Norway is not a member of the European Union (EU). However, Norway is a member of the European Economic Area (EEA). This means that transactions of goods across Norwegian borders and to or from the EU will be regarded as import or export supplies. As Norwegian tax authorities have stringent requirements of documentation, this creates a few challenges you should know before entering into an agreement with a company established in Norway. Let's take a look at how you can plan ahead.
Sale to Norway or sale in Norway?
It is crucial to determine whether the delivery will be a sale to Norway, or in Norway.
A sale to Norway is regarded as an export sale from abroad and should not trigger any particular liabilities with regards to VAT for the foreign seller. The importer of the goods is responsible for clearing the goods through Customs and for-paying the VAT on the value of the goods. When the Norwegian buyer is the importer, the sale should not trigger any obligations for the foreign seller to register for VAT and pay VAT or tax in Norway.
Note that new rules were introduced in 2020 for sale of low value goods to consumers. Sellers and online marketplaces will need to calculate and collect VAT on sale of goods with a value below NOK 3 000 from 1 April.
Read further here: VAT on e-commerce (VOEC) in Norway
Contracts with elements of assembly or installation
Foreign enterprises should be aware that contracts with elements of assembly or installation, often impact the VAT handling of the goods. A typical example would be a delivery of goods to Norway where the customer is the importer of record, but the seller will physically assemble or install the products on site. In this case, both the assembly/installation services and the goods would normally be VAT liable as a domestic transaction in Norway.
The goods and services are regarded as a sale in Norway. For foreign businesses, this triggers both registration and reporting responsibilities in Norway. In theory, this could be avoided by splitting the contracts into separate deliveries; one for delivery of goods and one for assembly or installation. However, this is rather unpractical and often commercially undesirable.
Please also note that for contracts containing elements such as maintenance and upgrades as a follow-up obligation, these services will also be VAT liable in Norway.
An important exemption is services capable of remote delivery. This could be auxiliary services such as installation and software test runs in connection with delivery of the goods. If these services could have been delivered remotely, e.g. from the seller’s offices outside Norway, the seller is normally not obligated to register for VAT.
Also read: Do the right things when doing business in Norway
Sale in Norway (domestic supply)
A sale in Norway will trigger an obligation to register for VAT if the turnover exceeds NOK 50 000 over a 12-month period.
Also read: Should your business register for VAT in Norway?
A sale is usually regarded as taking place in Norway if the goods are delivered to the buyer’s premises. Please note that whoever is declared as the recipient upon the import of goods will be the customs debtor. This applies regardless of who actually owns or will receive the goods. The information stated on invoices and other supporting documentation is of no independent legal significance.
If the sale will be regarded as a domestic transaction, it is important that the correct entity is stated as the importer of record. This ensures that the formal requirements to deduct the import VAT levied on the value of the goods, is in place.
Also read: 6 tips for businesses: How to get a VAT refund in Norway
Calculating the customs value
Secondly, being the importer of record also means being responsible for calculating the customs value.
The customs value is the amount paid or payable for goods abroad, including the cost of their transportation to Norway, insurance, packaging costs, and similar.
Royalties and agent commissions should be added to the customs value.
The customs value will usually be calculated this way:
price of goods
+ insurance (where applicable)
+ cost of packaging and the like
+ fees, royalties and commission (where applicable)
+ shipping costs
= customs value
Our VAT advice
Please note that we stress the importance of planning ahead of a potential delivery of goods to Norway. Due to the stringent requirements of documentation from the tax authorities, we have seen numerous examples of businesses losing VAT deductions because goods have been cleared through customs on the wrong entity or there are missing documentation of sales in Norway.
You will also find relevant information on our website: VAT in Norway.
Article first published July 2019, updated January 2023.