Norway introduced VAT on supplies from abroad of electronic services to consumers (B2C) as from 1 July 2011. VAT is collected through a simplified registration arrangement, called the VOES-scheme, similar to the MOSS scheme in the EU. Reporting of output VAT is done electronically on a quarterly basis, but VAT recovery is not possible through the scheme. Supplies of electronic services to Norwegian businesses (B2B) is VAT taxable on the purchasers hand via the reverse charge mechanism.

New approach by the tax authorities

Recently, we have seen that Norwegian tax authorities have initiated audits directed at foreign suppliers of electronic services with no establishment or place of business in Norway. The foreign supplier is instructed to produce customer records for all supplies of electronic services to Norwegian consumers going back up to 5 years.

Norwegian tax authorities collect records of cross border payments from all Norwegian financial institutions and store the data in an online database (the Norwegian Currency Register). Electronic processing of these records facilitate audit planning based on following the money trail made by Norwegian consumers’ payments to a certain recipient abroad.

Norway and the European Union have recently signed an agreement on administrative cooperation, recovery assistance and combating fraud in the field of VAT. It is expected that this agreement will make it much easier for Norwegian tax authorities to pursue such VAT audits of non-established suppliers.

Risks
Foreign suppliers who are identified, during an audit, to have supplied electronic services to Norwegian consumers face reassessment of VAT on its supplies going back up to 5 years, plus between 20% and 60% penalties, as well as late payment from the time when the VAT should have been reported.

Recommendation
We recommend that suppliers of electronic services should assess their turnover to Norwegian customers in order to determine if there is a VAT registration requirement and, if so, how Norwegian VAT compliance obligations should be handled.

My colleagues are happy to discuss the various aspects and requirements in connection with such a project in a call, and we can also assist with the VAT registration and reporting of VAT under the simplified VOES scheme.

Lars Flatåker 
PwC | Advokat | Lawyer | Director
Phone: +47 95 26 05 25
Email: lars.flataaker@no.pwc.com

Per Kirknes 
PwC | Fast advokat / Lawyer / Director
Phone: +47 95 26 00 99
Email: per.kirknes@pwc.com

Espen Qvist
PwC | Fast advokat / Direktør – Advocate / Director – VAT
Phone: +47 95 26 04 07 |
Email: espen.qvist@pwc.com