New VAT rules are being introduced in Norway this year, affecting foreign companies selling goods online to Norwegian customers. From 1st of April they are expected to register for VAT and report to the Norwegian tax authorities, provided the general registration threshold of NOK 50.000 (5000 EUR), in a 12 months period, is met.
Furthermore, the Norwegian tax authorities have announced a special focus on foreign businesses and their VAT liability in Norway in general. Thus, we will also point at some other, already existing, Norwegian VAT rules, relevant to foreign businesses having customers in Norway.
Abolition of VAT and excise duties exemption on small consignments
A previous exemption from excise duties and VAT on import of goods of a value less than NOK 350 (35 EUR), has already been abolished for food and beverages from 1st of January 2020. On 1st of April this year the VAT exemption will be abolished on all import of goods. An exemption from customs duties will however still apply on goods with a value less than NOK 3 000, exempt for food, beverages, alcohol, tobacco and other customs restricted goods.
Simplified VAT registration - VOEC - supplies of goods B2C
The abolition is combined with a simplified registration scheme called VOEC (VAT on e-commerce), which will only apply to the supply of goods with a value less than NOK 3000, and only on supplies to private consumers in Norway. The special scheme applies both for VAT and excise duties, and decharges the foreign supplier from the general VAT obligations that apply to ordinary VAT registered businesses in Norway, e.g. to file VAT returns six times a year, keep a proper VAT account in accordance with Norwegian Accountancy law etc. VOEC will not apply on food, alcoholic beverages, tobacco products or other customs restricted products.
The simplified registration scheme on e-commerce, is described as an extension of the already existing Norwegian VOES scheme (VAT on Electronic services) and will apply either to the seller, or the distributor, of the goods, i.e. sales platforms, electronic marketplaces (e.g. Amazon, E-bay etc.). The new scheme implies that VAT is included in the price offered by the supplier and the VAT dues is to be reported quarterly. The simplified registration schemes do not include any right to a refund of input VAT. The foreign supplier may, however, opt to register according to the ordinary registration rules, in order to benefit from the VAT credit rules. On the other hand, the simplified registration schemes cannot be combined with ordinary VAT registration by the same business.
Reverse charge – B2B
VOEC will not apply on supplies to customers being Norwegian businesses or public enterprises. For such supplies, the ordinary VAT registration rules applies. Furthermore, and for the overall view, it should be mentioned that a cross border supply, consisting only of services capable of delivery from a remote location, typically electronic services, the reverse charge mechanism applies.
As within the EU, reverse charge implies that the buyer reports the VAT to the Norwegian Tax authorities, based on an invoice from the foreign supplier, which is normally exempt from foreign VAT. The obligation to calculate Norwegian VAT by the reverse charge mechanism, includes Norwegian businesses being VAT exempt and thus not VAT registered, such as financial institutions, certain health and educational institutions etc. It is a condition however, to apply the reverse charge, that the business qualifies as an economic business, which means that for instance a mere (passive) holding company is not subject to reverse charge.
A common misunderstanding amongst foreign businesses, is to believe that Norway applies reverse charge to construction and other local physical work performed in Norway, including when such services are performed by Norwegian hired-in labor. However, this is not the case. Foreign businesses delivering a combination of goods and construction services to a Norwegian customer, this being a private consumer or a business, must register for their supply in Norway, provided the registration threshold is exceeded.
Ordinary VAT registration obligations on foreign suppliers
If the conditions of VOEC are not met, a foreign business supplying goods to Norwegian customers, without having any physical presence in Norway, could still have to register for VAT in Norway based on the ordinary VAT registration rules. In a few cases, the Norwegian Tax authorities (and even the Norwegian High court of justice) have assessed, that non-Norwegian businesses, making supplies of goods to Norwegian customers, might be categorized as performing their business in Norway, and thus is obliged to register for VAT, notwithstanding they have no physical presence in Norway. It is emphasized if the business is marketing itself specifically towards the Norwegian market through advertising etc., and if the goods are delivered directly to the customer by the seller. The lack of registration in such cases, will normally be followed by a forced retrograde registration for VAT, and include interests and probably tax penalties between 20 and 60 % of the VAT due. If the initiative to rectify comes from the business itself, and there has been no initial approach by the Norwegian tax authorities, the risk of penalties is minor.
Direct VAT registration or VAT representation
For foreign businesses from an EEA country that has a tax administration agreement with the Norwegian Tax authorities, a VAT registration can be done directly by the company itself. As per now this includes Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and United Kingdom.
Businesses from other countries, can only register for VAT in Norway, either by establishing an office in Norway, or by using a VAT representative. The VAT representative must be a Norwegian VAT registered business, and the Norwegian representative will be jointly and severally liable with the foreign business to calculate and pay the VAT due.
A company from an EEA country can also freely choose to use a VAT representative, instead of registering directly. In such cases, the joint and several liability for the VAT representative does not apply.
Optional VAT registration scheme for foreign carriers
Specific VAT registration rules also apply for foreign carriers performing assignments in Norway. The scheme covers only continuous transport assignments between Norway and a foreign country, and intends to enable the carriers to deduct input VAT on costs they have on fuel, etc. in Norway.