VAT adjustment obligations - new specification requirement in the VAT return
In the VAT return for the 6th term 2022 (November-December), with submission deadline 10 February 2023, the annual adjustment amount shall be reported on a separate specification line for the first time. There is reason to believe that the Norwegian Tax Agency will have an increased focus on correct reporting of VAT adjustment obligations when this now shall be clearly stated in the VAT return. If you are reporting on behalf of a Norwegian VAT registered company, it should be ensured that these amounts are reported correctly.
Capital goods and VAT adjustment obligations
Adjustment regulations for input VAT apply for capital goods investments. The regulations apply to immovable property (owned and leased) where input VAT exceeds NOK 100k and to machines where input VAT exceeds NOK 50k.
The adjustment rules imply that for input VAT deducted on investments on immovable property/machines, there is a lock-in period of 10/5 years. This means that if the use of the capital goods changes from VAT liable activity to non-VAT liable activity within the lock-in period, the company is obliged to repay the previously deducted input VAT made on the investments (equivalent to the remaining time of the lock-in period).
New VAT return from 2022
A new digital VAT return was introduced from 1 January 2022. The reporting is based on SAF-T codes and the SAF-T standard, which became mandatory for all companies subject to bookkeeping from 1 January 2020. The new VAT return has resulted in more detailed reporting, including specification of loss on receivables, adjustment obligations, reversals and withdrawal.
Reporting of VAT adjustment obligations and rights
In the event of changes in the use of capital goods from VAT liable use to VAT exempt use or vice versa, an annual adjustment of input VAT shall be done. The annual adjustment shall be reported in the VAT return for VAT term 6 (November-December) each year.
The adjustment amount shall be reported as an increase or decrease of input VAT. Input VAT is reported with SAF-T VAT code 1.
The SAF-T VAT codes does not have separate codes for loss on receivables, adjustment obligations, reversals and withdrawal. It therefore requires extra control routines at each individual company to report these amounts correctly.
If your company does not already have a full overview of ongoing adjustment obligations and rights, our recommendation is to start this mapping now in order to be able to report correctly in the VAT return for term 6 2022.
Our experience is that many companies do not have sufficient control and documentation related to VAT adjustment obligations, and more detailed reporting indicates an increased focus from the Tax Agency on these areas.
We have developed a tool that easily calculates your company's adjustment obligations and rights, so feel free to get in touch if your company needs assistance with identifying capital goods and adjustment amounts.
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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