VAT, VOEC and Reverse Charge when selling services in Norway
In this guide, you’ll be provided with an overview of the Norwegian VAT treatment of cross-border sales, including when foreign suppliers must register for VAT, how the VOEC scheme works for B2C sales and when the reverse charge mechanism applies to B2B transactions.
This article is part of our Doing Business in Norway guide.
Introduction
If you are a foreign company looking to sell services to customers in Norway, understanding the local Value Added Tax (VAT) rules are essential. Although Norway is not an EU member, its VAT system operates on similar principles, primarily guided by the destination principle. This means that services consumed in Norway are generally subject to Norwegian VAT.
This article provides a practical overview of how to treat VAT when selling services to Norway, highlighting the crucial distinction between business-to-consumer (B2C) and business-to-business (B2B) sales, the VAT on E-Commerce (VOEC) scheme, and when the reverse charge mechanism applies.
B2C sales and the VOEC scheme
When selling remotely deliverable services to private individuals and non-business customers in Norway (B2C), foreign suppliers must collect and pay Norwegian VAT once their total sales exceed the threshold of NOK 50 000 within a 12-month period.
To simplify compliance, Norway offers the VOEC scheme.
What is VOEC?
VOEC is a simplified registration and reporting system designed for foreign suppliers who have no registered business address or residence in Norway. It allows you to collect Norwegian VAT at the point of sale and report it quarterly, avoiding the administrative burden of an ordinary VAT registration.
The VOEC scheme applies to:
- Remotely deliverable services: This includes digital services, software, streaming, and consulting that can be delivered from abroad.
- Low-value goods: The scheme also covers the sale of physical goods valued below NOK 3 000 per item.
How to register for VOEC
The simplified registration, reporting, and payment processes take place entirely online through the Norwegian tax administration’s portal (Nw. “Skatteetaten”). The foreign enterprise has to create a user profile and the portal allows you to share data with up to five users in your organisation and communicate directly with the tax authorities. Once registered, you will be assigned a unique 7-digit VOEC identification number.
Important VOEC Limitations:
- No deductions: VOEC is a “pay only” scheme. You cannot claim deductions for VAT expenses incurred in Norway through this registration.
- Domestic businesses excluded: The scheme is strictly for foreign entities as highlighted in recent case law like the Boozt and Ifi OY cases The Boozt-decision shows that Norwegian-language websites, terms and customer communication are not, by themselves, enough to deny VOEC registration. Where the webshop serves several countries, has no Norwegian establishment, and ships goods from abroad to Norwegian consumers, the business will not necessarily be considered sufficiently adapted to the Norwegian market to require ordinary VAT registration.
B2B sales and the reverse charge mechanism
The rules shift significantly when you sell services to businesses or public sector bodies in Norway (B2B). The VOEC scheme cannot be used for B2B sales. If a Norwegian business provides you with its 9-digit organisation number, you should not charge them Norwegian VAT.
The reverse charge mechanism
Instead of the foreign seller charging VAT, Norway applies the reverse charge mechanism (Nw. “omvendt avgiftsplikt”) for B2B sales of remotely deliverable services.
Under this mechanism:
- The liability to calculate and report the VAT is shifted from you (the foreign supplier) to the Norwegian buyer.
- The Norwegian business will calculate the VAT and report it on their own domestic VAT return.
- You simply issue your invoice without Norwegian VAT, typically noting that the reverse charge mechanism applies.
This process greatly reduces the administrative burden for foreign companies, as it entirely removes the need for you to register for VAT in Norway for these specific transactions.
Defining “remotely deliverable” services
For the reverse charge to apply, the service must be “remotely deliverable.” This broadly covers services where the execution is not inextricably tied to the physical location of the recipient. The Norwegian Supreme Court has clarified the scope of remotely deliverable services, including that the leasing out of labor (hiring out personnel) constitutes a remotely deliverable service, meaning it falls under the reverse charge rules when provided by a foreign supplier to a Norwegian business.
Summary checklist for foreign sellers
To ensure compliance when selling services to Norway, follow this basic checklist:
(1) Determine your customer
- Are you selling to a consumer (B2C) or a business (B2B)?
(2) For B2B Sales
- Obtain the buyer’s 9-digit Norwegian organization number.
- Do not charge Norwegian VAT.
- Apply the reverse charge mechanism (the buyer handles the VAT).
(3) For B2C Sales
- Monitor your sales volume.
- Once your B2C sales to Norway exceed NOK 50 000 in a 12-month period, you must register for VAT.
- Register in the VOEC portal to simplify your VAT collection and quarterly reporting.
Next steps
Navigating cross-border VAT regulations can be complex and ensuring that you are using the correct registration form requires careful assessment of your specific business model.
At Brækhus, our specialised indirect tax and accounting team possesses deep expertise in Norwegian VAT law. Whether you need assistance determining if your services qualify as remotely deliverable, guidance on registering for the VOEC scheme, or representation in dialogue with the Norwegian Tax Administration, we are here to provide practical and tailored solutions to your needs. Contact us today to ensure that your entry into the Norwegian market is compliant.
