The supply of certain goods and services is exempt from VAT. The suppliers of such goods and services are not permitted to charge VAT and do not get credit for input VAT on purchases for the exempt (part of the) business.
Services exempt from VAT are specified in the VAT Act.
4.1 The supply and letting of real property and rights to real property
This exemption includes the supply and letting of undeveloped and developed plots of land, buildings and plants, and sections of buildings and plants. The exemption also includes goods and services supplied as part of the letting process, such as electricity, water, caretaker services and cleaning.
The exemption does not include
- letting of rooms, including letting of conference and meeting premises etc. in hotels and similar, letting of real property for camping and letting of cabins, holiday apartments and other holiday homes,
- the letting of parking spaces in car parks
- the letting of storage facilities,
- the letting of left luggage lockers and safe-deposit boxes,
- the hiring out of reception rooms in connection with the serving of foodstuffs,
- the supply of the right to use advertising space,
- the supply of trees and crops on the root which are not supplied with the land,
- the supply of the right to extract mineral products and other natural products from land, and
- the supply of hunting and fishing rights,
- the supply of the right to use an airport for aircraft,
- the supply of the right to use the railway network for transport,
- the supply of the right to use municipal harbours.
Those who hire out real property for use in activities that are liable to VAT may register voluntarily (see sub-section 12.5)
4.2 Financial services
The exemption for financial services is limited to specific services. The exempt transactions are defined according to the nature of the services provided and not according to the persons providing or receiving the services. Exemptions for financial services cover
- insurance and insurance brokerage
- financing services, but not financial leasing
- the execution of payment orders (In addition to the execution of traditional payment orders performed by, for example, savings banks and commercial banks, the exemption also covers services rendered by clearing houses and data processing centres etc. which provide communications and the collection of transactions providing these have independent responsibility for a given stage in the payment transfer.)
- valid means of payment and brokerage services during such supply
- financial instruments and the like, and brokerage services during such supply (Financial instruments means, among other things, shares, bonds and other negotiable securities, units in securities funds, money market instruments, forward rate agreements, and interest and currency swaps. The exemption also covers options on the purchase and sale of such instruments. The exemption for financial instruments covers, for example, the active management of an investor’s portfolio, underwriting services for share issues, and clearing. Supply relating to a company’s interests that are not shares – i.e. general partnership and limited partnership – and commodity derivatives are also exempt from VAT.)
- the management of securities funds.
Services relating to managerial, legal, financial or technical assistance are not covered by the exemption. For example, the supply of credit management services by a subcontractor to the person granting the credit is subject to VAT.
A financial service may contain elements of additional services which, when seen in isolation, would be liable to VAT.
However, if the associated service is directly connected to, and subordinate to, the main financial service, it may, upon evaluation, be regarded as being covered by the exemption. This may apply, for example, in the case of corporate finance services.
The taxable status of a rendered service shall be evaluated separately for each business activity. A subcontractor who provides a service which is liable to VAT must therefore ensure that VAT is added, even if the service at a later stage in the supply chain forms a necessary part of an exempt financial service.
Services provided by a subcontractor may, however, be regarded as financial services in themselves, and thus exempt from VAT. For a subcontractor’s service to be covered by the exemption, the service must be separate from, but essential and specific to, an exempt financial service. A decisive factor in such an evaluation is whether the subcontractor is independently responsible for the specific and essential components of the exempt financial transaction.
4.3 Health services
The exemption for health services includes services covered by the Municipal Health Service Act, the Dental Services Act, the Specialist Health Services Act, and services covered by Chapters 5 and 10 of the National Insurance Act – i.e. services provided by doctors, dentists, psychologists, chiropractors and physiotherapists are exempt. Acupuncture, homeopathy, osteopathy, naprapathy, zone therapy, aromatherapy, nutritional therapy, herbal medicine, kinesiology and classic (Swedish) massage are also exempt as health services. Other kinds of alternative treatment services are exempt if exercised by authorised health personnel. The exemption for health services also covers health services organised by a firm for its employees and services provided by dental technicians and ambulances.
The exemption also covers the procurement of health services.
4.4 Social services
The exemption for social services includes, among others, those services that the municipalities are obliged to perform pursuant to Chapter 4 of the Social Services Act. This applies to home helps, care and nursing services in municipal old people’s homes, accommodation for the functionally disabled and for alcohol and drug abusers, among others. Childcare in both private and municipal kindergartens and the running of youth clubs and children’s holiday camps are also covered by this exemption.
Services relating to the operation of community alarm systems are also exempt from VAT.
The exemption also includes the procurement of social services.
4.5 Educational services
The exemption for educational services includes both private and state education. In addition to traditional school teaching, the exemption also covers instruction in recreational activities, such as music, dance, riding, skiing, swimming and driving schools. A distinction is made between exempt services and consultancy and advisory services, which are liable to VAT. As opposed to educational services that are characterised by having the objective of transferring knowledge, an advisory service is distinguished by the fact that the provider undertakes to perform an assignment/deliver a result on the basis of a specific request.
The exemption also covers the procurement of educational services.
