Value added tax
Value added tax (VAT) is a tax which your business collects from your customers on behalf of the government. VAT must be added for most goods and services when you sell them (output VAT). In the same way, you are entitled to deductions for VAT for most goods and services you purchase for the business (input VAT).
However, only once you have sold vatable goods and services for more than NOK 50,000 within a 12-month period must you register in the VAT Register. You cannot add VAT on your sales until you have registered the enterprise in the VAT Register.
Value added tax (VAT) rates
25% - for most goods or services
15% - for food and drinks
12% - for passenger transport, cinema tickets and room rental
Are all sales vatable?
Some services, such as health services, teaching services and cultural services, are exempt from the scope of the VAT Act. Sales of such services do not give entitlement to registration in the VAT Register, and output VAT must not be calculated. You will also not be entitled to deductions for input VAT on purchases you make for an enterprise that is exempt from the scope of the VAT Act.
Some goods and services are exempt from the calculation of VAT in connection with sales; these are known as 'zero rate'. This applies for example to exports, the sale of books as end retailer and the sale of newspapers and used cars. However, sales are still covered by the VAT Act and entitle you to register in the VAT Register and make deductions for input VAT.
Contact the Norwegian Tax Administration for guidance if you are in any doubt as to whether your enterprise's sales must be subject to VAT.
How to register in the VAT Register
The VAT registration takes place via Norwegian Tax Administration´s website.
If you are applying for joint registration, voluntary registration or deletion/changing information in the VAT register, you need to use the form entitled 'Coordinated register notification'. When submitting the Coordinated Register Notification, copies of invoices or other documentation verifying that you have sold goods/services liable to VAT amounting to more than NOK 50,000 must be uploaded as attachments.
The processing time is generally short - rarely more than three weeks.
You are not assigned a separate VAT number. To show that your enterprise is registered in the VAT Register, the enterprise's business documents are endorsed with the letters "MVA" (VAT) after the enterprise's organisation number.
Subject to certain conditions, some enterprises can be pre-registered in the VAT Register. In order to be pre-registered, you must either have made purchases amounting to at least NOK 250,000 (major purchases) which are directly linked to subsequent vatable sales, or that your vatable sales are likely to exceed the threshold within three weeks from the date on which sales commence. However, there is no entitlement to pre-registration for major purchases if it is expected to take less than four months from the application date to reach the registration threshold.
If you are pre-registered, the enterprise will be VAT-registered and have all the associated rights and obligations that this entails.
Your first invoice which includes VAT
As an example we can assume you have previously sent invoices for a combined total of NOK 40,000. As you are not registered in the VAT Register, you have not included VAT in your invoices for the sales/assignments concerned. You have now completed a new assignment and must invoice the customer for NOK 15,000. You can now do the following:
- Issue the invoice without VAT and notify the customer that they will receive an additional invoice for the VAT.
- Then you register in the VAT Register.
- You will be notified that your business is now registered in the VAT Register.
- Processing time varies - from completion within the day, up to a few weeks - depending on the course of the processing.
- You can now send an invoice with the VAT amount for the invoice which resulted in the threshold amount being passed.
- From now on you should add VAT to your sales.
Both sales which are vatable and sales which are non-vatable
When you sell both vatable and non-vatable goods/services, you will have split sales. VAT must only be added to sales that are vatable. When you make purchases which are intended for use in both parts of the enterprise, input VAT must be distributed proportionately between the part that is vatable and the part that is exempt from VAT. You will therefore not be entitled to make deductions for input VAT on purchases which are intended for use in the part of your sales that is exempt from VAT only.
Sales of goods/services which are exempt from VAT will not be taken into account in the basis for the calculation regarding when the enterprise must be VAT-registered.
Businesses operating in a few sectors, normally exempt from the obligation to be registered in the VAT Register, can register voluntarily. These businesses can claim deductions for input VAT on purchases intended for use by the business. This could for example concern deductions for VAT on construction costs, heating costs and maintenance in connection with the hiring out of commercial premises.
Can I reclaim VAT?
After your enterprise has been registered in the VAT Register, you can reclaim VAT on goods and services which are purchased for your enterprise (input VAT). In the tax return for VAT, input VAT is offset against output VAT (VAT on what you sell). You can now see whether you must pay VAT or whether you can reclaim VAT for the period concerned.
In connection with purchases: Make sure that the seller's organisation number and the letters 'MVA' (VAT) are stated on the sales document. If this is missing on an invoice that has already been paid, you will not be able to claim a deduction for input VAT.
Retrospective VAT refunds
You can reclaim VAT on purchases you made before you were registered in the VAT Register - up to three years back in time. In order for you to do this, the goods must not have been re-sold without VAT and they must be intended for use in the vatable activity. You submit the claim through the Coordinated register notification when you register in the VAT Register.
In order to reclaim VAT on such purchases, you must submit an additional tax return for VAT for the period during which the enterprise was registered for VAT. To submit an additional return, open form RF-0002 Ordinary VAT return and select "additional return". This must be submitted at the same time as the first ordinary tax return for VAT. In the addition tax return for VAT, you should only include VAT on the purchases for which you are claiming a retrospective VAT refund. You do not have to submit documentation of the purchases. However, this documentation must be available in the enterprise's accounts and must be presented as and when necessary.
Deletion from the VAT Register
When turnover that is subject to VAT (vatable turnover) ceases, either because the enterprise has ceased trading or because the nature of the enterprise changes so that it only has turnover which is exempt from VAT, the enterprise must give notice of deletion from the VAT Register.
If vatable turnover in an individual year is less than NOK 50,000 (the threshold amount for registration in the VAT Register), this will not in itself mean that the enterprise must be deleted from the VAT Register.
However, if the turnover remains below the threshold amount in the next two consecutive years, the enterprise must be deleted from the VAT Register.
You must submit the notice of deletion using the Coordinated register notification form.