Norway Supreme Court Approves Simplified VAT Registration for Foreign B2C Sales

The VAT registration process may sometimes cause problems for taxable persons, especially when the taxable person is a non-resident. Some of the barriers to registration are foreign language, different procedures and rules from one country to another, and sometimes, the application of rules and regulations is unclear or inconsistent.

The Norwegian Supreme Court published its final ruling to clarify VAT registration rules and settle the dispute between the Norwegian Tax Authority and a foreign online fashion company.

Main Issue and Court Ruling

A foreign online fashion company (the Company) wanted to register under the simplified VAT registration, known as the VOEC registration. The VOEC registration refers to the VAT registration schemes for providers of remotely deliverable services and low-value goods.

However, the Norwegian Tax Agency denied the Company's registration application, stating that it did not consider it foreign, as it had a strong link to Norway. This conclusion was based on the fact that the Company included the Norwegian language and currency on its website. The Tax agency thus concluded that the Company must register for VAT in Norway under the regular VAT registration procedure.

As the VOEC registration includes, in addition to simplified reporting and import procedure, custom duties on clothes and other textile products valued below the NOK 3,000 threshold, the Company wanted to take advantage of these benefits. Therefore, it appealed against the Tax Agency's decision.

Since the Court of Appeals unanimously decided in favor of the Company, the Tax Agency appealed to the Supreme Court. Nevertheless, the Supreme Court denied the appeal, thus confirming the Court of Appeals decision.

Conclusion

The Supreme Court ruling confirms that the Court of Appeals' decision to rule in the Company is significant for all foreign online companies and platforms involved in B2C sales of small consignments and intangibles. 

Since it is common practice for international online sellers to have their websites set to display prices and other information in different languages, this ruling helps those businesses benefit from VOEC registration and not be excluded from it due to multi-language websites. However, this rule only applies to clothing companies, and other businesses, such as foodstuff and beverage sellers, cannot register for VAT through VOEC.

Source: EY