Consultation on a proposal for amendments to the Norwegian VAT Act regarding cross-border trade of services from businesses to consumers

The Norwegian Ministry of Finance hereby presents a proposal for amendments to the Norwegian VAT Act regarding cross-border sales of services from businesses to consumers (B2C). It is proposed that all purchases of remotely deliverable services from businesses located outside of Norway to consumers located in Norway shall be subject to VAT.

Remotely deliverable services, also referred to as services capable of delivery from a remote location, are services which in principle can be provided anywhere. These services are, by their nature, difficult to associate with a physical location. Examples are consultant services, accounting services and services that can be supplied digitally (electronic services).

According to the Norwegian VAT Act, businesses and public authorities located in Norway must pay VAT on all purchases of remotely deliverable services from businesses located abroad. Consumers located in Norway must only pay VAT on such purchases if the service is electronic. This means that foreign suppliers of remotely deliverable services which are not electronic, have a competitive advantage compared to suppliers located in Norway. This is because consumers must pay VAT on domestic purchases of both electronic and non-electronic services (unless the service is exempt from VAT). 

The VAT system should be neutral and not give competitive advantages to certain businesses. Therefore, the Ministry of Finance proposes that all purchases of remotely deliverable services from businesses located outside of Norway to consumers located in Norway shall be subject to VAT. This ultimately means that all purchases of such services to Norway will be subject to VAT, regardless of the status of the customer and whether the service is electronic or not.

The Ministry suggests that when the customer is a consumer (B2C-sales), it shall be the responsibility of the supplier to charge and collect VAT. Suppliers that are not established in Norway may use the simplified VAT scheme for registration and reporting (VOEC). This scheme is already used by suppliers which sell electronic services to consumers in Norway. When the customer is a business or a public authority (B2B-sales), the VAT will still be charged and collected by the customer (reverse charge). 

The deadline for submitting comments on the proposal is July 8, 2022.