Foreign businesses conducting commercial activities in Norway must comply with Norwegian value-added tax (VAT) regulations. Depending on their connection to Norway, different rules apply for registration in the VAT Register. This article provides an overview of representative registration for foreign businesses, who is covered by the regulations, and what obligations and rights this entails.
When Must Foreign Businesses Register?
To have the right and obligation to register in the VAT Register, a business must have taxable turnover in Norway above the threshold amount and conduct business activities here. The registration obligation is not tied to a company's country of registration or a person's citizenship, but to the business's connection to Norway.
Regular Registration vs. Representative Registration
Foreign businesses with a place of business or domicile in Norway follow the regular rules for registration in the VAT Register. This applies to businesses that have:
Headquarters in Norway
Branch/NUF (permanent establishment) in Norway
Residence in Norway (sole proprietorships)
To have a place of business or domicile in Norway requires a certain level of establishment in the form of:
An office
A fixed base for employees and equipment for service provision
A warehouse with order reception and sales for goods transactions
When Should Representative Registration Be Used?
Foreign businesses that do not have a place of business or domicile in Norway shall calculate and pay VAT through a representative. This applies, for example, to:
Businesses selling goods from a consignment warehouse
Businesses with short-term assignments in Norway without establishing an office
Exceptions to the Requirement for a Representative
Following a legislative amendment in 2016, the requirement for a representative was changed. The obligation to be registered through a representative does not apply to taxable persons who are resident in an EEA state that, according to a tax treaty or other international agreement with Norway, shall exchange information and assist with the collection of VAT claims.
As of 2020, this includes the following countries: Belgium, Bulgaria, Denmark, Estonia, Finland, France, Iceland, Italy, Croatia, Cyprus, Malta, Latvia, Lithuania, Luxembourg, Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, United Kingdom, Germany, Czech Republic, and Austria.
Benefits of Representative Registration
Representative registration ensures the right to deduct input VAT on expenses incurred by the foreign business in Norway. Foreign businesses that incur Norwegian VAT without being registered in the VAT Register can apply for a refund of the VAT, but this requires, among other things, that they have not had taxable turnover in Norway in the last twelve months.
Sales in Norway or to Norway?
The prerequisite for registration obligation is that the foreigner has turnover and business activities within the VAT area. With newer forms of sales, for example over the internet, it can be challenging to distinguish between sales in and to Norway.
The central assessment criterion is whether the foreign company, based on an overall assessment of its connection to the Norwegian market, can be said to conduct a sales business here. The Supreme Court has addressed this issue in Rt. 2006 p. 364 (Ifi Oy).
The following circumstances may indicate sales in Norway:
Warehouse in Norway from which goods are sold
Performance of location-bound services in Norway
Use of a Norwegian website and Norwegian domain name (.no)
This distinction has had less practical significance since April 1, 2020, when the exemption for import VAT for goods of insignificant value (the 350 NOK threshold) was removed.
The Representative's Role and Responsibilities
The representative must have a domicile or place of business in Norway. It is not required that the representative has, or does not have, taxable turnover. Both the foreign business and the representative must sign the registration notification.
The foreign business through its representative is given a separate organization number in the VAT Register. In addition, the representative may be registered with its own number for its own taxable turnover.
Joint and Several Liability
The VAT Act imposes a joint and several liability on the foreign business and the representative to ensure that the correct tax is calculated and paid. However, the representative is not jointly and severally liable for payment of the VAT if the business is domiciled in an EEA state that, according to a tax treaty or other international agreement with Norway, shall exchange information and assist with the collection of VAT claims.
The representative shall keep a copy of the business's sales documents and is responsible for ensuring that the accounting obligations are maintained.
Special Rules for Transport Services
Foreign businesses that only perform transport in Norway in connection with transport assignments in and out of Norway can choose whether they want to register in the VAT Register through a representative or just apply for a refund for input Norwegian VAT.
Summary
Representative registration is an arrangement that ensures that foreign businesses without a place of business or domicile in Norway can calculate output VAT and receive deductions for input VAT on an equal basis with Norwegian businesses. The scheme also ensures that Norwegian tax authorities have a contact person in Norway who is co-responsible for tax obligations. For businesses from many EEA countries, it is now possible to register directly in the VAT Register without a representative.
