Norway is not a member of the European Union (EU), but it 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. This, in turn, creates a few challenges you should observe before entering into an agreement with a company established in Norway.
Sale to Norway or sale in Norway?
Firstly, it is important to determine whether the delivery will be a sale to Norway, or in Norway.
Sale to Norway (export supply)
A sale to Norway is regarded as an export sale and will not trigger any particular liabilities for the foreign seller. In this case, the importer is responsible for clearing the goods through customs and pay the VAT on the value of the goods. This will not trigger any obligations to register for and pay VAT or tax.
Contracts with elements of assembly or installation
However, foreign enterprises should be aware that contracts with elements of assembly or installation, may impact the VAT handling of the goods as well. 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 will 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. This could be avoided by splitting the contracts into separate deliveries; one for delivery of goods and one for assembly or installation.
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 not obligated to register for VAT.
More information: 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. Find out more in this blog: 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 you as a seller is stated as the importer of record. This ensures that you may deduct the import VAT levied on the value of the goods.
Calculating the customs value
Secondly, being the importer of record also means you will be 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 shall be added to the customs value. If you have contributed to the production of the goods abroad, the cost of this must also be added.
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
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 missing documentation of sales in Norway.
You will also find relevant information on our website: VAT in Norway.