Summer is the most popular time for international tourists to visit Norway. Many foreign tourists come to Norway to experience the spectacular mountains and fjords. These toursits sometimes come to Norway by joining an organized bus tour from an other country. These tour organizers are normally from the same country where the tour starts. What many tour organizers don’t know is that the bus tour as a business activity might trigger VAT liability in Norway.
VAT on personal transportation in Norway
In general, sale of personal transport in Norway is subject to 12% VAT. If the tour bus is driving around in Norway with passengers, the driving activity is considered as personal transport service and thus liable for 12% VAT in Norway. When this revenue exceeds NOK 50 000 in any 12-month period, the tour organizer will have the obligation to register for VAT in Norway and revenue will be VAT liable.
Many argue that the transport of passengers is a kind of cross-border transport which should be exempt for VAT. However, the exemption only applies when it’s direct transportation between one place in a country and another in Norway. For the case of a bus tour, the exemption can only be valid when the bus (and passengers) stays in Norway less than 24 hours. This means, if the tour drives passengers around Norway for 5 days, the transportation inside of Norwegian border is considered VAT-liable.
VAT on other services in Norway
Tour organizers often offer passengers a tour package that might include several elements that are relevant or necessary to the tour, e.g. accommodation, restaurant visit, snacks etc. These elements shall be evaluated individually to determine the VAT-liability. A rule of thumb is that these elements, if offered in Norwegian border, are also VAT-liable with variable VAT rates depending on their characters.
For hotel accommodation, the VAT rate is 12%. For restaurant visit, the standard rate 25% will apply. If food or soft drink is offered outside of a restaurant, café or a place of hospitality, a reduced rate of 15% will apply instead. In some occasions, 12% VAT can be applied on the food and drink if the elements is considered as insignificant as part of the personal transportation service. An example can be serving coffee or tea on the bus. Another worth mentioning element is sales of guide tour which is exempted for VAT. You may also ready our article about VAT for foreign enterprises in Norway.
Consequences for non-compliance
Tour organizers might not aware their obligations when operating tours in Norway. This rises the potential risk for receiving penalties from Norwegian Tax Administration. For non-registration and declaration of VAT, Norwegian Tax Administration might enforce additional tax ranging from 20% of original tax-liability. For serious cases, the additional tax can set as high as 40% or 60%.
ECOVIS has a dedicated team working with VAT liability for cross-border transportation. Contact us to find out how we can help you to operate compliantly in Norway.