|The Value Added Tax (VAT) is an indirect tax on the consumption of goods and services in Norway. The tax is calculated on every chain in the sales process and on import of goods and services from abroad. The general rule is that sales of all goods and services are eligible for taxation, with a few exceptions such as health services and educational services.|
The exceptions are listed in the VAT Act (unofficial translation). See also the brochure for foreign employers and employees from the Tax Authorities.
In this guide you will find the most important aspects of the Norwegian value added tax regulations, plus a number of links to different authorities and sources. Contact us if you are in doubt, either by using the Contact Us-form in Bedin or calling the toll free number 800 33 840 (the Narvik Business Hotline). In both cases, your request will be handled by experienced business advisers.
The following topics are covered here:
When to calculate VAT?
Only businesses registered in the VAT Register are subject to calculation of VAT on their goods and services. Consequently, you do not add VAT to the sales price if you sell something as a private person. The same applies if your accumulated sales have not reached the registration limit of NOK 50 000.
A new enterprise, not yet registered in the VAT Register, will sell the initial goods and/or services without VAT on the added value. Such sales are not subjected to VAT if you at a later stage reach the registration limit.
The actual sale that causes the limit of NOK 50 000 to be exceeded shall include VAT (on the total sales price).
The company Software Consult ANS (an unlimited liability company) has sold software and consultancy services for NOK 45 000. The sale is invoiced without VAT as the company is not registered in the VAT Register.
The next sale has a value of NOK 10 000. The new sale causes the registration limit to be exceeded, and the company must register in the VAT Register before the invoice is sent. Alternatively, an invoice without VAT is submitted, followed by an extra invoice for the VAT when the company is properly registered. The same procedure applies if the first sale was NOK 1 000 and the next NOK 50 000. The latter sale must include VAT.
The standard VAT rate is 25 per cent, but foodstuff (defined as any item of food or drink, or any other commodity, intended for human consumption) has a reduced VAT rate of 15 per cent. Passenger transport services and stays in hotel and camping sites, holiday apartments and other holiday properties have a rate of 8 per cent.
If your accounting routines are sound, the VAT returns should not be very complicated. Input and output VAT should be given separate accounts in order to keep track of the amounts due each period. All accounting software will handle input and output VAT and will produce reports telling you how much to pay or possible receive from the Tax Office each period.
If you are uncertain about accounting, or if you do not have the time to conduct it satisfactory yourself, you should consider engaging an external accountant. He/she will also handle the VAT returns on your behalf.
Who is subject to VAT?
The general rule is that all sales of goods and services are subject to VAT, unless specifically exempted.
Services subject to VAT:
- Lawyers, accountants and auditors.
- Collection of debts and credit information services.
- All computer oriented services, including sales, leasing, maintenance and software services.
- All consultancy services, e.g. construction and building management, valuation, service reporting, etc.
- Research paid for (by external sources).
- Hiring out man power (with a few exceptions).
- Agent services, e.g. real estate agents, agents of goods, electric power agents, man power agents, etc.
- Postal services.
- Passenger transport services.
- Renting out premises (rooms) in hotels and at camping sites as well as seasonal renting out holiday property.
- Letting agent.
- Practitioners of Alternative Medicine/ health treatment not registered in the voluntary register or without authorisation/License following the Law of Health Care Personnell.
Services exempted from VAT
The following services are exempted from the VAT eligibility.
- Health and health related services (e.g. doctors, dentists, psychologists, chiropractors, physiotherapists, dental technicians, ambulance services rendered with vehicles specifically designed for such services).
- Alternative Medicine/health treatment in general is exempted from the VAT eligibility when the practitioners are registered in the voluntary register for Practitioners of Alternative Medicine. Also professions licensed or authorised by the Law of Healthcare Personnel are exempted from the VAT eligibility when providing such services.
- Social services (e.g. looking after children in private or municipal kindergartens, caring and nursing services in old people's homes and help and caring services in private homes).
- Educational services (teaching in schools and educational institutions, recreational oriented teaching and driving instructions).
- A wide variety of cultural services (theatre, opera, ballet, and circus performances, concerts, sports events).
- Financial services (e.g. insurance, financing and credit services, execution of payment orders, valid means of payment and related brokerage services, financial instruments and the management of security funds. The exemption includes brokerage services related to the financial services).
- Lottery services, including brokerage of such services.
- Funeral and interment services.
- Services rendered as part of the execution of the duties of public authorities.
- Supply and letting of real property or rights to real property.
Note that last exemption above is not absolute. There are several provisions where VAT is eligible. A couple of these are letting of car space in parking lots and hire of storage lockers.
Several of the exemptions listed above have further limitations given in regulations and guidelines from the authorities.
Reduced VAT Rate
Sale of foodstuff is eligible to a VAT rate of 15 per cent. Foodstuff is defined as any item of food or drink, or any other commodity, intended for human consumption.
The exceptions are:
- Water from water utilities
- Tobacco products
- Alcoholic beverage
Goods that are not defined as ordinary foodstuff or drinks, are taxed at the standard rate of 25 per cent, unless the seller knows for a fact that they will be used for human consumption. Foodstuff included in sales from serving services is not considered sales of foodstuff and thus subjected to 25 per cent VAT rate. The service is regarded as a serving service when foodstuff and/or drinks are served and may be consumed at the premises.
