Proposed amendments to VAT registration rules for foreign businesses in Norway

The Norwegian Government has proposed amendments to the provisions in the Norwegian VAT Act regarding VAT registration for foreign businesses.

Under current rules, a foreign business with VAT taxable supplies in Norway, but with no established place of business in Norway, are obliged to register through a VAT representative.

The Government proposes to abolish the mandatory requirement to register through a VAT representative for businesses which are resident or established in an EEA state provided that the EEA state is party to an agreement with Norway on mutual administrative assistance in exchange of information and recovery of VAT. According to the Ministry of Finance's public consultation on the proposal, such agreements are currently in place for Belgium, the Czech Republic, Denmark, Finland, France, Germany, Iceland, Italy, Malta, The Netherlands, Poland, Portugal, Slovenia, Spain and Sweden. The proposal implies that businesses resident in these countries, and which have taxable supplies in Norway, can register directly in the VAT register without appointing a VAT representative.

The proposal is a consequence of the fact that the EFTA Surveillance Authority in 2012 concluded that the Norwegian VAT representative scheme was in breach of the EEA Agreement. You can read more on this reasoned opinion from the EFTA Surveillance Authority here.

On this background, the Norwegian Government took a first step in 2013 and abolished the joint and several liability for VAT representatives for businesses resident in a state that has entered into an agreement with Norway on mutual administrative assistance in exchange of information and recovery of VAT. The current proposal is thus the second step to make the Norwegian VAT representative scheme compliant with the EEA Agreement.

It is proposed that the Government decides when the proposed amendments will enter into effect, as certain practical issues must be addressed before the new scheme can be implemented.

If the proposal is adopted, it will be easier and less costly for certain foreign businesses to register for VAT taxable supplies in Norway. Businesses currently registered through a representative should therefore assess whether direct registration could be beneficial.