VAT, GST and Sales Tax in Norway

Summary

Name of the tax Value-added tax (VAT)
Local name Merverdiavgift
Date introduced 1-Jan-70
Trading bloc membership European Free Trade Association (EFTA)
Administered by Ministry of Finance (http://www.skatteetaten.no)
VAT rates
Standard 25%
Reduced 10% and 15%
Other Zero-rated (or exempt with credit) and exempt without credit
VAT number format 123 456 789 MVA
VAT return periods Bimonthly (with the possibility for shorter periods), Annual (for farmers and fishermen; optional for other businesses if taxable turnover does not exceed NOK1 million)
Thresholds
Registration NOK50,000 (NOK140,000 for some charitable and nonprofit organizations)
Recovery of VAT by non-established businesses Yes

Scope of the tax

VAT applies to the following transactions:

  • The supply of goods or services made in Norway by a taxable person
  • Withdrawals of goods from a registered enterprise or an enter­prise with a registration obligation for a use outside the scope of the VAT Act and withdrawals of services from a registered enterprise or an enterprise with a registration obligation for a private use or for a purpose that falls outside the scope of the enterprise as a whole
  • Purchase of intangible or remote supply services from abroad by a Norwegian taxable person or public body
  • The importation of goods, regardless of the status of the importer

The application of delivery terms affects the deemed place of sup­ply for goods. The supply of services in Norway related to goods or real property is deemed to be liable to VAT in Norway.

Who is liable

A taxable person is any business entity or individual that makes taxable supplies of goods or services in Norway, in the course of a business.

The VAT registration threshold is NOK50,000 during a 12-month period. However, for charitable bodies and some nonprofit orga­nizations, the 12-month threshold is NOK140,000. Special rules also apply to certain partnerships, trading companies and corpo­rations.

Voluntary registration. Norwegian VAT legislation provides an option for voluntary registration for VAT purposes for certain activities. For example, voluntary registration is available for leasing property for use by a taxable business.

Group registration. The Norwegian VAT Act provides that “col­laborating companies” may form a VAT group. Group registra­tion may apply if one or more companies own at least 85% of the capital in each company and if the companies are collaborat­ing. Special issues arise for groups of companies with foreign presence.

The VAT authorities must be notified before a VAT group may be formed or dissolved.

Members of a VAT group are regarded as one taxable person liable to payment of VAT. All of the participating companies are jointly and severally liable for the correct payment of VAT. Transactions between companies within a VAT group are gener­ally not subject to VAT. However, the withdrawal of taxable goods or services from a taxable part of the group’s business may be subject to VAT.

Non-established businesses. A “non-established business” is a business that has no fixed establishment in Norway. A non-established business must register for VAT if it makes taxable supplies of goods or services in Norway in excess of the registra­tion threshold. Effective 1 January 2013, nonresident foreign transporters that supply only international, zero-rated transporta­tion services may choose between registering for VAT and there­after applying for refunds of input VAT on VAT returns or remaining not registered and applying for VAT refunds through the refund regime.

Digital economy. Effective from 1 July 2011, nonresidents who sup­ply electronic services to final consumers in Norway (B2C sup­plies) are required to register for VAT and charge VAT on services supplied to Norwegian consumers. For these purposes, electronic services include the supply of, for example, e-books, films, music and software. To coincide with this change, a new form of foreign VAT registration, which is intended to be less burdensome in terms of administration, has been introduced for overseas companies affected by the changes. As an alternative to the use of a fiscal representative, simplified registration and reporting arrangements based on the EU system (one-stop-scheme) have been established.

Importation of goods. The one that is acting as the importer of records (recipient of goods) in the customs declaration is liable to pay import VAT.

VAT representatives. If a non-established business is required to register for VAT in Norway, it must appoint a resident tax repre­sentative, unless it maintains a place of business or a registered office in Norway.

Domestic reverse charge. Effective 1 January 2014, the reverse-charge mechanism applies to the sale of industrial and investment gold.

