How VAT-registered entities in Norway will be affected by the new VAT rules starting January 1st 2017

Starting 2017 there will be changes in how you prepare VAT returns, and how you deal with import VAT. The changes require new demands on areas like reporting, procedures, communication and systems. Here we provide a concise summary of what the new rules will entail for VAT-registered entities in Norway from the beginning of 2017.

The changes entail:

  • The new VAT return (mva-meldingen) will replace the current form (omsetningsoppgave for merverdiavgift).
  • Import VAT on goods must be reported and paid using the new VAT return, rather than the customs declaration as at present.

 

Enterprises are obliged to calculate and pay import VAT on all goods imports from abroad, including individual purchases. 

Currently the import VAT for VAT-registered enterprises and private individuals in Norway is included in the customs declaration, which is calculated by the customs authorities and paid to them upon importing. A shipping agent will often arrange this at the customs office on behalf of the importer. Enterprises with ongoing imports often have their own customs credit arrangements.

From 2017, import VAT and the basis for the VAT will no longer be declared in customs declarations for VAT-registered entities in Norway. For private individuals and enterprises not registered for VAT, import VAT will still be calculated and paid in the same way as before. The VAT is stated on the customs declaration and paid to Norwegian Customs – possibly via a shipping agent, such as KGH Customs Services. Customs credit will cease to apply for importers who do not have excise and customs duty on their imports. Enterprises will no longer receive invoices from shipping agents or Norwegian Customs including import VAT. Importers will be obliged to calculate the basis for the VAT themselves and declare the VAT in the VAT return. Customs and excise duties must be included in the basis for calculation.

New VAT changes from 2017 will involve some challenges for VAT-registered enterprises. It will be important to prepare for the VAT changes during autumn 2016, by being aware of the following:

  • Customs values
  • Exempted imports
  • Reduced-rate goods
  • Customs and excise duty to be included in the basis for calculation
  • Internal procedures for ensuring correct reporting
  • Documentation
  • Updating the current accounting system

It is also important to have solid procedures in place to ensure that the customs declarations are correct, for instance by checking them against supplier and shipping agent invoices, as well as having routines for checking that all customs declarations have been received, and for evaluating the accuracy of customs declarations and calculating the basis for VAT. Ensuring good communication with the accounts department will be important, so that they can use the calculation for bookkeeping, reporting and documentation. If the enterprise has well-established procedures, reporting, communication and systems in place that are in compliance with the changes, it will be well prepared for the new VAT rules starting January 1st 2017.

If you would like to find out more about the new import VAT collection scheme, please register for one of our breakfast meetings, where you will also be able to talk directly to KGH’s customs and VAT experts. Please follow this link to sign up.

Establishing a company in Norway and handling Norwegian VAT

Accounting and tax issues can be challenging for foreign companies doing business in Norway. The most appropriate organizational form for your company should be researched and evaluated. A decision should be made based on forecasts, current facts and the way you’re operating. 

The three most common forms of organizations in Norway are limited companies, sole proprietorships and Norwegian Foreign Enterprise (NUF).

In recent years, Norwegian Foreign Enterprise (NUF) has grown in popularity.  It is described as a division of the foreign company, with the foreign company as the legal entity. This is the easiest and most affordable way to register a foreign company in Norway. The simplicity and affordability are two of several reasons why this type of registration has become very attractive.

There are several benefits connected to registering a company in Norway. If you are selling goods to Norway using a registered company, you will have several competitive advantages. You can serve your customers throughout the business process, from A to Z. You are able to handle the importation of goods, including the customs clearance and payment of VAT at the border. By doing so, your customers will not have to be concerned with these tasks.

When registering a NUF, a VAT representative in Norway is necessary. NUF companies will not be taxable to Norway, as the arrangement of having a VAT representative assumes that the company does not have a business address or a location in the VAT area.

The following two scenarios make it a necessity to register a company in Norway:

Scenario one; you are going to have personnel at work in Norway. Most services carried out within Norway are taxable. The service performed must be invoiced with Norwegian VAT from a Norwegian organization number. The turnover must be reported to the Norwegian Tax Administration (Skatteetaten). The company will also be obliged to report both work carried out and the employee’s salary and employment conditions to the Norwegian Tax Administration.

Scenario two; your company is going to import machines to Norway. For example, to rent them out to Norwegian customers. The legal owner of the object must handle the clearance and payment of VAT according to Norwegian law.

For more information about registration of company in Norway or handling of Norwegian VAT, please contact us.

E-mail: post@kghav.com

Phone: +47 69 21 40 00