In the area of Norwegian taxation, a notable mechanism comes into play when businesses procure services from foreign suppliers. Known as 'import of services - reverse charge in Norway,' this procedure specifically applies to intangible services, those not confined to a fixed location for execution. For such services, VAT obligations arise if they are deemed taxable in Norway. In this blog, we delve deeper into the intricacies of this mechanism, explaining its implications and how you report and apply your VAT.
Who is responsible for import VAT on services in Norway?
Services are to a large extent subject to a reverse charge procedure in EU. This is not the same in Norway. The reverse charge procedure in Norway will only apply to so called intangible services. Intangible services may be described as services that are not dependent on a fixed place to be carried out.
Therefore, non-established suppliers of services are often not aware of their VAT obligations in Norway.
When Norwegian companies purchase services from abroad, they will in some cases themselves be responsible for calculating and paying VAT in Norway. The non-established suppliers of the services will in these cases not be obliged to register for VAT in Norway.
The conditions for this are as follows:
- The buyer must be a public sector enterprise or business which operates in or is affiliated to Norway. This also applies to foreign enterprises or businesses which have a VAT representative in Norway.
- The service is vatable if it had been sold in Norway.
- The service can be provided anywhere
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The purchase must concern a service which can be provided anywhere
Intangible services are services which can in principle be provided anywhere. In other words, it can be provided remotely. This means cases where the provision of the service, by its nature, is difficult to associate with a physical location.
Examples of remotely deliverable services:
- Services that can be supplied digitally
- Advisory/consultancy services
- Accounting services
- Services which are provided electronically, including digital products supplied via the internet
- Hiring out of labour
Also read: Should your business register for VAT in Norway?
Note that the key question is whether the service is capable of remote delivery, not if such a service is delivered at a physical location. The scheme does not apply to private individuals and non-profit organisations and associations which do not carry on commercial activity. If the service is purchased for use in the organisation's commercial activity, the organisation must report and pay VAT.
If the nature of the work is such that it must be carried out in Norway, for example when a foreign supplier works on a property in Norway, the supplier will normally be obliged to register the activity in Norway. This will also apply in B2B transactions. Foreign established suppliers are therefore obliged to register for VAT in Norway and include Norwegian VAT on their invoices when they supply services in Norway. VAT related to services performed physically in Norway should be accounted for by the supplier.
Also read: VAT on e-commerce (VOEC) in Norway
How to report and pay your VAT?
If the buyer is registered for VAT, the VAT shall be reported on the ordinary VAT return. There is no lower threshold amount for such buyers.
Buyers who are not registered in the VAT register must report via the tax return for VAT for reverse tax liability (RF-0005). The reporting and payment obligation only apply if the VAT amount for the quarter amounts to at least NOK 500, i.e. if the basis is at least NOK 2,000.
The buyer must in both cases convert the purchase sum to Norwegian kroner using Norwegian Custom's exchange rate at the time of delivery. You can find the import calculator at toll.no.
Do you have questions about Norwegian VAT?
Contact us and get in touch with an expert today!
Article first published April 2020, latest update September 2021.