Registration procedures. The taxable person must complete the Coordinated Register Notification Part 1 and 2 which is a com­mon form for registration in the Central Coordinating Register of Norway and the VAT register. Every enterprise registered in the Central Coordinating Register will be given a unique nine-digit organization number. This number is used as a means of identifi­cation for the entities by most official registers containing busi­ness related information, such as the Register of Employers, the VAT register, etc. The taxable person, his accountant, auditor or adviser are entitled to apply for registration.

The application form is available at: http://www.brreg.no/english/forms/

Fee listings for registration are available at: http://www.brreg.no/english/fees_reg/

It is possible and preferable to register the business online. More information is available at: http://www.brreg.no/english/registration.html https://www.altinn.no/en/Start-and-Run-a-Business/ https://www.altinn.no/en/Start-and-Run-a-Business/Start-up­and-registration/Registration-with-the-VAT-Register/

Late-registration penalties. Any entity that willfully or negli­gently fails to register for VAT could be subject to fines or imprisonment. Penalties and interest will also be assessed if, as a result of late registration, a taxable person submits a late VAT return or pays VAT late.

Deregistration. Different rules apply to deregistration and clo­sures of different types of entities and enterprises, but all dereg­istrations and closures shall be notified using the Coordinated Register Notification form Part 1 and 2. If VAT liable turnover falls under NOK50,000, without the business being deleted, the taxable person remains registered in the Norwegian VAT register for two years.

VAT rates

The term “taxable supplies” refers to all supplies of goods and services that fall within the scope of the Norwegian VAT Act, including zero-rated supplies.

The VAT rates are:

  • Standard rate: 25%
  • Reduced rates: 10% (from 1 January 2016) and 15%
  • Zero rate (0%)

The standard rate of VAT applies to all supplies and importation of goods or services, unless a specific measure allows a reduced rate, the zero rate or an exemption.

Examples of goods and services taxable at 0%

  • Exports
  • Supplies to foreign ships, and aircraft and ships involved in for­eign trade
  • Books and newspapers (includes e-newspapers and e-journals)
  • Transfer of a business as a going concern
  • International transportation services (goods and passengers)

Examples of services taxable at 10%

  • Domestic passenger transportation services (excluding the leas­ing of vehicles as such)
  • Television licenses
  • Hotel accommodation
  • Museums
  • Amusement parks
  • Galleries
  • Bigger sport events

Examples of goods and services taxable at 15%

  • Food (excluding alcohol and tobacco, and supplies in restau­rants)

In Norway, the term “exempt with credit” is also used for zero-rated supplies. This means that no VAT is chargeable, but the supplier may recover input VAT related to the supplies. The terms “exempt” and “outside the scope” are used for supplies of goods and services that are not liable to VAT and that do not give rise to a right of input tax deduction.

Examples of exempt supplies of goods and services
(also called outside the scope of the VAT Act)

  • Financial services
  • Insurance
  • Lease of residential property
  • Medical services
  • Educational services
  • Real estate transactions
  • Specified cultural and sporting events

Option to tax for exempt supplies. Not applicable.

Time of supply

The time when VAT becomes due is called the “time of supply” or “tax point.” The basic time of supply for goods is when they are delivered. The basic time of supply for services is when they are performed. The time of payment does not generally affect the time of supply. If a customer makes an advance payment, the general rule is that the tax point remains the date of delivery of the goods or the date of performance of the services.

The supplier may defer the time of supply by issuing an invoice. In general, an invoice may be issued up to one month after the date of delivery of goods or performance of services. The invoice date then becomes the tax point.

Sales documents issued within the first 15 working days of the month, can state the last day of the preceding month as the docu­ment date, provided that the goods or services are delivered at this time.

Deliveries that are invoiced monthly may be invoiced within the first 15 working days of the month following the month of deliv­ery.

