Deductions for Value Added Tax

You can claim deductions for the value added tax you have paid - either in full or in part.

In order to be entitled to a deduction, the following criteria must be met:

  • The enterprise must be registered in the Value Added Tax Register.
  • The goods and services must be used in the enterprise.
  • The seller has calculated value added tax on the goods or service.
  • The value added tax must be specified on the receipt (or other sales document).

You do not need to provide documentation unless we ask for it, but you must have all the receipts at hand.

The right to deduction does not apply when

  • You have purchased something for your own personal use.
  • You have purchased something that is for specific use in the part of the enterprise that is exempt from VAT.
  • You have purchased something that does not entitle you to a deduction – such as catering, representation, and the leasing of function rooms. Read more about exemption from VAT

If your enterprise has activities in more than one area, you might have a partial right to deduction.

If the enterprise has both a vatable activity, such as the sale of instruments , and a non-vatable activity, such as educational services, you run a partially exempt enterprise. Purchases that are for use in both the vatable and non-vatable parts of the enterprise are so-called joint purchases, and you can claim deductions for parts of the value added tax.

The size of the deduction you can claim always depends on the amount of intended use of the goods or services in the vatable part of the enterprise as estimated by you at the moment of purchase.

You have full right of deduction for joint purchases if the non-vatable turnover is insignificant.

If the turnover in the part of the enterprise that is exempt from VAT is 5 percent or less, you can claim deductions for all value added tax on joint purchases.

You have no right of deduction for joint purchases if the vatable turnover is insignificant.

If the turnover in the part of the enterprise that is exempt from VAT is 95 percent or more, you cannot claim deductions for any part of the value added tax.

You must determine yourself what deductions your enterprise can claim

You must calculate yourself the part of the value added tax that your enterprise can claim deductions for. If you have a partially exempt enterprise, you do this with an allocation key.  An allocation key is the ratio between vatable and non-vatable use.

To find the correct allocation key for your partially exempt enterprise, you can assess how the use of the joint purchases is distributed between the vatable and non-vatable parts of the enterprise. This could, for example, be turnover, area or use of time. You must choose the calculation basis that best reflects the estimated use of the purchase(s).

You teach music and sell musical instruments to your students, and you have purchased a photocopier for use in your business. Since music education is exempt from value added tax, you can only claim a deduction for the part of the enterprise that applies to the sale of musical instruments. You have made an assessment and have concluded that an allocation   based on turnover best reflects the use of the photocopier.  

  • 50 percent of the enterprise’s earnings result from the sale of musical instruments.
  • 50 percent of the earnings come from teaching music.
  • You receive an invoice from the supplier of the photocopier of NOK 125,000 including VAT.

Total sum on the invoice including VAT:
NOK 125,000

Value added tax on the invoice:
NOK 25,000

Deductions you can claim:
50 percent of NOK 25,000 = NOK 12,500

In this example, we assume that you have voluntarily registered for value added tax in connection with renting out buildings. 

You are the owner of a two-storey building and you rent out to a grocery store and a dentist’s office. You need to replace the roof, and the cost of the work is a shared expense for the two premises. The dentist’s office is non-vatable. Therefore, you can only claim deductions for value added tax for the part of building that is rented out to the grocery store. You have made an assessment and have concluded that an allocation  key based on area best reflects the use of the roof.

  • 50 percent of the building is rented out to a grocery store.
  • 50 percent of the building is rented out to a dentist’s office.
  • You receive an invoice from the roofing company of NOK 250,000 including VAT.

This is how you calculate the deduction:

Total sum on the invoice including VAT:
NOK 250,000

Value added tax on the invoice:
NOK 50,000

Deductions you can claim:
50 percent of NOK 50,000 = NOK 25,000

You work as a self-employed person and provide consultancy and educational services. You purchase office furniture. Education is exempt from value added tax, and you can therefore only claim a deduction for the part of the purchase that is related to consultancy. You have made an assessment and have concluded that an allocation key  based on time best reflects the use of the office furniture.

  • You use 60 percent of your working hours on consultancy services.
  • You use 40 percent of your working hours on educational services.
  • You receive an invoice from the supplier of the furniture of NOK 50,000 including VAT.

This is how you calculate the deduction:

Total sum on the invoice including VAT:
NOK 50,000

Value added tax on the invoice:
NOK 10,000

Deductions you can claim:
60 percent of NOK 10,000 = NOK 6,000

When you buy something that is intended for both personal and business use

When you purchase something for use in your business, but which you also intend to use privately, you can only claim a deduction for the part that is used in your vatable activity.

You cannot claim a deduction for the part of your purchase that is used privately.

You are a self-employed architect and purchase a new printer. This printer is also intended for personal use. You have made an assessment and have concluded that an based on the number of sheets best reflects the use of the printer.

  • 60 percent of the are used in the enterprise.
  • 40 percent of the sheets are used privately.
  • You receive an invoice from the supplier of the printer of NOK 10,000 including VAT.

This is how you calculate the deduction:

Total sum on the invoice including VAT:
NOK 10,000

Value added tax on the invoice:
NOK 2,000

You can claim a deduction for:
60 percent of NOK 2,000 = NOK 1,200

VAT deductions for purchases made before registration in the Value Added Tax Register

You can claim deductions for value added tax on goods and services that the enterprise has purchased for up to three years before the enterprise was registered in the Value Added Tax Register..

In order for you to claim deductions, the goods or services

  • must not be resold before registration
  • must be for use in the vatable enterprise

This is how you do it:

  1. Enter the expenses in the accounts.
  2. Report the value added tax in the first VAT-return that you submit after registration.

If the expense has previously been entered in the accounts without a deduction for value added tax, you can reverse this in the current period and re-enter the expense with a deduction for value added tax.

Relevant legislation

Regarding the limitations of the right to deductions in chapter 8 of the Value Added Tax Act (in Norwegian only)