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Can save 45 MNOK per year on simplified VAT registration (VOEC)

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The Swedish company Boozt has just won a case against the Norwegian Tax Administration in Oslo District Court. Boozt was granted the right to simplified VAT registration in Norway, instead of ordinary VAT registration. This means that the company can save about 45 MNOK per year in customs duties, and also save a lot of administration. The judgment is also relevant for other foreign companies that sell online to Norway.

The judgment from Oslo District Court

On September 6, a judgment was issued in Oslo District Court concerning a dispute between the Swedish company Boozt Fashion AB and the Norwegian Tax Administration about simplified registration for VAT.

Boozt sells clothes and shoes online to customers in several European countries, including Norway. The company wanted to use the simplified registration scheme for VAT (VOEC). This scheme was introduced in 2020 to facilitate the administration and collection of VAT on goods with a value below 3000 kroner that are sold to Norwegian consumers from abroad.

The Norwegian Tax Administration, however, refused Boozt to register in the VOEC scheme, and claimed that the company was engaged in domestic sales in Norway, and therefore had to register in the ordinary VAT register. Boozt disagreed with the Tax Administration's assessment, and filed a lawsuit with Oslo District Court. Boozt argued that they met the conditions for simplified registration, and that they had changed their business model so that they no longer had a Norwegian branch (NUF), but only sold goods to Norway from Sweden. Boozt also claimed that they had not adapted their business specifically to the Norwegian market.

The District Court ruled in favor of Boozt in the case, and overturned the Tax Administration's decision to deny simplified registration. The District Court based its decision on the fact that there was not such a connection between Boozt's sales and Norway, that Boozt had to be considered to engage in domestic Norwegian sales.

Sales to or in Norway?

The District Court referred to the Supreme Court's judgment in the Ifi OY case, which is the most important decision on what constitutes domestic sales in Norway in relation to the VAT Act. In that case, it was emphasized that a concrete overall assessment must be made of whether it is sales in Norway or sales to Norway.

The District Court found that Boozt's case differed from the Ifi OY case on several points. Firstly, it was visible to the customers that they were dealing with a foreign company, as the websites were mixed with English text, and it was stated the Swedish organization number and address. Secondly, there was no question of evasion of VAT, as Boozt agreed that they should pay VAT, but only disagreed on the form of registration. Thirdly, there was no question of a special adaptation to the Norwegian market, as Boozt followed the common European rules on consumer rights and right of withdrawal, which also applied to Norwegian companies. The District Court also considered that the consideration of competition neutrality was not decisive in the case, as the purpose of the simplified registration scheme was to ease the administration and collection of VAT, and not to give foreign companies an advantage over Norwegian companies.

The District Court concluded that the Tax Administration's decision was based on an incorrect understanding of the VAT Act, and that the decision was therefore invalid.

The judgment can be appealed

The judgment is not final yet, and it can be appealed to the Court of Appeal. The case is, in our opinion, principled, and it is therefore likely that it will be appealed further in the legal system. The question of what is sales to and in Norway, may therefore remain unclear for several years to come.

Customs exemption on goods with simplified VAT registration

If the judgment becomes final, such a "registration change" from the ordinary VAT register to VOEC will have a large cost-saving effect for Boozt. In the VOEC scheme, goods are exempt from customs duties as long as the value is below NOK 3,000. You can buy as many items as you want and have them sent in the same package, as long as each item has a value under NOK 3,000. The simplified registration scheme is exempt from customs duty, but you must pay VAT of 25% for all goods, including shipping and other costs.

By being normally registered in the VAT register, Boozt has had to pay customs duty on textiles from the first kroner. The textile duty on imports to Norway is usually 10.7%.
According to Boozt's own calculations, this can save them about 45 MNOK per year in customs duties, in addition to the administrative savings of using the VOEC scheme.

How about similar companies?

The judgment may also have implications for other foreign companies that sell online to Norway, and that are currently registered in the ordinary VAT register. They may want to consider whether they can change their business model and qualify for the simplified registration scheme, and thereby save costs and administration.

However, companies should also be aware of the legal uncertainty that still exists around the interpretation of the VAT Act concerning “turnover to or in Norway”, and the possibility of further appeals in the case.

The content of the blog is intended as general information, and should not be considered legal advice. The content is often simplified and is not adapted to the recipient's specific situation. In addition, there may have been changes after the blog was published that are not reflected. We therefore recommend that professional assistance is sought. PwC does not take responsibility for any errors or omissions in the blog, including decisions that are wholly or partly based on the content.

Helene Hval

Helene Hval

Hi, my name is Helene Øien Hval and I work as a customs advisor at Advokatfirmaet PwC. On a daily basis, I work with advice to companies within the customs and excise duty area. An incredibly exciting area where we see that both Norwegian and foreign companies need assistance in dealing with new customs barriers, more technical regulations and more documentation requirements than before. I have previous experience from more than 10 years in the Directorate of Customs, and have also taught at the Norwegian Customs Competence Center in the subject "Preferential Customs". I think customs is incredibly fun, and if you have questions about any of the topics I cover in the blog, just get in touch!

Bjørnar Elverhøy Michaelsen

Bjørnar Elverhøy Michaelsen

Jeg heter Bjørnar Elverhøy Michaelsen og jobber som advokat i Advokatfirmaet PwC. Jeg jobber til daglig med å bistå næringsdrivende med rådgivning om merverdiavgift. Dette er et område med et komplisert regelverk, stadige lovendringer og omfattende praksis. Det er fort gjort å gjøre feil som fører til betydelige kostnader.

Jeg har lang og bred erfaring innen merverdiavgift, og kan bidra med profesjonell bistand knyttet til merverdiavgiftsmessige utfordringer. Målet mitt er å gi råd som bidrar til å spare unødige kostnader, og til å skape verdier hos virksomhetene. De siste årene har jeg opparbeidet meg betydelig erfaring med momsutfordringer innen næringseiendom og finansiell sektor.

Ta gjerne kontakt med meg for en hyggelig og uforpliktende prat om moms!

Bjørnar is an experienced VAT specialist and he gives advice on national VAT issues.

Bjørnar has special expertise in tax issues related to real property, including rental operations, property development, construction, purchase and sale. Bjørnar assists with questions related to mapping of the business, review rental conditions, review of rental contracts, compliance with documentation requirements, deduction of input VAT, preparation of cost allocation rules, formal requirements for the issuance of invoices, accrual of VAT etc. Bjørnar can also help with information and advice on adjustment rules that apply to property.

Bjørnar has extended experience within the FS sector dealing with VAT aspects especially of insurance companies, banks and leasing companies. Items like pro-rata calculation, optimization of tax exemptions especially within outsourcing structures are included.

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