The Norwegian Parliament has recently passed an amendment to the VAT Act, which will make non-resident businesses providing remotely delivered non-digital services to consumers in Norway liable for VAT.
The changes will come into effect beginning January 1, 2023.
VAT Act rules prior to January 1, 2023
Norway provides a distinction in the definition of remotely supplied non-digital services and electronic services. They are not considered the same.
Remotely delivered non-digital services
When a non-resident taxpayer provides remotely delivered non-digital services (e.g. legal, consulting or marketing services) to a business in Norway (B2B), the local business must collect and remit the VAT under the reverse charge mechanism. Currently, no VAT is charged when such services are provided to consumers (B2C).
For electronic services (e.g. SaaS, cloud-based or streaming services, etc.), the reverse charge mechanism also applies to B2B transactions. Unlike for remotely delivered services, registration and collection rules have already been in place for B2C electronic services. When non-resident suppliers of electronic services sell to individuals in Norway, they must register and charge VAT if they reach the registration threshold.
What changes will take place on January 1, 2023?
Beginning on January 1, 2023, non-resident providers of remotely delivered non-digital services must also register and charge VAT on B2C sales when they reach NOK 50,000 (circa USD 5,000) in sales over a 12-month period. Regulations regarding B2B services remain unchanged.
Such non-resident taxpayers will be able to take advantage of the simplified registration scheme (VOEC) and shall file quarterly VAT returns.
Non-resident sellers must differentiate between B2B and B2C sales as it can trigger VAT registration and liability.
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