Norway

VAT proposed overhaul We expect 2023 to be a critical year for countries signalling their intent to re-structure their VAT rates, as we enter a post-covid era and countries look to solidify their economic position after multiple volatile years in the financial sector, which was compounded by inflation in 2022. The tax expert committee in Norway is exploring an overhaul of the VAT system in the country as we know it today. Key points being discussed include:

• The abolishment of reduced VAT rates and VAT exemptions – which intend to be replaced with a flat rate of 25%
• The inclusion of the public sector in the VAT system
• Digital services becoming subject to VAT.

These proposals are significant and will have profound implications for the fiscal VAT structure in Norway. Feedback via public consultation has been requested, which is expected to conclude in April 2023. Norway is a compliant territory at Tungsten and we will follow developments, including the tax expert committee’s response to the public consultation. Our e-invoicing solution will support any new VAT rates confirmed by the Norwegian government.  

New VAT rate changes As with several countries at the start of 2023, Norway is introducing some new VAT rate changes, effective 1 January 2023.   On a high-level, these include the following: 

• VAT exemptions in place for the sales of electric cars registered from 2023 will be limited to cars up to NOK 500,000. For cars that exceed this amount, the excess amount will be charged at 25%. 
• The VAT for electronic news services will be repealed.  
• There will now be VAT on remote services supplied to non-businesses in Norway.  

Norway is a compliant territory for Tungsten Network and our solution accommodates all valid VAT rates in the country.  

Co-operation with the EU to reduce VAT fraud Last month we communicated how countries in Europe, specifically the Benelux countries, were embarking on joint ventures with the aim of reducing VAT fraud. The European Commission aims to establish a similar incentive with Norway, with the same underlying objective- to reduce the VAT gap. This is a unique development- it is the first ‘alliance’ of its kind with a non-EU country. As part of the agreement, tax authorities in both the EU and in Norway can share tax information and partake in activities to help fight VAT fraud similar to those outlined in the EU. A recommendation from the European Commission plans to extend this joint initiative yet further, proposing new methods to further reinforce barriers against VAT fraud. Reduction of the VAT gap is the primary objective of e-invoicing mandates, which are expected to be implemented with increasing frequency in the coming years in Europe. By extension, we can envisage the European Commission, and countries of their own initiative, to instigate measures to further reduce the VAT gap in a streamlined and efficient manner.

VAT exemption extended for electronic news services The Norwegian Ministry of Finance has extended the VAT exemption applied to electronic news services until 2028, via press release No.14/22. This exemption was first introduced in 2016 and provided parity between news relayed on paper and electronically. It is hoped that the extension will serve to increase consumer appetite for news and current affairs.

New VAT return as of 1 January 2022

The Tax Authorities have announced that a new VAT return will be introduced that will replace the current, manual VAT return, effective 1^st January 2022. The new VAT return will be based on the SAF-T codes and will include approximately 30 boxes as opposed to the 19 boxes in the current VAT return. The Norwegian Tax authorities aim for a direct transfer from the company’s accounting system to altinn. It will however still be possible to fill out and submit the VAT return manually as per the current process.

Proposed extension of 6% COVID reduced VAT rate to 30 September 2021

The Norwegian government has proposed to extend the temporary 6% reduced VAT rate for transportation, lodging, etc, until September 30, 2021 in the revised national budget. Originally, the reduced rate was to last until the end of June 2021. However, this decision is yet to be formally approved.

Norway: Reduced VAT rate extension

Norway has extended the 6% Reduced VAT Rate beyond October 31. A new end date has not yet been established.

Norway implements EU VAT Directive 55

The European Union (EU) VAT Directive 55 obliges all EU public authorities to receive invoices electronically, or at least to have a defined for how they will do so, by 27 November 2018.