Supply is defined as the delivery of goods or the rendering of services for a consideration. This means that VAT shall be calculated if the supply of the goods or services falls within the scope of the VAT Act and the vendor is a registered person. If no payment is received there is no supply.
The importation and withdrawals of goods and services are also taxable events.
Supply is also regarded as taking place when goods are delivered or services provided as payment, wholly or in part, for the receipt of other goods or services. This means that an exchange of goods or services is regarded as supply. Therefore, when services and/or goods are exchanged, both parties must calculate and pay VAT due on the transactions.
“Taxable transactions” may be defined as the supply of goods and services in return for a consideration made by a taxable person in the course or furtherance of his business.
Special regulations apply to building activities carried out for one’s own account. Even if a business does not have VAT-liable transactions, activities carried out on its own account, regarding the construction, decorating, modernisation etc. of buildings or plants for sale or let, are liable to VAT. The VAT due in such cases shall be the same as for the withdrawal of goods and services – see sub-section 3.4.
3.2 Supply of goods
VAT shall be calculated and paid on all domestic supplies of goods unless specific exemptions exist.
A definition of what is regarded as goods is provided in the VAT Act. This definition is relatively comprehensive. Goods are defined as physical objects, including real property. Electric power, water from water utilities, gas, heating and refrigeration are also regarded as goods.
VAT is normally calculated at 25 per cent. However, the rate in the case of the supply of foodstuffs is 14 per cent
VAT shall not be calculated on the sale of real property – see sub-section 5.1. Real property includes land with and without buildings. The sale of buildings is also regarded as the sale of real property, unless the buildings are temporary by nature, such as mobile accommodation huts. These are regarded as goods, and their sale is therefore liable to VAT.
VAT shall be paid on the supply/hiring out of machines and electrical equipment that are attached to real property without being a part of the property.
Even though the supply of real property is not liable to VAT, the construction of new buildings and repairs to existing buildings and other real property will incur VAT. This is regarded as a supply of services for which VAT shall be calculated according to the normal rules.
3.3 Supply of services
VAT shall be calculated and paid on the supply of services unless they are specifically exempt.
A service means anything that can be supplied and that is not regarded as goods (cf. the definition of goods above). Restricted rights to physical objects or real property are also regarded as services, as is the total or partial utilisation of intangible assets.
Examples of services/suppliers of services that are liable to VAT:
- estate agents
- passenger transport
- letting of rooms
- computer services
The supply of digital products, such as music or software via the Internet, is regarded as the supply of a service.
In the case of the supply of foodstuffs as part of the supply of services connected with the serving of such foodstuffs, VAT is calculated at 25 per cent. The distinction between services connected with the serving of foodstuffs (ordinary rate) and services connected with the sale of foodstuffs (reduced rate – 14 per cent) will thus be critical for many taxable persons.
By catering services is meant serving at a catering establishment, that is: a place where food and/or beverages are served and where conditions are favourable for consumption on the premises. Premises adjoining catering establishments on board ships, in hotels, theatres, cinemas and similar, are deemed to be part of the catering establishment. Places where catering enterprises, in addition to providing food, also provide services such as hiring out of waiters, laying and clearing of tables etc, are also deemed to be catering establishments.
The sale of foodstuffs from catering establishments is not deemed to be included in the sale of a catering service if the foodstuff is not meant to be consumed on the premises or the foodstuff must be considered a traditional kiosk article.
3.4 Withdrawal of goods and services
In order to ensure equitable VAT liability on all consumption liable to VAT, VAT shall also be calculated on withdrawals for e.g. private use on a par with purchases by others. For example, VAT shall be calculated when a self-employed person withdraws foodstuffs for private use from his/her own business, in the same way as when the owner of a garage repairs his/her own private car.
VAT shall be calculated when a registered self-employed person withdraws goods for private use or for other purposes that fall outside the scope of the Act. Accordingly, if a self-employed person conducts business activities which partly fall inside and partly outside the scope of VAT liability, VAT shall be calculated on any withdrawal made from the VAT-liable part of the activities to the part not liable to VAT. For major operating assets, the duty to calculate VAT on withdrawals is contingent on withdrawal for private use or for purposes falling outside the overall business activities. This rule must be seen in relation to the rules relating to adjustment of input tax regarding real estate and other major operating assets in the event of a change of use.
In principle, VAT shall only be calculated on the withdrawal of goods when the person liable to VAT was entitled to deduction of input VAT on the acquisition or production of the goods.
VAT shall be calculated when a self-employed person withdraws services for private use or for other purposes that fall outside the overall business activities. No VAT shall be calculated on the withdrawal of services for that part of the enterprise which is not liable for VAT. (Instead, the input VAT shall be divided proportionately between the VAT-liable and the non-VAT-liable parts of the activities.) However, for building and construction services, VAT on withdrawals shall also be calculated for that part of the enterprise which is not liable to VAT.