Services that are supplied on a continuous basis must be invoiced within one month after the end of the ordinary VAT period in which the delivery takes place.

For services that are delivered on the basis of metered consumption (for example, electricity and telecommunications), sales docu­mentation may be issued for longer periods, up to a maximum period of one year.

For services that are delivered on the basis of a tender or an equivalent pre-agreed price, the parties may agree on the sales documentation, unless the agreed invoicing deviates materially from the actual progress of the service delivery.

Sales documentation for certain services, such as passenger transportation or leases, may be issued in advance.

Reverse-charge services. VAT payable through the reverse-charge mechanism is due on the date of the invoice if the invoice is issued in accordance with the generally accepted accounting principles in the country of the service provider.

Imported goods. The time of supply for imported goods is the official date of importation.

Recovery of VAT by taxable persons

A taxable person may recover VAT, which is charged on goods and services supplied to it for taxable business purposes. A tax­able person generally recovers input VAT by deducting it from output VAT, which is VAT charged on supplies made.

Input VAT includes VAT charged on goods and services supplied in Norway, VAT paid on imports of goods and VAT self-assessed for reverse-charge services received from outside Norway.

The amount of the VAT reclaimed must be detailed on a valid VAT invoice. Consequently, VAT may not be deducted as input VAT before a VAT invoice is received. Input VAT that is not properly documented may not be deducted. The input VAT deduction must be reported in the VAT period in which the invoice is dated.

Effective 1 January 2011, a deduction of input VAT may be granted only if the payment is made through a bank or similar financial institution, unless the total payment is less than NOK10,000.

Nondeductible input VAT. Input VAT may not be recovered on purchases of goods and services that are not for use in a business that is subject to VAT (for example, goods acquired for private use). In addition, input VAT may not be recovered for some items of business expenditure.

Examples of items for which input VAT is nondeductible

  • Tobacco and alcohol
  • Personal expenses
  • Business entertainment
  • Restaurant meals
  • Purchase and maintenance of passenger vehicles, with certain exemptions for taxi and car-lease companies
  • Gifts and handouts for advertising purposes if the value is at least NOK100 inclusive of VAT

Examples of items for which input VAT is deductible (if related to a taxable business use)

  • Advertising
  • Purchase, lease and hire of vans and trucks not for private use
  • Fuel for vans and trucks not for private use
  • Conferences
  • Business use of home telephones and mobile telephones
  • Passenger transportation services that are not for private use

Partial exemption. Input VAT directly related to making exempt supplies is generally not recoverable. If a Norwegian taxable person makes both exempt supplies and taxable supplies, it may not deduct input VAT in full. This situation is referred to as “par­tial exemption.” Exempt with credit supplies are treated as tax­able supplies for these purposes.

Input VAT incurred on purchases that are used for both taxable and exempt supplies must be apportioned to reflect the supplies that carry the right to deduction and those that do not carry such right. The apportionment may also be calculated based on the ratio of taxable supplies to exempt supplies in the preceding financial year if the preceding financial year is representative of the normal pattern of trading.

Refunds. If the amount of VAT recoverable in a bimonthly period exceeds the amount of output tax payable in that period, the taxable person has an input tax credit. A refund claim is triggered automatically if the VAT return shows a VAT credit. Refunds are generally processed within three weeks after the date on which the VAT authorities receive the VAT return. The VAT authorities pay interest on refunds that are paid late. The annual interest rate is 8.5% as of 1 July 2016.

Preregistration costs. Not applicable.

Recovery of VAT by non-established businesses

The Norwegian VAT authorities refund VAT incurred by busi­nesses that are neither established in Norway nor registered for VAT there. A non-established business may claim Norwegian VAT to the same extent that a Norwegian taxable person may deduct input VAT incurred in the course of a similar business in Norway.

Norway does not apply the reciprocity principle to refunds. Con­sequently, it does not exclude claimants based on the country where they are established.

