In brief: A business must register in the Norwegian VAT Register (Merverdiavgiftsregisteret) when its taxable turnover and withdrawals in Norway exceed NOK 50,000 within any twelve-month period. The rule applies to both Norwegian and foreign businesses.
Determining whether a business is required to register for VAT in Norway can be difficult. Many businesses discover too late that they should have been registered, which can lead to back-assessed VAT, additional tax and lost deductions. This article gives a practical overview of the Norwegian VAT registration rules: who must register, how turnover is calculated against the threshold, what happens if the registration obligation is not met, and how to register the business in the VAT Register.
Under the Norwegian VAT Act, the main rule is that businesses must register in the VAT Register when turnover and withdrawals in the business exceed NOK 50,000 within a period of twelve months. Withdrawals are, for example, goods and services the owner takes out of the business for private use. The threshold applies to all businesses, both Norwegian and foreign companies, that carry on taxable activities in Norway. A higher threshold of NOK 140,000 applies to charitable and non-profit organizations.
This raises three key questions about the registration obligation:
What is considered a business?
What constitutes taxable activity?
How is turnover calculated against the NOK 50,000 threshold?
Also see: 7 FAQ's about VAT for foreign companies operating in Norway
Only "businesses" and "public enterprises" are required to register in the VAT Register when the turnover threshold is exceeded. The Norwegian VAT Act does not define exactly what qualifies as a "business". The meaning of the term has been developed through case law and requires that the activity has a certain duration and scope. In addition, the activity must be objectively capable of generating a profit and must be carried out for the owner's own account and risk. It is sufficient that there is a reasonable possibility of achieving a profit. This means that an activity may operate at a loss and still meet the requirement of profit-making capacity. This will typically be the case in a start-up phase, but it applies generally.
Under the Norwegian VAT Act, VAT must be calculated on the "supply of goods and services". A supply is defined as the delivery of goods and services in exchange for payment. The starting point is therefore that VAT must be calculated on the sale of all goods and services. Norway thus has a general VAT system with broad tax liability.
However, it is important to note that the Norwegian VAT Act also contains rules on supplies that are exempt from the Act, and supplies that are zero-rated.
When a good or service is exempt from the VAT Act, the supply falls entirely outside the scope of the Act. A person supplying exempt goods or services is not required to charge output VAT on the sale and has no right to deduct input VAT on acquisitions related to the exempt activity. Turnover from exempt goods and services is not included when assessing whether the NOK 50,000 threshold has been exceeded. The most important exemptions are set out in Chapter 3 of the VAT Act and include, among others, financial services such as insurance and financing, and the letting of real property. If the business carries on both taxable and exempt activities, input VAT must be apportioned proportionally.
Zero-rating means that the supply is within the scope of the VAT Act, but that no output VAT is charged. In other words, the business does not add VAT to its invoices for these supplies, but it retains the right to deduct VAT input on its acquisitions. Zero-rated turnover is included when assessing whether the NOK 50,000 threshold has been exceeded. The most important zero-rated supplies are set out in Chapter 6 of the VAT Act and include, among others, the export of goods and services outside the VAT area, certain transport services, and supplies made as part of a transfer of a business as a going concern.
Also see: The VOEC scheme — a simplified VAT solution for online suppliers
If the taxable turnover exceeds the NOK 50,000 threshold, the registration obligation arises automatically. It is the business's own responsibility to ensure that it is registered when the threshold is exceeded.
There are several important points relating to the calculation of when the business exceeds the threshold:
The threshold does not follow the calendar year. The twelve-month period is rolling and applies to any period of twelve months. The registration obligation arises from the transaction that brings the total turnover above NOK 50,000.
The decisive factor for when turnover is considered to have occurred is the time of delivery of the goods or service, not the time of invoicing.
The threshold refers to net turnover, that is, turnover exclusive of VAT.
VAT is only to be calculated on supplies and withdrawals that are within the scope of the VAT Act. This means that all turnover that is not exempt from the Act must be included in the assessment of whether the NOK 50,000 threshold has been exceeded.
It should also be noted that several business activities carried on by the same taxable person must, as a general rule, be registered in the VAT Register as a single taxable entity. Only one combined threshold of NOK 50,000 applies per taxable entity. The consequence is that the owner becomes liable for registration and VAT on all turnover within the scope of the Act, including business areas where turnover on its own is below the minimum threshold.
Yes. Foreign businesses that make taxable supplies in Norway must register once the NOK 50,000 threshold is exceeded, on the same terms as Norwegian businesses. A foreign business without a place of business in Norway normally registers through a Norwegian VAT representative. Special simplified schemes apply to certain sales of low-value goods and digital services to Norwegian consumers.
If you fail to register despite being required to do so, you risk the Norwegian Tax Administration estimating and imposing the tax retrospectively. In addition, you risk being charged additional tax. The additional tax normally amounts to 20 percent of the tax amount that should have been paid. In cases of intentional or grossly negligent conduct, increased additional tax of a further 20 to 40 percent may also be imposed. In more serious or deliberate cases, the matter may also be reported to the police. It is therefore important to monitor turnover continuously to avoid sanctions and unnecessary additional costs.
Another point is that the business has no right to deduct input VAT or to invoice with VAT before it is registered. Failure to register may therefore cause the business to miss out on deductions it would otherwise have been entitled to. There is, however, a safety net: under Section 8-6 of the Norwegian VAT Act, a registered taxable person has the right to deduct input VAT on acquisitions made up to three years before registration, provided that the acquisitions are directly connected to the turnover in the registered business and that the claim is submitted no later than three years after registration. This does not, however, apply to goods and services that were resold before registration. Although this rule provides an opportunity to recover deductions after the fact, it requires that the business is registered and that the claims are submitted within the deadline. The longer you wait to register, the greater the risk that valuable deductions are lost.
If it is already clear at start-up that you will quickly exceed NOK 50,000, you can apply for pre-registration. This allows you to charge VAT and deduct input VAT on investments from the start. Pre-registration is particularly relevant for businesses with large start-up investments, for example when constructing premises or purchasing expensive equipment before the ongoing operations have commenced.
Also see: Claiming VAT deduction in Norway through pre-registration?
If your business meets the conditions for the registration obligation, it must be registered in the VAT Register. Registration is done through the Norwegian Tax Administration's digital services. Before you can register in the VAT Register, the business must normally be registered in the Register of Business Enterprises or at least have been assigned an organization number in the Central Coordinating Register for Legal Entities.
Once the business has an organization number, the registration notification is submitted to the Norwegian Tax Administration. In the notification, you must provide information about the business and document that the conditions for registration have been met, for example by referring to achieved turnover or other documentation demonstrating that the business carries on or will carry on taxable supplies. The notification should be submitted as soon as possible after the conditions for registration have been met. It is worth noting that the obligation to charge output VAT arises from the point in time when the threshold was exceeded, not from the time of registration. If you delay your registration, a period may arise during which the business is liable for VAT but is not yet entitled to show VAT on its invoices.
Registration in the Norwegian VAT Register is not something a business can opt out of, and the registration obligation arises automatically. It is the business's own responsibility to monitor when the threshold is exceeded, and the consequences of failing to register in time can be significant. Although the rules on claiming VAT back retroactively may provide some relief after the fact, it is far better to register on time than to have to clean up afterwards.
The registration obligation should therefore be assessed already at the start-up of the business, and the development of turnover should be monitored on an ongoing basis. If you are in doubt as to whether your business must register for VAT in Norway, you should seek advice early. Our lawyers specializing in VAT and taxes are happy to assist you with the assessment.