Some provisions of the Act contain special exemptions from VAT liability for services sold to a limited circle of subjects, or they relate VAT liability to a more closely qualified type of a service. In these cases, the sale of such VAT-exempt and VAT-liable types of services does not constitute withdrawals. This means, for example, that someone who lets parking spaces in a parking enterprise shall not calculate VAT on withdrawals if he/she also has parking space hire as part of a rental contract for building space.
No VAT shall be calculated on withdrawal of services that are provided free of charge on a charitable basis.
Withdrawals of exempt goods or services are not liable to VAT.
If a deduction has been made for input tax, VAT is calculated in the same way as for withdrawal if the goods or services from the business are used:
- for board and payments in kind to the proprietor and staff of the business
- for work on and the running of real property that is required to meet housing requirements or recreational, holiday or other welfare needs, including furniture and equipment for such properties (This rule does not apply to the construction and maintenance of company canteens)
- for entertaining clients/business contacts etc.
- for gifts and for distribution for the purposes of advertising
(VAT is not calculated on the withdrawal of services provided in person and without payment to charitable and non-profit institutions and organisations. For individual taxable persons, this exemption applies to the withdrawal of services for up to 100 hours per calendar year. Representatives elected at annual meetings are not necessarily bound by this restriction. Regulations have been issued that address the limitations of this exemption.)
Businesses that are entitled to deduct input VAT on the purchase, maintenance, use and operation of passenger vehicles (car dealers, businesses that hire out cars or carry out passenger transport), shall pay VAT if the cars are used for other purposes than as a commodity, a vehicle used in commercial vehicle hire, or for passenger transport in return for a remuneration – see sub-section 7.3.
Separate rules apply for agricultural businesses and associated subsidiary sources of income, for forestry and for fisheries. VAT shall not be calculated on the withdrawal of a business’s own products for
- the owner and his household,
- board or payments in kind to employees in these industries, or
- the fulfilment of tenancy contract obligations.
Separate rules apply to the withdrawal of timber cultivated in the proprietor’s own woodlands when the cutting is performed in his own sawmill. The same applies to the withdrawal of timber cut by co-operative sawmills. In addition, separate rules apply to the hired cutting of timber.
Under the VAT Act, VAT is calculated on the importation of goods. The liability to pay VAT on the importation of goods is intended to ensure that imported goods are subject to the same VAT burden as those in the domestic supply chain. VAT is also paid when the goods are received from abroad on hire, as a gift or as a loan.
The Customs and Excise represents the tax authorities with regard to imports, and it therefore calculates and collects the VAT.
Pursuant to the Customs and Excise Act, it is the owner of the goods who must pay VAT on the importation of goods. For the purpose of VAT liability, it is irrelevant whether a consumer or a taxable person imports the goods. For registered persons, input VAT on imports is deductible.
Certain goods are exempt from VAT on imports. This applies mainly to goods that would also be exempt if supplied in Norway.
VAT shall be paid on services purchased from abroad, Svalbard or Jan Mayen that are liable to VAT when sold domestically. A number of services are liable to VAT in Norway when the recipient of the service is domiciled in Norway, for example most services provided by consultancy enterprises, lawyers and auditors. The recipient has a duty to calculate and pay the VAT. In principle, this VAT liability only applies when the recipient of the service is a self-employed person domiciled in Norway, the state, a municipality or an institution owned or operated by the Norwegian state or a Norwegian municipality. Buyers not registered in the VAT Register must report the transaction on a separate VAT return which is available from the tax office.
VAT liability applies only to those services that can be supplied from a remote location (intangible services). This means in cases where the provision of the service, by its nature, is difficult to associate with a particular physical location. Examples of this type of service are all those that can be supplied digitally, consultancy services, advertising services, hiring out of labour, legal services and various kinds of information services.
For services that cannot be supplied from a remote location, for example services relating to work on real property or goods in Norway, hiring out of goods, transport services and catering services, the foreign business enterprise or self-employed person or its representative must register in the VAT Register.
Foreign providers of electronic communications services shall calculate Norwegian VAT on sales to private persons and other customers domiciled in Norway who are not engaged in business activities or belong to the public sector. The same applies to providers based on Svalbard or Jan Mayen. VAT shall be calculated on electronic communications services delivered via a recipient’s permanent terminal in Norway, even if the recipient is not domiciled in Norway. Conversely, no VAT shall be calculated if the delivery is done via a permanent terminal abroad or on Svalbard or Jan Mayen, even if the recipient is domiciled in Norway.