On April 8, 2022, the Ministry of Finance published a white paper regarding introduction of a general VAT liability on remotely deliverable services (Nw. fjernleverbare tjenester) rendered by services providers resident outside Norway to recipients in Norway. The legislative intent is to level the playing field between resident and non-resident services providers by subjecting both to the same VAT liability irrespective of whether they render their services from a place of business in Norway or abroad.
Under the current rules, services rendered by a non-resident service provider without a place of business in Norway are only subject to Norwegian VAT if the services (i) are fixed to a specific place of supply in Norway, (ii) are remotely deliverable services rendered B2B, or (ii) are electronic services rendered B2C. Thus, remotely deliverable services other than electronic services, rendered to recipients that are not businesses, are not subject to Norwegian VAT. E.g. any type of consultancy services such a technical, architectural, legal or economic advisory services.
Under the new rules, a non-resident supplier without a place of business in Norway would have to register and account for Norwegian VAT on supply of remotely deliverable services rendered to recipients that are not businesses. I.e. the taxable person for such services would be the non-resident supplier. The taxable person for remotely deliverable services rendered B2B is the resident business recipient under the reverse charge mechanism. Thus, under the new rules the non-resident supplier would have to determine the status of the recipient, i.e. whether the recipient is a business or not, in order to clarify its VAT liability to Norway.
A non-resident supplier that becomes subject to VAT in Norway under the new rules would have the right to choose whether to register for VAT under the ordinary VAT regime or under the simplified VAT regime for e-commerce. The latter would however be available only to non-resident suppliers without a place of business in Norway that does not have any other types of supplies to or in Norway than remotely deliverable services rendered from abroad.
According to the white paper the new rules would be in line with the OECD VAT Guidelines. However, the white paper does not seem to consider the compatibility with the actual rules in effect in the EU member states and other countries, and whether the new rules would involve a risk of international double taxation. As place of supply rules may entail that the place of supply for services B2C is where the supplier is located, a VAT liability on the supplier also in the country where the customer is located may cause double VAT on the same supply which would significantly impede the competitiveness of foreign suppliers offering services to Norwegian customers. We therefore expect the Ministry of Finance to also consider this aspect before any proposal is made to the legislator.
All business structures set up to service the Norwegian market should carefully consider the potential impact of the new rules contemplated by the white paper. The same applies to investment, management and transaction structures involving Norwegian companies.
The Ministry of Finance as invited interested parties to provide comments to the white paper by 8 July 2022.
Thommessen's indirect tax team consists of lawyers with experience from the Ministry of Finance, the Tax Administration and the legal profession, dealing with basically every aspect of the Norwegian indirect tax system, indirect tax controversies and legislative processes, in relation to all business spaces. The team advises clients related to all types of indirect taxes, such as VAT, customs and excise duties.
Please do not hesitate to contact us if you would like to discuss the new rules and the potential impact they may have on your business.