If the business both sells and serves foodstuff, e.g. a bakery with tables and seats, it must include 15 per cent VAT on foodstuff that is taken away. If the customer on the other hand buys a lunch meal that is consumed at the premises, the sale is eligible to 25 per cent VAT.
Passenger transport and renting out rooms in hotels etc. are subjected to 8 per cent VAT. The input VAT is fully deductible. The reduced VAT rate of 8 per cent covers transport of passengers in Norway by aeroplanes, buses, trains, taxis, ski lifts, cable cars, transport of cars and brokerage of such transport services.
Direct transport to and from abroad is not subjected to VAT. The VAT is eligible only for domestic travels, a provision that is identical to what you find in other countries that have VAT on transport services. The regulations following the Act define what is meant by direct transport. The condition is that there is an agreement on non-interrupted transport from one place in the country to a place abroad, or vice versa.
The business must register in the VAT Register when the VAT eligible turnover reaches NOK 50 000 in a period of 12 months. To register, one must use part II of the registration form, Combined Register Return. If part II is submitted together with part I, the form is sent to the Central Coordinating Register for Legal Entities. If part II is submitted when the turnover is getting close to the limit, the form may be sent to the Tax Office in your county. Note that the business is not registered in the VAT Register before the turnover exceeds the registration limit. Therefore, submit documentation of the turnover when the form is sent in. Do not calculate VAT on sales occurring before the business is registered.
Since the business normally is not registered in the VAT Register from the first day of operation, the periodic VAT returns do not apply. Consequently, the VAT (input tax) on goods and services purchased cannot be deducted and refunded from the County Tax Office. In order to receive the refunds, which incidentally may amount to substantial values, one may apply for a "previous period refund". The application is normally submitted together with the first ordinary VAT Return following the registration of the business. Using this procedure, one will receive refunded VAT (input tax) on all purchases of goods and services and other acquisitions from the start-up of the business. Only goods purchased and not sold before registration in the VAT Register are subject to the VAT refund. Furthermore, the purchases must have occurred less than three years prior to the VAT refund claim.
Businesses with substantial start-up investments (i.e. more than NOK 250 000) may apply for pre-registration in the VAT Register. In such cases, the businesses calculate VAT on all sales from the date of registration.
Output and Input VAT
Output VAT is VAT calculated on goods and services sold. Thus, it is the VAT that the customer pays. VAT is calculated regardless of the customer being a private person or a business enterprise. VAT is also calculated and charged on the withdrawal by the owner of goods and services from his own business when such goods and services are for personal use.
Input VAT is the tax added to the price of purchased goods or services. If the buyer is registered in the VAT Register, input VAT may be deducted from the VAT Return.
The Glass Market AS (a limited liability company) is registered in the VAT Register. In the actual VAT period, the business purchases goods costing NOK 62 000. The input VAT amounts to NOK 12 400. In the same period the business sells goods for NOK 150 000 exclusive of VAT. Thus, the output VAT amounts to NOK 37 500. In the VAT Return, the input VAT is subtracted from the output VAT. The resulting sum is sent to the Tax Office. As seen from the above, you only pay VAT on the value added by your business. If the value of the purchases exceeds the value of the sales in a given period, you will be refunded the sum from the Tax Office.
Below is a table showing the same example including calculations. In an accounting software package all of this is calculated automatically. In addition, the software will produce a report that is used as the actual VAT Return to be submitted to the Tax Office.
|Sold goods for 150 000 NOK|
exclusive of VAT
|150 000 * 25/100 = 37 500 NOK||Output VAT||37 500|
|Purchased goods for 62 000 NOK inclusive of VAT||62 000 * 25/125 = 12 400 NOK||Input VAT||12 400|
|Your payment of VAT||37 500 – 12 400 = 25 100 NOK||Difference||25 100|
Note: Detailed instructions on how to fill in the VAT Return is given in chapter 7.
Calculate VAT on goods imported to Norway. The tax is collected by the customs authorities. Businesses registered in the VAT Register may deduct the input VAT on the imported goods in their VAT Returns.
Do not calculate VAT on sales abroad. The rule does not apply if the commodity is delivered in Norway, even if the payment comes from abroad.
The VAT Return
The VAT return is submitted bi-monthly. The form (in Norwegian "omsetningsoppgave") will be sent to the business well in advance of the deadline for the actual period.
The return must be filled in and submitted no later than 1 month and 10 days after the end of the period. The return for the first period, i.e. for January and February must be paid no later than April 10, and so on. Businesses with annual turnover less than NOK 1 million may apply for yearly instalments. You may also submit the return electronically, - see the link below. Note however that both the form and the electronic link are in Norwegian only. If you give your customers credit, you should write the invoices as quickly as possible after delivery of the goods or services. It is important to collect your money without unnecessary delay.
