAT return penalties have been addressed above.


Where a business willfully or by negligence has avoided payment or obtained an undue deduction/refund of VAT, a penalty of up to 100 percent of VAT may be imposed. Any business that willfully does not comply with the regulations of the VAT Act may also be punished with fines or imprisonment.

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Tax authorities

Tax audits


How often do tax audits take place?


There is no specific frequency; some companies are audited often while others are never audited.


Are there audits done electronically in your country (e-audit)? If so, what system is in use?


No.


Advance rulings and decisions from the tax authority


Is it possible to apply for formal or informal advance rulings from the (indirect) tax authority?


Yes, it is possible both to ask for guiding and binding statements. There is a fee for asking for a binding statement.


Are rulings and decisions issued by the tax authorities publicly available in your country?


Guiding statements are normally not made publicly available, but binding statements normally are. In any case, the statements are made anonymous. The decisions of the VAT complaint board are normally made publicly available and are also anonymous.

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Miscellaneous

In your country, are there unique specific indirect tax rules (regimes) that differ from standard indirect tax rules in other jurisdictions?


Since Norway is not part of the EU, some rules are different from those applied in the neighboring countries which are part of the EU.


Are there indirect tax incentives available in your country (e.g. reduced rates, tax holidays)?


Reduced rates are applicable.

 

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