May 26, 2022
Norway proposes changes to VAT rules on e-commerce
Extension of the scope of VAT to remotely delivered services
The Norwegian Ministry of Finance has proposed to extend the scope of services subject to Norwegian value-added tax (VAT) supplied by foreign service providers to cover the supply of intangible and remotely delivered services to Norwegian consumers (VAT on e-commerce or VOEC).
In the Ministry of Finance's whitepaper, "consumers" will include not only private persons, but also all types of customers who are not considered as businesses or entrepreneurs (i.e., companies and organizations not considered as conducting business activities, such as pure or passive holding companies). The proposed regulations are likely to mean that a foreign service provider supplying remotely delivered advisory services (e.g., suppliers of transaction support services or legal services) to a Norwegian passive holding company will have to register for Norwegian VAT (using the simplified VAT registration scheme for e-commerce, VOEC) and charge 25 % Norwegian VAT. Thus, after the potential introduction of the new regulations, foreign suppliers will be required to keep track of the customers classification as business and consumer.
The proposal is currently subject to public consultation, ending in July 2022. It is expected that introduction of the proposed regulations will be in connection with the Government budget for 2023, with potential implementation from 1 January 2023.
Removal of the low-value goods exemption for VOEC
A temporary declaration exemption for the VOEC relating to goods with a value less than NOK350 (approximately €35) was introduced with the VOEC scheme in 2020. The Norwegian Government is now considering removing the exemption because it competitively disadvantages resident suppliers of goods. Therefore, the Government has announced a consultation notice regarding possible amendment of national VOEC legislation to make the import declaration process less burdensome for foreign suppliers, thus making the current exemption unnecessary.
The timing for the removal of the temporary declaration exemption has not yet been decided, but it is anticipated that it will be no later than 2023.
For additional information with respect to this Alert, please contact the following:
EY Norway, Oslo