Internet based VAT Return (in Norwegian)
Completing the VAT Return
In order to enter the VAT (value added tax) return, you must have complete overview of goods and services purchased and sold during the period. Therefore, update the accounts regularly, and at least each month. In the accounting system you maintain separate accounts for input and output VAT and the corresponding VAT amounts should be reflected by the accounts. The deadlines for the bi-monthly instalments are as follows:
|Period 1: Jan - Feb||Instalment by 10 Apr|
|Period 2: Mar - Apr||Instalment by 12 Jun|
|Period 3: May - Jun||Instalment by 01 Sep|
|Period 4: Jul - Aug||Instalment by 10 Oct|
|Period 5: Sep - Oct||Instalment by 11 Dec|
|Period 6: Nov - Dec||Instalment by 12 Feb|
Businesses with annual turnover less than NOK 1 million may apply for yearly instalments. If accepted, the deadline for the instalment is February 10 the following year.
The form will be sent to you well in advance of the instalment deadline in each period. The condition is that your business is subject to VAT and registered in the VAT Register. In order to be registered, part II of the "Combined Register Return" must be submitted to the Central Coordinating Register for Legal Entities in Brønnøysund or to the Tax Office.
Download the registration form here (in Norwegian).
If you are registered, you may submit the VAT return via internet. More information on electronic (internet) returns here (in Norwegian).
The VAT return consists of 11 sections. Below you will find an example on how to enter the form. The completed sample form is shown at the end of the chapter.
Our imaginary business is called the Edu-Café AS. The business idea is breakfast and lunch servings, sales of bakery goods (breads, cakes, etc.) and coffee tasting courses.
Note: The VAT rates are according to the Act's amendments per 01.01.11.
Total sales in the period are NOK 50 000 exclusive of VAT. Both sales subject to VAT and sales exempted from VAT are included.
- Sales subject to VAT constitute NOK 40 000, from which NOK 25 000 are sales having a middle VAT rate and NOK 1 000 are sales exempted from VAT.
- The additional sales of NOK 10 000 are educational services (courses) that are not covered by the VAT Act.
In the current period new bakery equipment costing NOK 6 200 inclusive of VAT and bakery ingredients costing NOK 22 400 are bought. The bakery ingredients are subject to the lower VAT rate. In addition services costing NOK 10 000 are purchased from Sweden.
The return has two parts.
The left hand column deals with the sales (turnover) and the right hand column with the calculated VAT.
Enter the complete sales plus possible withdrawal (own use), i.e. NOK 50 000.
Enter the total sales subject to VAT, i.e. NOK 40 000. If the owners of the café have had dinner at the café, or if they have taken bread for private use, these withdrawals are added to the sales (as VAT eligible withdrawals).
The sales of newspapers amount to NOK 1 000. Newspapers are exempted from VAT and the sum subtracted from the VAT eligible turnover. Enter the amount in section 3.
Enter sales eligible to the standard VAT rate, i.e. NOK 40 000 minus NOK 1 000 (section 3) minus the sales of NOK 25 000 from the bakery (low VAT rate). The result is NOK 14 000.
In the right hand column (calculated VAT), enter the VAT of the sales: 14 000*25/100 = 3 500.
The sales from the bakery have a middle VAT rate of 15%. The turnover was NOK 25 000 NOK, which is entered in the left hand column. In the right hand column, enter the calculated VAT (middle rate) of the turnover: 25 000*15/100 = 3 750.
If applicable, enter the sales subject to low VAT rate (8%), e.g. part of the turnover was due to passenger transport services. However, our bakery business there is no such low VAT rate sales.
If the business has purchased services from abroad that cannot be related to one particular location, e.g. services delivered electronically, consultancy services, advertising, renting manpower, legal advice and information services, your enterprise must calculate VAT for the purchase. If you, on the other hand, import goods, the VAT is calculated by the Customs and Excise Authorities and paid when imported. In the former case, the invoice is not passed through the Customs and Excise Authorities and you, as buyer, calculate the VAT to be paid to the Tax Authorities. The tax is output VAT.
In the business considered here, the bakery has purchased services from Sweden related to establishing new web pages. The cost of NOK 10 000 is entered in section 7, left hand column. Enter the corresponding VAT of NOK 2 500 in the right hand column. As purchase, the VAT is also deductible (section 8).
Enter input VAT, i.e. VAT on purchases, standard rate. For the current period, the calculation is as follows: 6 200*25/125 + 2 500 = 3 740. The 2 500 is VAT on the import (section 7).
Enter input VAT, middle rate. For the current period, the VAT is NOK 2 750 (22 400*14/114).
Enter low rate input VAT, e.g. VAT on travels.
Enter the VAT sum. If input VAT exceeds output VAT, tick the box to the left.
The boxes below are used to indicate if the business has additional information sent to the County Tax Office (Yes – Ja) or not (No – Nei).
The completed return (paper version) must be signed and submitted to the Central Agency for VAT Returns (Sentralt oppgavemottak).
Questions on the Return and Other Duties
If you have questions that you did not find the answers to here, you may call the Narvik Business Hotline on the toll free number 800 33 840. Alternatively, you may submit your question(s) via Contact Us at Bedin.