VAT Obligation

VAT obligation for a foreign enterprise doing business in Norway can be tricky. ECOVIS has summarized some rules here for you to navigate through the complex regulations.

Obligation for VAT will occur when an enterprise has sold goods or services over NOK 50 000 during the last 12 months. For non-profit organizations, the threshold is NOK 140 000. For a foreign enterprise without having any registration in Norway, it is important to start the registration process in good time as the VAT-registration requires the enterprise to have a Norwegian organization number first. Sometimes, it can take more than 1 month to obtain such a number. Late VAT registration and payment can lead to interests and additional tax.

VAT for most goods and services is 25% meanwhile some products and services are subject to a reduced VAT rate, e.g. 12% for public passenger transport, cinema tickets, hotel rooms and 15% for foodstuffs. 

Remotely Deliverable Service

For services that can be delivered remotely, a reverse charge mechanism might be used when it comes to apply VAT. This means it is the Norwegian buyer who has the obligation to declare VAT for the purchase and the foreign seller will not need to do so. On a general note, a foreign enterprise that only supply remotely deliverable service is not liable for VAT-registration in Norway. The conditions for applying reverse charge mechanism are the following:

• The sale of services would be VAT-liable if it is sold in Norway according to Norwegian VAT Act.
• The Norwegian buyer must be a public sector body or a business that is resided in Norway.
• The service must have the characters that allow it to be delivered remotely. How the services was actually delivered is not the deciding factor.

VAT Representation

Foreign enterprises that do not have permanent establishment in Norway must register for VAT via a representative. The representative must have their PE in Norway and is jointly responsible for VAT declaration and payment.

The obligation for having a representative does not apply if the enterprise comes from United Kingdom or one of the following EEA countries: Belgium, Denmark, Finland, France, Iceland, Italy, Luxembourg, Malta, The Netherlands, Poland, Portugal, Slovenia, Spain, Sweden, Germany, Czech Republic, Bulgaria, Estonia, Greece, Croatia, Cyprus, Latvia, Lithuania, Romania, Slovakia, Hungary and Austria. This is because Norway has engaged in the Agreement on administrative cooperation, fight against fraud and assistance on recovery of claims in the field of VAT. However, companies from above mentioned countries sometimes still choose to use a local representative as it eases the administrative load for them.

VOEC – VAT on E-commerce

For foreign e-commerce enterprises, it’s possible to register in a simplified VAT scheme VOEC (VAT on E-commerce) for its B2C revenue. A seller will have the obligation to register when the B2C revenue exceeds NOK 50 000 during in the past 12 months. For practical reasons, it is also possible to register in VOEC voluntarily before the revenue reaches the threshold. VOEC only includes “low value goods” under NOK 3 000. Goods with a unit price higher than NOK 3 000, foodstuffs, goods subject to excise duties and other restricted or illegal goods according to Norwegian law are not covered in VOEC. It is important to know that the seller registered in VOEC can not claim any VAT deduction. If a company needs to claim VAT deduction in Norway, it shall apply for VAT refund through the regular VAT refund scheme. Alternatively, the company can register in regular VAT-scheme.

ECOVIS is a leading global consulting firm with its origins in Continental Europe with over 9000 employees in 80 countries. In Norway, ECOVIS assists international companies with compliance and global mobility, from company registration through work permit application, legal advice, house finding, VAT returns, tax advisory, accounting to annual tax declerations.