4.6 Services that form a natural part of health, social or educational services
The exemption for health, social and educational services also includes other goods and services that form a natural part of the exempt main service. For these services to be exempt, they must be rendered by the same person that performs the exempt service. For example, the exemption includes the provision of bandages and artificial limbs by a doctor, and catering services for the functionally disabled or pupils in an institution. The exemption does not include, for example, ordinary sales from a canteen or a kiosk, the sale of educational materials (notebooks, pens etc.) and so-called “optional” services such as hairdressing.
4.7 The hiring out of health, social and teaching personnel
VAT is not calculated on the hiring out of labour for the performance of health, social or educational services. Nor is VAT calculated on the procurement of labour for the performance of health services.
4.8 Cultural services
The exemption for cultural services includes the right to attend theatre, opera, ballet, and circus performances, exhibitions in galleries and museums, concerts and sports events, and amusement parks, adventure centres and dance halls with live music, and computer parties and similar events directed towards children and youth. This exemption also applies to the procurement of such services. However, other parts of the entertainment sector are liable to VAT. This applies to discotheques, cinemas, striptease and restaurants etc.
Services in the form of artistic performances and the procurement of such services are also exempt.
Singers, musicians, orchestras, actors, theatre groups, conductors and stand-up comedians etc. are covered by the exemption. However, these are distinguished from lecturers, programme presenters etc., where the focal point of their presentation is of a more administrative or informative nature. Disc jockeys will be liable for VAT if their performance simply entails the passive playing of CDs.
Services provided as an integral and necessary part of an artistic performance are also exempt.
VAT does not apply to an author exploiting the copyright to his own literary and artistic works.
4.9 Sporting activities
In principle, the exemption for sporting activities covers activities carried out by associations affiliated to The Norwegian Olympic Committee and Paralympic Committee and Confederation of Sports. Certain other activities are also exempt, such as go-cart racing and motor sports. An activity that is simply called a sporting activity is not covered if the purpose of the activity is not to carry out sport, for example dancing at a discotheque and snooker/pool/billiards in bars etc. VAT is not charged on the sale of football players. However, a player’s agent is liable for VAT. The hiring out of sports grounds and facilities is covered by the general exemption for the letting of real property.
4.10 Guide services and procurement of such services
The exemption covers guiding and conducted tours related to tourism and culture. Examples are guided travel tours, services such as guiding in mountains or on glaciers and conducted tours of museums or other cultural/religious places. The exemption also covers guiding in connection with organised activities to observe wildlife (photo safaris etc.), cave exploration and rafting etc. on rivers and watercourses.
4.11 Public authorities
Services related to public authorities are not subject to VAT. This exemption applies to activities performed by bodies governed by public law and related to fundamental powers and duties of a public authority. Private entities or persons may also be empowered by public law to execute public authority, and will then be exempt for this activity. Activities that can by their nature be performed by individuals in a profit-making capacity are not exempt. Land registry activities, the issue of passports and driving licenses, the consideration of planning applications and municipal duties pursuant to the Burial Ceremonies Act, are examples of the performance of public duties.
5.12 Other exemptions
- State-regulated lotteries, gaming, betting by means of the totalisator, as well as the procurement of such services, including the activities of lottery agents and others who engage in lottery-related activities on a commercial basis are exempt.
- The services of funeral directors and undertakers, such as the intermediary service of engaging a priest, organist etc. in connection with the chapel or church ceremony, are exempt. This also applies to the care of the deceased, embalming and pall-bearing, and services connected with the issue of documents related to the death. Services of funeral directors in connection with the transport of the deceased or the arrangement of such transport and the packaging and dispatch of urns are also exempt.
- Catering services for students of schools and universities are exempt. The exemption covers catering services in connection with both private and state educational establishments, such as university and college canteens and student canteens in secondary schools etc. The exemption does not cover the serving of alcohol, the sale of goods from kiosks and catering services to others. If a student canteen is used as a normal restaurant, for example in the school holidays, this will be regarded as a VAT-liable activity.
Also exempt from VAT are sales by
- charitable and non-profit institutions and organisations (including sales by commission agents) of picture postcards, folders, calendars and other objects of small value, provided that such sales are occasional and are part of the activity of the institution or organisation concerned. The exemption also includes the sale of goods from such institutions and organisations at considerably inflated prices
- charitable, non-profit organisations and associations of goods from second hand stores when the surplus is used entirely for charitable purposes. Furthermore there is a condition that the shops only sell second hand goods which have been received without any charge, and that the shops use voluntary, unpaid manpower.
- charitable, non-profit organisations and associations where contributions are received in the form of membership fees, and where these fees cover goods and services that form part of the organisation’s or association’s charitable, non-profit activities
- housing co-operatives of management services to associated housing associations
- museums, theatres, , organisers of exhibitions, concerts and meetings, of catalogues, programmes, picture postcards and souvenirs are also outside the scope of VAT.
The supply of stamps, banknotes and coins as collector’s items, are exempt from VAT.
The scope of some exemptions is further established in regulations issued by the Ministry of Finance. The Ministry of Finance has also issued interpretative statements for certain exemptions.