A zero-rated supply falls within the scope of the VAT Act, but no output VAT is charged since the rate is zero. The provisions of the VAT Act apply in full for such supplies, including the regulations relating to deductions for input VAT.
In many cases regulations have been issued to delimit and define these exemptions. Zero-rating applies, in the main, to the cases outlined in the following sub-sections.
The supply of goods and services to abroad is zero-rated. For these purposes both Svalbard (Spitsbergen) and Jan Mayen are regarded as abroad. Such supplies and the documentation required for export sales are governed by regulations.
Goods must be cleared by the customs authorities. The exemption does not apply if the goods are handed over in Norway, even if payment is made from abroad. There are separate regulations for what are known as ‘tourist sales’, see sub-section 7.7.
For services to be regarded as exported and consequently zero-rated, the service must, as a general rule, be used entirely abroad. If a service can be supplied from a remote location, VAT shall not be charged if the recipient of the service is a taxable person who is resident abroad, on Svalbard (Spitsbergen), or on Jan Mayen. For further details regarding the expression ‘supply of services from a remote location’, see sub-section 4.5.2.
6.2 Offshore petroleum activities
In addition to the supply of goods and services to licensee companies, zero-rating applies to drilling companies and the owners/hirers of platforms, the supply to taxable persons who are not obliged to register and who provide offshore services outside Norwegian territorial waters.
In principle, all types of goods that are for use outside Norwegian territorial limits are zero-rated. There is, however, a proviso for the sale of goods for use in Norway and the supply of goods for sale to crews.
In order for the supply of goods to be zero-rated, the supply must be made in accordance with a special order slip.
Zero-rating on the supply of services is restricted to those services referred to specifically in the regulations. Zero-rated services include, among others, services performed at a drilling or survey site, or at an installation outside Norwegian territorial waters, services performed in Norway on equipment associated with such an installation, services connected with design and other technical assistance for such an installation, and transport services between land and an installation outside Norwegian territorial waters. If the service is zero-rated, VAT is not charged on materials that are supplied in connection with the work. The requirement to use a special order slip does not apply to the straightforward provision of services.
Base companies that are obliged to register shall not charge VAT on supplies at the base premises for services related to storage, unloading and transport etc. for the account of licensee companies or drilling companies etc.
In addition, the supply of goods and services to specialised ships for use in the offshore petroleum activities is zero-rated. With regard to services, zero-rating is limited to work on the vessel or on the vessel’s fixed operating equipment, towing of the vessel, the hiring-out of fixed operating equipment for the vessel, and the fee paid by a Norwegian shipowner to negotiate the chartering of a specialised ship. For the provision of services, there is no requirement to use a special order slip.
The scope of the zero rate is outlined in the regulations.
6.3 Supplies to foreign ships
Zero-rating on supplies to foreign ships applies only to supplies of goods and services to certain types of ship, including larger ships that carry paying passengers, cargo ships and commercial fishing/whaling boats etc. More detailed provisions are provided in the regulations.
6.4 Supplies to ships in international transport
Supplies of goods and services to Norwegian ships of at least 15 metres in length, providing they are in international transport and carrying cargo or paying passengers are zero-rated. Ships in international transport means vessels that regularly sail between foreign ports, or between Norwegian and foreign ports.
6.5 Supplies to aircraft on international flights
The provisions allow zero rate only for the supply of goods and services to Norwegian and foreign aircraft on international flights, and do not apply to the supply of goods and services for use on foreign aircraft on domestic flights in Norway.
6.6 Transport services directly to or from abroad
Zero-rating for transport services directly to or from abroad applies to transport services that are provided in Norway. Direct transport is said to occur when an agreement exists regarding the uninterrupted transport from a place in Norway to a place abroad, and vice versa. Regulations have been issued concerning the relevant conditions, scope and documentation. With the exception of the bulk dispatch of letters to abroad, zero-rating does not apply to the conveyance of letters to abroad by the Norwegian postal service
6.7 The procurement:
- of passenger transport abroad or directly to or from abroad, and also the procurement of
- rooms in hotels etc,
- holiday apartments,
- catering services and
- car rental services
when the procurement concerns services that are supplied abroad, on Svalbard or Jan Mayen.
6.8 Transfer of a business to a new owner
Output tax shall not be calculated on sales of goods and services linked to the transfer of a business or part of a business to a new owner
Zero-rating for newspapers applies at all stages in the supply chain from when the newspaper is printed. The newspaper must be published regularly, with at least one edition per week.
6.10 Books and periodicals
Zero-rating for books includes their simultaneous publication as talking books. Zero-rating for periodicals applies if supply is, in the main (at least 80 per cent), made to regular subscribers, or if the periodical is distributed to members of an association, or if the content is predominantly political, literary or religious. Zero-rating only applies at the final stage in the supply chain.
6.11 Electric power for households in the counties of Finnmark, Troms and Nordland
Electric power supplied to households in the counties of Finnmark, Troms and Nordland is zero-rated.
6.12 Private assets or goods
Output tax shall not be calculated on the supply of private assets or goods purchased for purposes that are not deductible for input tax.
Zero-rating applies to the sale of vehicles which are subject to the obligation to pay re-registration tax and which have been registered in Norway (used vehicles). VAT is charged on sales of new vehicles.
Sales of vehicles that exclusively use electricity for propulsion are also zero-rated.
6.14 Services for the account of foreign principals
Regulations provide for zero-rating in two areas. The first concerns the provision of advertising services to foreign businesses. The second concerns repairs carried out under guarantee on behalf of foreign principals.
6.15 Sales of certain ships, aircraft and platforms
Zero-rating applies to the sale of passenger and cargo ships over 15 metres in length, among others.
Furthermore, zero-rating applies to the sale of fishing vessels of at least 20 feet in length. For the sale of school ships, naval vessels and ships used for meteorological and research purposes, the 15-metre minimum length does not apply.
Zero-rating also applies to the sale of oil-drilling platforms and other movable platforms for use in the petroleum industry.
The zero-rating on the sale of aircraft applies to aircraft intended for commercial activities and depends on the purchaser having a concession or operating license for such services.
Zero-rating also applies to operating equipment supplied together with the ship, aircraft or platform providing the latter is zero-rated. Zero-rating does not apply to fishing tackle supplied together with fishing vessels.
6.16 Building, repair etc. of ships, aircraft and platforms
Zero-rating applies to services at the final stage in the supply chain in connection with the repair, maintenance, new-building or conversion of ships, aircraft or platforms, as mentioned in sub-section 6.16. Zero-rating also applies to goods supplied together with such services, and to work performed on fixed operating equipment.
6.17 Hiring out of certain ships, aircraft and platforms
Zero-rating for the hiring out of ships applies only to those of at least 15 metres in length for use in international service, or in domestic service if the vessel is intended for carrying paying passengers, and to specialised ships for use in petroleum activities. The hiring out of other ships is regarded as liable to VAT.
6.18 Salvage of certain ships, aircraft and platforms
Zero-rating applies to services provided by salvage or rescue vessels in connection with the salvage of certain ships, aircraft or platforms