New VAT return from 2017 – simplifications for the VAT liable businesses?
From 2017, a new VAT return form called “Skattemelding for merverdiavgift” will replace the current VAT return form in Norway. The main reason for changing the VAT return is that import VAT shall be reported in the VAT return from 2017, instead of paid on importation. However, the changes entail that all VAT liable businesses in Norway will have to update their ERP systems and VAT codes.
The reason for changing the VAT return
From 1 January 2016, the responsibility for import VAT was transferred from the customs authorities to the tax authorities. From 2017 import VAT will not be paid upon importation. Instead, the import VAT shall be reported as output VAT in the new VAT return and the import VAT can be deducted in the same VAT return. Thus, the change will have a positive cash flow effect, as it will no longer be necessary to actually pay the import VAT to the customs/tax authorities.
It will be necessary with new boxes in the VAT return to report the import VAT and that is why we get a new VAT return. When importing goods it will however still be necessary to complete the normal customs procedures.
As the new VAT return shall be used by all VAT liable businesses in Norway, all businesses will have to act in accordance with the changes regardless of whether your business imports goods or not.
Advantages and disadvantages with the new scheme
The fact that the import VAT shall be reported through the VAT return implies a positive cash flow effect, as the import VAT will be reported and deducted in the same VAT return. Businesses importing goods (and who has the right to deduct input VAT) will thus not need to pay the import VAT to the authorities from 2017.
The Ministry of Finance point out that the changes also will imply reduced administrative costs for businesses importing goods to Norway, among other things because the need for a customs credit will be repealed. I am not sure that I completely agree with this. In a transitional period between the new and the old scheme, I picture that the changes can result in increased administrative burdens for the businesses, which I will get back to below.
What will you have to do before the implementation?
The new VAT return will have 19 boxes (today it is 11 boxes). Some of the boxes are new, some of them have some new content, while others are similar to the ones we have today, but moved to another box than before. The changes imply that the ERP system and VAT codes will have to be adapted to the new VAT return, in order for your business to be able to report the correct numbers. For instance, zero-rated export sales have to be specified in a separate box in the new VAT return. Thus, it will be important to do the necessary changes in the ERP system, and also update and prepare the VAT codes.
It is also worth noticing that the VAT authorities will not send a monthly statement of account, as the customs authorities have done under the customs credit scheme. This implies that businesses who import goods will have to establish systems and routines in order to have control of the amounts that shall be reported in the new VAT return.
Municipals that are entitled to VAT refunds for import VAT under the VAT compensation scheme will also be comprised by the new scheme, if the municipal is registered for VAT. This entails that a municipal will have to report import VAT as output VAT in its VAT return, while the VAT will have to be reclaimed in the VAT refund return.
The transitional period
All VAT terms comprising 2016 shall be reported in the current VAT return. Thus, it will be a transitional period at the turn of the year 2016/2017. From 1 January 2017 all vouchers will have to be recorded with new VAT codes which are adapted to the new VAT return. However, the last reporting deadline comprising the current VAT return will be 10 February 2017 (the deadline for term 6 2016). It thus have to be ensured that the reporting are made correct in this overlap period.
How will the new VAT return look like?
As already mentioned, the new VAT return will have 19 boxes. This will be the following boxes:
|A. Total turnover, withdrawal and import|
|Box 1||Total turnover not covered by the VAT Act|
|Box 2||Total turnover and withdrawal covered by the VAT Act and import|
|B. Domestic turnover and withdrawal|
|Box 3||Domestic turnover and withdrawal, and calculated VAT 25 %|
|Box 4||Domestic turnover and withdrawal, and calculated VAT 15%|
|Box 5||Domestic turnover and withdrawal, and calculated VAT 10 %|
|Box 6||Zero rated domestic turnover and withdrawal|
|Box 7||Domestic turnover subject to reverse charge (emission trading and gold)|
|Box 8||Total zero rated turnover due to export of goods and services|
|D. Import of goods|
|Box 9||Import of goods, and calculated VAT 25 %|
|Box 10||Import of goods, and calculated VAT 15 %|
|Box 11||Import of goods not subject to VAT|
|E. Purchase subject to reverse charge|
|Box 12||Purchase of intangible services from abroad, and calculated VAT 25 %|
|Box 13||Domestic purchases subject to reverse charge, and calculated VAT 25 %|
|F. Deduction of domestic input VAT|
|Box 14||Deductible domestic input VAT, 25 %|
|Box 15||Deductible domestic input VAT, 15 %|
|Box 16||Deductible domestic input VAT, 10 %|
|G. Deduction of import VAT|
|Box 17||Deductible import VAT, 25 %|
|Box 18||Deductible import VAT, 15 %|
|Box 19||VAT payable / VAT receivable|
Reporting of import VAT through the VAT return was introduced in Sweden from 1 January 2015. Afterwards it turned out that many businesses have not known about the changes and thus not reported the import VAT. From our experience, it is normally much easier to do the necessary adjustments in the systems etc. in advance, rather than correcting errors afterwards.
I therefore recommend everyone to start planning the necessary changes in the ERP systems and VAT codes now, in order to be ready for a new reporting routine in 2017!
Ta gjerne kontakt med meg dersom det er noe du lurer på.
My name is Synne Hangeland and I work as a lawyer at PwC Tax and Legal Services. I assist clients with general VAT advice on Norwegian and international VAT matters, as well as in connection with national and cross border restructurings. I have worked at PwC Tax and Legal Services since 2013. If you have any questions, comments or input, feel free to contact me!
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