Services

The Norwegian Ministry of Finance opened a public consultation on the proposed amendments to the VAT rules on remotely delivered services. These services include marketing, consulting, and information and communication technology (ICT) services, and their performance and delivery cannot be linked to a specific physical location due to their nature.

Proposed Changes to VAT Regulations

As the Ministry of Finance highlighted, VAT in cross-border trade is based on the destination principle, meaning that VAT is due in the country where goods and services are consumed. Consequently, services bought outside Norway and used in Norway must be taxed in Norway.

Nevertheless, these rules apply differently to international companies that, for example, have headquarters in Germany and a branch office in Norway. If the Norwegian branch office uses the service in an activity that the VAT Law does not cover, input VAT on purchases is not deducted; the company does not bear the VAT costs.

In other words, international companies have an advantage over Norwegian companies, and the international companies selling financial services in Norway benefit the most.

The open consultation consists of three parts. The first is the proposal to extend the obligation to calculate VAT on remotely delivered services that international companies buy outside Norway but are for use in the country, thus equaling the tax treatment for international and Norwegian companies.

The second part of the consultation refers to the proposal to expand the right to deduction when international companies buy services in Norway that are used outside the country. This amendment will exempt international companies from VAT in Norway on services used outside the country if adopted.

The third part focuses on establishing a special rule to ensure equal treatment between international and local companies that sell financial services to Norwegian consumers, regardless of whether they sell them abroad or from Norway.

Conclusion

With these suggestions, Norway became the first European country to propose introducing the OECD model for using purchased, remotely deliverable services in its own business in several countries. Consultations are open until June 21, 2025, and all interested parties may submit their opinions and suggestions through the government website.

Source: Norwegian Government - Consultation – VAT on cross-border trade in services, KPMG