As from 1 April 2020, non-established sellers / online marketplaces will be liable for VAT on cross-border B2C sales of low-value goods to Norwegian consumers. The new rules comprise goods with a value below NOK 3,000, if the annual sales made in Norway exceeds NOK 50 000. Non-established companies will be obliged to register for VAT in Norway, but a simplified registration and reporting scheme is also established.
The new obligations and reporting scheme
Foreign companies selling goods to Norwegian consumers online will be obliged to register for VAT in Norway from 1 April 2020. The simplified registration and reporting scheme for these entities is called VOEC (VAT on E-Commerce), and it is based on the existing scheme for supply of electronic services (similar to the EU implemented Mini One Stop Shop solution).
A consequence of the new rules is that the previous VAT exemption for import of goods with a value below NOK 350 (small consignment exemption) is abolished. Under the VOEC scheme, the obligation to calculate, collect and pay VAT is shifted to the sellers, and there is a general exemption from import VAT. Goods that are comprised by the new scheme are also exempt from customs duties, making the scheme potentially profitable for suppliers of clothes.
The simplified VAT registration and reporting scheme is not mandatory, meaning that foreign entities can use an ordinary VAT registration in Norway to fulfil their new VAT obligations in Norway instead. On the other side, foreign entities that are already registered for VAT in Norway may be in a position to choose the VOEC-registration instead.
A supplier that chooses the simplified VOEC-procedure, will have to:
- Register under VOEC
- Charge Norwegian VAT to the customer on the point of sale
- Mark the consignments with the VOEC identification number
- Report and pay Norwegian VAT quarterly
Advantages under the VOEC scheme compared to an ordinary VAT registration
- Clothes and textiles are as a starting point subject to customs duties in Norway, while goods within the scope of the VOEC scheme will not be subject to customs duties.
- Consignments imported by VOEC registered entities will not be subject to the customs declaration procedure (the transporter to report in an electronic manifest instead).
- Reporting under VOEC scheme is simplified (in a simplified return on a quarterly basis).
Challenges when deciding whether VOEC is applicable/beneficial
- VOEC is only applicable for sale of goods with a value below NOK 3,000 (appr. EUR. 300). The NOK 3,000 threshold is applied per item - not per invoice or consignment.
- Companies that are registered under the VOEC regime are not able to claim deduction of input VAT on potential local supplies in Norway.
- There will be a requirement for the seller to label the packages specifically.
Companies that are currently performing their online sales to Norwegian consumers through a Norwegian legal entity or an ordinary VAT registration of a foreign entity, should consider whether it is beneficial to change the business model to benefit from the simplified registration scheme. The ordinary customs duty rate for clothes is appr. 10%.
Please note that a change of business model could have commercial and practical consequences, as well as having an impact on allocation of taxable income. It is therefore important to analyze the impact of a potential change of model as a whole.
To ease compliance in the implementation period, online stores and marketplaces may on request be given time to make necessary technical system adjustments needed to provide necessary shipment information with the VOEC consignments and to calculate and collect VAT on the following conditions:
- The online store or marketplace must register in the VOEC scheme. Online stores and marketplaces do not need to be fully compliant by 1 April 2020 to register in the scheme; partial compliance is acceptable in a temporary period.
- The online store or marketplace must confirm an exemption is needed due to technical facilitation etc, and on request, provide documentation that they have taken reasonable steps to comply with the VOEC scheme.
- The online store or marketplace must inform the tax authorities about the estimated date of final compliance with the VOEC scheme.
Only consignments where the VOEC-registered online store or marketplace
has collected the VAT shall be marked with VOEC number. There are detailed guidelines prepared by the authorities how to mark consignments to Norway after registering for VOEC.
This blog post is written by Teresa Sermak and Per Kirknes.
Mitt navn er Per Kirknes og jeg jobber som advokat i PwC. Mitt arbeidsfelt er merverdiavgift og toll, med særlig fokus på internasjonale forhold og cross border transactions. Jeg har arbeidet i PwC siden 2010, og har også erfaring fra tollmyndighetene.
My name is Per Kirknes, and I am an Attorney at Law working in the indirect tax team in PwC Oslo. I specialize in international trade with goods, including domestic and international VAT issues, as well as customs and excise duties. My work is often related to cross-border transactions, including structuring of supply chains and analyses of intra-group transactions. I also provide advice related to specific customs issues like valuation, origin, classification and customs procedures. I have been with PwC since 2010. Prior to that I worked ten years with development of the Norwegian customs legislation in the Directorate of Customs and Excise.