Wondering if your business should register for VAT in Norway? Determining whether your company meets the criteria for VAT registration can be complex, with various factors coming into play. And are there significant enough ties between your company and Norway to trigger registrations obligations? Let's have a look at the criterias and when the VAT registration is necessary.
All entities that exercise VAT liable activities inside Norwegian borders, must register with the national VAT register and calculate and pay VAT to the same extent as Norwegian companies. VAT is payable on all sales and withdrawals of goods and services, except those that have been specifically exempted; for instance, health care, education and social services.
The registration threshold is a turnover exceeding NOK 50 000 over a twelve-month period. VAT must be calculated with the standard rate of 25 % and reported on bimonthly VAT returns. A VAT registered entity is entitled to a corresponding refund of the input VAT on its own purchases of goods and services used in the Norwegian business.
The VAT is reported on VAT returns that are normally filed bi-monthly, and excess input VAT is normally repaid from the Tax Authorities within 3 weeks.
VAT rules when importing goods to Norway
Goods crossing the Norwegian border are subject to import VAT through customs handling. In many cases, the Norwegian buyer or importer handles the import VAT and other duties. In these cases, the foreign company normally has no actual business activity inside Norway and is therefore not liable for VAT registration in Norway.
Sellers and online marketplaces that have cross-border sales of low value goods to consumers (B2C) in Norway, are subject to the VOEC scheme (VAT on e-commerce).
Also read: VAT on e-commerse in Norway.
There's a difference between business “to” and “in” Norway
In many situations however, it can be challenging to establish whether a foreign company performs business in Norway, or if the foreign company just sells goods and services to the Norwegian market from abroad. The Norwegian VAT Act and regulations are silent on the subject, but court rulings and administrative statements from the Tax Office, give some advice. The Ifi Oy verdict (Rt. 2006 p. 364) from 2006 is of particular importance.
Is there a connection between Norway and the turnover?
The formal exchange of ownership to the goods, and transfer of risk is crucial in this matter. If the exchange of goods takes place on the Norwegian border or earlier, this is normally seen as doing business “towards” Norway, which does not trigger registration. If the transfer of ownership of the goods takes place after the goods have crossed the Norwegian border, the foreign company will most likely be considered doing business in Norway and be liable for VAT registration from the moment the turnover threshold is exceeded.
Also read: Do the right things when doing business in Norway
The Ifi Oy verdict
In the Ifi Oy verdict the foreign company sent packages of photo prints by regular mail to Norwegian private persons. The goods were not considered delivered until they reached the customers’ mailboxes. This was an important factor to establish liability for the foreign company to register in Norway and compete with Norwegian businesses on equal terms. It was also of significance that the foreign company clearly and in several manners had directed its business towards the Norwegian market, and that the agreements (ordering of photo prints) took place inside of Norway.
Also read: 5 tips for successful tendering in Norway
Other relevant VAT factors
Many other elements can be of relevance in the evaluation. Based on previous cases and administrative letters, it is relevant to consider the type and extent of marketing towards Norwegian customers, use of country-specific domain (.no), use of Norwegian phone numbers, communication with customers in Norwegian, and the general impression the customers get as to whether this is a Norwegian business or business based abroad.
Where is the physical presence for delivery of services
Supplies of services where the goods component is insignificant or even non-existing can be even more challenging as the change of ownership of goods does not give advice. It all comes down to a specific evaluation of each case where the question always is whether the connection between the turnover and Norway is sufficiently strong.
As a main rule, services capable of delivery from a remote location will not trigger a VAT registration liability, even if the services are physically delivered in Norway. Typical examples include advisory services and IT-services which are not dependant on a physical presence for delivery.
Also read: How to choose the right corporate structure in Norway
How does VAT apply to the rental of goods?
A foreign company with no other connection to Norway than letting out goods to Norwegian customers, can also be considered liable for VAT registration in Norway. This is specified in an administrative statement from the Tax Office in 2017. Particularly where the goods are already within Norwegian borders when the rental starts, there is normally a strong enough connection between the turnover and Norway to trigger VAT registration.
The statement also mentions that choice of currency is of importance (payment in Norwegian Kroner indicates a stronger connection to Norway), as well as the place of delivery, the time and place for transfer of risk, and the customers’ physical and legal right to use the goods. If the Norwegian customer uses the goods abroad and is restricted from bringing goods across the Norwegian border, the lessor is normally not liable to register for VAT.
Do you need a VAT representative?
A VAT liable enterprise without any fixed place of business in Norway must register via a Norwegian based VAT representative. The VAT representative controls that the VAT handling is correct and is responsible for filing the VAT return.
However, enterprises from the following EU/EEA countries are exempt and can register without a representative: Belgium, Bulgaria, Denmark, Croatia, Czech Republic, Cyprus, Estonia, Faroe Island, Finland, France, Germany, Greece, Greenland, Hungary, Iceland, Italy, Latvia, Lithuania, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and United Kingdom.
Magnus Legal acts as a VAT representative for foreign companies with VAT liable activity in Norway.
The article was first published August 2018, latest update November 2021.