Changes to Norwegian VAT rules

Norwegian VAT

The Ministry of Finance has proposed changes to the Norwegian VAT representation scheme. The new rules will ease the administration for certain foreign enterprises doing business in Norway.

Norwegian VAT representative system

The Norwegian Ministry of Finance has circulated a public consultation paper with a proposal to ease the regulatory  framework for businesses established abroad with Value Added Tax (“VAT”) liable supplies in Norway.

Current Norwegian VAT law provides that foreign enterprises without a fixed place of business in Norway must be registered through a Norwegian based VAT representative if they conduct VAT liable transactions in Norway.

The proposal is to abolish the mandatory requirement to register through a Norwegian VAT representative. The change will apply to businesses established in an EEA state, which Norway has signed an agreement with, providing for mutual administrative assistance in the exchange of information and the recovery of VAT. Businesses established in these countries may instead choose to be directly registered in the VAT Register.

The deadline for commenting the proposal is 30 September 2015. Thereafter the Ministry will have to draft proposition to the parliament. The changes may therefore at the earliest be effective as from January 2016.

Details of the proposed changes to the Norwegian VAT rules

The changes will apply only for enterprises from EEA member states that have entered into an agreement on administrative assistance in the exchange of information and recovery of taxes with Norway.

As of today these states are Belgium, the Czech Republic, Denmark, Finland, France, Germany, Great Britain, Iceland, Italy, Malta, the Netherlands, Poland, Portugal, Slovenia, Spain and Sweden.

Enterprises domiciled in these states will be able to register directly for VAT without a Norwegian VAT representative. They may however elect to appoint a Norwegian VAT representative.

The Ministry of Finance will evaluate the effect of the proposal and may later provide regulations introducing requirement to provide financial guarantees for VAT incurred in Norway for businesses established abroad.

It is further proposed that in case the other state does not effectively comply with the abovementioned provisions of the agreement, enterprises from such countries may no longer benefit from the proposed ease. In such case the enterprise must appoint a Norwegian VAT representative that is jointly and severally liable for payment of VAT.

Consequences for foreign businesses

Enterprises domiciled in the above mentioned EEA member states, will be allowed to register and handle VAT without the need of a Norwegian VAT representative.

These enterprises will still be responsible for the correct calculation and payment of VAT, as well as calculation of VAT to be deducted. Wrongful handling may result in penalties and surcharges.

These enterprises may still opt to register via a Norwegian VAT representative, and enterprises from other states will still be required to appoint a Norwegian VAT representative.

As Norway is not a member of the EU, the Norwegian VAT rules do not follow EU regulation. This may create certain challenges for enterprises resident in the EU when doing business in Norway.