Value added tax (VAT) is a tax which consumers in Norway must pay on almost all goods and services. As a business, you must pay VAT on your purchases, but you will usually also be entitled to deductions for the tax. Foreign businesses with taxable turnover in Norway must register in the VAT Register in accordance with the same rules as Norwegian enterprises.
The difference between output and input VAT
‘Output VAT’ means the VAT that a business registered in the VAT Register must calculate and collect when it sells goods and services. You must calculate output VAT when you sell anything to another business or to an ordinary consumer. You must also calculate VAT if you withdraw goods or services from the business for your own use.
Input VAT is the tax you as a business pay when you purchase goods or services for your business. Businesses that are registered in the VAT Register can claim deductions for this tax.
The difference between exceptions and exemptions for VAT
You should not calculate VAT on some goods and services.
When something is excepted from VAT, this means that you mustn't calculate VAT on the goods or service. The goods or services are not VAT liable. If you only have turnover of this kind, you should not register in the VAT Register. You should then not calculate VAT on the goods and services that you supply and you will also not be entitled to deductions for goods and services that you purchase.
Examples of services that are excepted from VAT: health services and education services.
When something is exempt from VAT, this means that you must not calculate VAT on the goods or services (known as ‘zero rate’). However, the turnover is still covered by the VAT Act, which means that you must be registered in the VAT Register once the threshold amount is reached. You may also be entitled to deductions for VAT that you have paid on goods and services for your enterprise.
Examples of turnover that is exempt from VAT: books sold to consumers, export sales, registered vehicles, etc.
The standard rates for VAT are presented below. Some sectors and areas have specific rates for VAT:
General rate 25 percent
Foodstuffs 15 percent
Passenger transport, cinema tickets, letting of rooms 12 percent.
You can claim deductions for VAT that you have paid on goods and services that you purchase (input VAT). This only applies to enterprises that are registered in the VAT Register.
The following criteria must be met in order for you to be entitled to the deduction:
- The procurement must be for use in the registered business (relevance criteria) and be for use in the business's own duty-liable enterprise/activity (assignment criteria).
- The vendor has calculated VAT on the goods or service.
- The VAT must be stated on the sales document.
- You must be able to present the sales document in the event of an audit
- The vendor must be registered in the VAT Register.
The deduction entitlement won't apply when you have purchased something for private use or for an enterprise which is exempt from the VAT Act.
Partial deduction entitlement
If you carry on an activity which is only partially covered by the VAT Act, you can only claim deductions for purchased goods and services for use within the taxable enterprise.
Deductions for VAT on purchases made prior to registration in the VAT Register
Enterprises can claim deductions for VAT paid on many goods and services purchased up to three years before they registered in the VAT Register. This is called ‘retrospective VAT refund’. The goods and services must be intended for use by the enterprise and mustn't have been resold prior to registration in the VAT Register.
You can claim a retrospective VAT refund by submitting a supplementary statement for the period in which you became registered in the VAT Register. The three-year deadline does not apply to VAT on goods and services included in a capital goods.
Anyone who is obliged to submit tax returns for VAT may have to pay an enforcement fine if they fail to submit a return.
This means you will have to pay an amount which will continue to accrue daily until you submit the necessary information.
It's therefore important that you register punctually, so that you can start submitting the VAT return.
You may have to pay additional tax if you fail to provide accurate and complete information in your VAT return. You are personally obliged to provide accurate and complete information. Even if someone else has been involved in submitting information, you'll still be responsible for the information that has been submitted.
You have a right to appeal against any decision that you have received. Your appeal must be posted within six weeks after you received notification of the decision or the decision was made available to you.