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Basics of VAT

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  • Value added tax is often shortened to VAT.
     

  • It is a consumption tax of the value of goods and services in each production or trade.
     

  • A person or company selling goods or services covered by the VAT Act has a registration obligation when the turnover, if any, exceeds NOK 50,000 for a period of 12 months and the company is running in business.
     

  • The general VAT rate in Norway is 25%. Foods have a VAT rate of 15% and passenger transport, hotel accommodation and some areas within culture, etc. has a VAT rate of 12%.
     

  • Exports of goods and services are generally exempt from VAT, ie they have zero rate (invoiced with 0% VAT).
     

  • Companies that are within the scope of the VAT Act, regardless of the VAT rate applicable to their sales, are entitled to full deduction for VAT on costs related to the business for which they are registered.
     

  • Companies that trade goods and / or services that are defined outside the scope of the VAT Act, have no right to deduct VAT on costs related to the business.
     

  • If you have sales where something is VAT-mandatory and something defined outside the VAT Act, you only have the right to deduct VAT on costs relating to the taxable part. If you have costs that apply to both business areas (joint costs) you can deduct a proportionate share.
     

  • Companies that have not reached the threshold of NOK 50,000, but who expect to reach the limit over a 12-month period may apply for pre-registration in order to obtain deduction for VAT on establishment costs in a start-up phase. There are special conditions for such registration and it must also be applied separately via Altinn.
     

  • When a business is registered for VAT, deduction for inbound VAT may be required for costs relating to the registered business up to three years back in time, if the acquisition has not been used for purposes that fall outside the scope of the VAT Act, for example private purposes.
     

  • Reporting and possible payment of VAT will normally be made upon reporting in sales assignments that are delivered 6 times a year. Companies with a turnover of less than NOK 1 000 000 can apply for an annual sales assignment.