VAT on electronic services (voesnorway) – simplified VAT scheme for non-established vendors

In a legislation proposal, the Government presents a simplified VAT scheme for non-established vendors supplying electronic services to consumers in Norway. From 1 July 2011, non-established vendors must charge VAT when supplying electronic services to Norwegian consumers.

”These are important updates to our VAT system. The proposal creates a level playing field for electronic services supplied from within Norway and supplied from abroad to Norwegian consumers. At the same time we are making it easier for non-established vendors to comply,” says Minister of Finance Sigbjørn Johnsen.

Since 2001, electronic services have been subject to VAT in Norway, when supplied from vendors established in Norway. On 10 December 2010, and as part of the 2011 Fiscal Budget, the Norwegian Parliament passed a bill making purchases of electronic services from abroad (import) by consumers in Norway also subject to VAT at the standard rate of 25%. Following up this bill, the Ministry of Finance now presents a simplified VAT scheme for non-established vendors supplying electronic services to consumers in Norway. The scheme will provide for electronic and simplified registration and reporting procedures, and will be when the liability to charge VAT comes into force, 1. July 2011. The proposal will not create any additional burdens for Norwegian consumers.

The proposal will mainly affect vendors supplying electronic services from abroad. Such vendors may be the person contractual responsible for the content of the services and different types of intermediaries of electronic services.

The main features of the simplified scheme are:

• The non-established vendor supplying electronic services will be responsible to account for VAT when supplying such services to consumers in Norway. Such vendors may be the person contractual responsible for the content of the services (often referred to as seller) and persons engaged in the delivery of electronic services (different types of intermediaries). This will as a starting point also apply to Norwegians intermediaries. However, when electronic services are supplied domestically, both the seller and the intermediary may be liable to calculate VAT.
  
  
• Vendors supplying electronic services will be liable to register in the Norwegian VAT Register, bur may opt to use a simplified VAT scheme, as an alternative to register in the VAT Register.
  
  
• Vendors only have to communicate electronically with one tax office in Norway, they will meet electronic and simplified registration and reporting procedures and simplified documentation requirements.
  
  
• Vendors opting for simplified VAT scheme will be subject to most of the general provision in the VAT Act, such as the general duty of disclosure and the general provision on determination of discretion. The vendors will also be subject to the VAT Act`s penal provisions, including civil penalties and criminal proceedings.
  • Vendors will not be able to deduct input VAT in the VAT return, but will be eligible for input VAT refunds.

As the proposed simplified registration scheme is similar to the rules regarding the Special scheme for non-established taxable persons supplying electronic services to non-taxable persons, which were adopted by the EU in 2003, several non-establish operators should be familiar with the system.

Assuming the proposal is adopted by the Norwegian Parliament, the Tax Administration will publish more detailed information on the new Act and practical information on compliance on the web site www.voesnorway.com before 1 July 2011. The Tax Administration will also answer any queries from vendors having to make changes to their VAT compliance.

More information

• Fact sheet - Voesnorway
• Level playing field for suppliers of electronic services (press release of 5 October 2010)