For example, effective 1 January 2013, foreign entrepreneurs providing transport services directly to and from Norway are not obliged to register for VAT, but they are entitled to receive a refund of VAT paid on purchases of goods and services in Norway.

Refund application. A claimant must submit the following docu­mentation to obtain a VAT refund:

  • Application Form RF 1032
  • Under the general rule, the original VAT invoices
  • A power of attorney if the claimant uses the services of a third party to recover the VAT
  • A certificate of taxable status obtained from the competent tax authorities in the country in which the claimant is established. The certificate, which is valid for 12 months from the date of issuance, must be completed, signed and stamped by the local tax authorities
  • If the claim relates to goods that are located in Norway at the time of submission of the claim form, an explanation of the basis on which the refund is requested

The deadline for submitting applications is 30 June following the claim year. This deadline is strictly enforced. The forms must be completed in Norwegian, Danish, English or Swedish. The mini­mum claim period is a calendar quarter, and the maximum claim period is one calendar year. The minimum claim amounts are NOK2,000 for a quarter and NOK200 for an annual claim.

Applications for refunds of Norwegian VAT may be sent to the following address:

Skatt Øst – Moss

Postboks 103 N-1501 Moss Norway

Repayment interest. Claims for VAT refunds are generally paid within six months. Interest is not paid on late refunds.

Invoicing

VAT invoices and credit notes. Under the general rule, invoices and credit notes must be issued by the supplier for all sales and exports. A Norwegian taxable person must generally provide an invoice including VAT for all taxable supplies made. Invoices must support claims for input tax made by Norwegian taxable persons and VAT refunds claimed by non-established businesses.

A credit note may be used to reduce the VAT charged and reclaimed on a supply. The document should be marked “credit note” and it must refer to the original invoice.

Proof of exports. Goods and services exported to countries out­side Norway or supplied to the Norwegian areas of Jan Mayen and Svalbard are exempt from VAT with input tax credit. To qualify exported goods as VAT-free, the supplier must prove that the goods have been exported. The documentation requirement for goods is as follows:

  • A printed copy of the Customs Single Administrative Document where an attestation from the transporter or the Customs has been inserted

Foreign-currency invoices. If an invoice is issued in a foreign cur­rency, the VAT must be stated in Norwegian kroner, using the official exchange rate for the date of the invoice. No other exchange rate may be used for VAT purposes. Other amounts shown on the invoice may be stated in other currencies.

VAT returns and payment

VAT returns. In general, Norwegian taxable persons file bimonth­ly VAT returns. However, farmers and fishermen must file returns annually. Businesses with taxable turnover of less than NOK1 million may opt to file annual returns.

VAT groups submit a single, joint VAT return.

To ease cash flow, businesses that receive regular VAT refunds may request shorter VAT return periods. Taxable persons must contact the appropriate VAT office to register for annual returns or for permission to use shorter VAT return periods.

For bimonthly VAT returns, the VAT due for each period must be reported and paid in full within 1 month and 10 days after the end of the VAT period. Return liabilities must be paid in Norwegian kroner.

From 1 January 2016, it is obligatory to report VAT returns elec­tronically. The opportunity to apply for an exemption for VAT returns by paper has been discontinued.

From 1 January 2017, the VAT returns are replaced by a new VAT return. The deadlines for submission and payment will remain unchanged, but accounting systems, accounts and VAT codes must be updated and compatible with the new VAT return before 1 January 2017. Import VAT will no longer be declared through the customs declaration but rather through the new VAT return.

Penalties

Penalty interest is assessed for late payment of VAT. The interest rate is announced twice a year in a decree issued by the Ministry of Finance. The annual interest rate as of 1 July 2016 was 8.5%. The minimum penalty is NOK100. The interest rate was last changed on 1 July 2016. An additional penalty of up to 100% of the tax due for a period may be imposed on taxable persons that willfully or negligently contravene the provisions of the VAT Act. Penalties may also be assessed for failing to submit VAT returns.