Value Added Tax (VAT), known as "merverdiavgift" (MVA) in Norwegian, is a crucial aspect of business operations in Norway. This article provides an overview of VAT regulations, registration requirements, and important considerations for businesses operating in Norway.
What is VAT?
VAT is a tax that businesses collect from customers on behalf of the Norwegian government. It applies to most goods and services sold (output VAT), and businesses can claim deductions for VAT paid on most purchases made for the business (input VAT).
VAT Rates in Norway
Norway employs a tiered VAT system with three rates:
1. Standard rate: 25% for most goods and services
2. Reduced rate: 15% for food and drinks
3. Low rate: 12% for passenger transport, cinema tickets, and room rental
VAT Registration Requirements
When to Register
Businesses must register in the VAT Register once they have sold vatable goods and services exceeding NOK 50,000 within a 12-month period. It's important to note that you cannot charge VAT on your sales until your business is registered.
Registration Process
To register for VAT, visit the Norwegian Tax Administration's website. Once registered, you'll use your organisation number followed by "MVA" on business documents to indicate VAT registration.
Pre-registration
Under certain conditions, businesses can be pre-registered for VAT:
- If you've made purchases of at least NOK 250,000 directly linked to future vatable sales
- If your vatable sales are likely to exceed NOK 50,000 within three weeks of starting sales
Pre-registration is not available if you expect to reach the registration threshold in less than four months from the application date.
Exempt and Zero-rated Goods and Services
Some services, such as health, education, and cultural services, are exempt from VAT. Sales of these services do not require VAT registration, and you cannot claim input VAT on related purchases.
Certain goods and services are zero-rated, meaning they're exempt from output VAT but still allow for input VAT deductions. Examples include exports, books (for end retailers), newspapers, and used cars.
Voluntary Registration
Some businesses in sectors normally exempt from VAT registration can register voluntarily, allowing them to claim input VAT deductions on business-related purchases.
Claiming VAT Refunds
Once registered, businesses can reclaim VAT on goods and services purchased for business use. This input VAT is offset against output VAT in the tax return. To claim a refund, ensure that your suppliers are VAT-registered and that their invoices include their organisation number and "MVA."
Retrospective VAT Refunds
Businesses can claim VAT deductions on purchases made up to three years before registration, provided the goods weren't sold without VAT and were used in a VAT-liable business activity.
Split Sales
If your business has both vatable and non-vatable sales, you'll need to manage split sales. VAT should only be added to vatable sales, and input VAT on purchases used for both types of sales must be proportionately distributed.
First Invoice with VAT
When you reach the VAT registration threshold, you can:
1. Issue an invoice without VAT and notify the customer of a forthcoming VAT invoice
2. Register for VAT
3. Once registered, send an additional invoice for the VAT amount
4. Include VAT on all subsequent sales
Staying Compliant
Always consult the Norwegian Tax Administration if you're unsure about your VAT obligations. Keep accurate records and ensure all VAT-related documents are properly maintained for potential audits.
By understanding and adhering to Norway's VAT regulations, businesses can ensure compliance and avoid potential penalties while efficiently managing their tax obligations.