Buying and selling fishing vessels and fishing quotas
About deductions and depreciation when you buy or sell a fishing vessel and/or a fishing permit (fishing quota).
Does this apply to me?
This applies to you if you’re self-employed and buy or sell a fishing vessel and/or a fishing permit.
A fishing permit is an official permit to participate in fishing and is linked to the fishing vessel and the owner of the vessel. A fishing permit can, for example, be a right to participate, a licence or a structural quota.
The Directorate of Fisheries annually sets a fishing quota for the vessels that have a fishing permit. The fishing permit can accompany the fishing vessel when it’s sold.
Buying a fishing vessel and/or fishing permit
As a rule, you must distribute the deduction for the expense you’ve incurred for the purchase of a fishing vessel over several years. You should normally not deduct expenses for fishing permits.
Note that you can claim a deduction for the structural quota if you’re going to sell it. Therefore, keep the purchase contract, invoice and information about cost price and any other expenses you’ve had in connection with the purchase. Use the ID number from the Directorate of Fisheries to differ between the permits.
When you buy a fishing vessel, tools, fishing permits, etc. together, you must distribute the purchase price in proportion to the value of each individual asset.
You must also distribute expenses such as, for example, commissions or fees related to the purchase.
It can be difficult to distribute the purchase price between the fishing vessel and the fishing permit. If the distribution is not stated in the sales agreement, you can get information from, for example, the purchase contract, the loan application, the board meeting minutes, or the shipping agent.
You must enter the value of each individual fixed asset under the relevant balance group in the business information. Fishing permits that are not limited in time should normally not be deducted unless the permit has clearly decreased in value.
You cannot normally depreciate the purchase price of fishing permits, but there are exceptions for time-limited permits such as structural quotas.
You must depreciate the structural quotas by the same amount each year for the duration of the permit:
- Structural quotas allocated after 1 January 2007 can be depreciated over 20 years.
- Structural quotas allocated before 1 January 2007 can be depreciated over 25 years, from the income year 2008.
The depreciation period is 20 or 25 years combined for all owners of the structural quota.
You must only depreciate the value of the quota for the part of the year in which you have owned it.
Calculate the depreciation (Excel)
Example:
Owner A is allocated a structural quota on 1 July in year 1. The cost price for the quota is NOK 264,000.
You buy the quota from Owner A on 1 September in year 5 for NOK 950,000.
The structural quota is depreciated over 20 years. This amounts to 240 months from the first month the quota is allocated to Owner A.
Owner A owns the quota for 50 months: 6 months in year 1 + 36 months in year 2, 3 and 4 + 8 months in year 5.
The depreciation for Owner A per month will be: NOK 264,000 kroner (cost price) / 240 months = NOK 1,100.
You own the quota for 190 months: 240 months - 50 months (Owner A’s period of ownership).
The depreciation per month will be: NOK 950,000 kroner (the price you’ve paid) / 190 months = NOK 5,000.
Selling a fishing vessel and/or fishing permit
Taxable income or loss
If you sell a fishing vessel at a profit, the profit will be taxable income. You enter the profit as income in the business information.
You can enter the entire profit as income in the year of sale, or you can choose to enter the income in the enterprise’s profit and loss account to distribute the profit over several years.
If you sell a fishing vessel at a loss, you can claim a deduction for the loss.
Value added tax
You must pay value added tax on income when you sell a fishing vessel, tools, or quotas, but there are some exceptions:
- Fishing vessels of at least 6 metres can be sold without value added tax if the buyer is a business.
- When selling fishing vessels between 6 and 15 metres, you must document the exemption with a confirmation from the tax office that the buyer is registered in the VAT Register and during the last twelve months has sold raw fish, seal, whale, seaweed or kelp above the threshold amount for registration in the VAT Register.
In addition, you must get a statement from the buyer that the vessel will be used exclusively for professional fishing purposes. To obtain an exemption from value added tax, you must apply to the Tax Administration.
You’re responsible for assessing whether value added tax should be calculated on the sale.
You must submit the VAT return and pay in the usual way.
If you sell a fishing permit at a profit, the profit will be taxable income. You enter the profit as income in the business information.
You can enter the entire profit as income in the year of sale, or you can choose to enter the income in the enterprise’s profit and loss account to distribute the profit over several years.
If you sell a fishing permit at a loss, you can claim a deduction for the loss.
What to do if you
If you completely stop using the fishing vessel, you must consider whether the enterprise has ceased. When the enterprise ceases, you’re no longer entitled to a deduction for depreciation of the fishing vessel.
If the enterprise that ceases is value added tax liable, you must delete the registration in the VAT Register.
If you sell your business to a new owner, you do not have to pay value added tax on the sale of the enterprise. The main conditions are that you sell all or part of the enterprise, and that the enterprise continues under the new owner. More about the transfer of enterprise in the VAT handbook 6-14 section 6-14 (Merverdiavgiftshåndboken, in Norwegian only).
Register, change or delete in the Value Added Tax Register (VAT Register)
If you take over your own fishing vessel to use it privately after you’ve stopped commercial fishing, you must enter the market value of the fishing vessel as income in the business information.
Related information
If you run a business and own your own fishing vessel, you may be entitled to the fishermen's allowance and to a deduction for expenses you’ve incurred. You must pay tax on the wealth of the fishing vessel and the fishing permit.