Norway Proposes VAT Changes for Cross-Border Services to Enhance Neutrality and Close Tax Gaps

• Norway’s Ministry of Finance proposes changes to VAT rules for cross-border services within the same company.
• The goal is to ensure neutrality and taxation in the destination country and address the VAT gap for Multi Location Entities.
• Remotely deliverable services include consulting, IT, and legal services.
• Key proposal aspects:
• Equal treatment for international and domestic companies regarding VAT obligations in Norway.
• Alignment with OECD guidelines to promote fair competition and prevent tax avoidance.
• Expansion of input VAT deduction for services used outside Norway to avoid unintended tax burdens.
• Proposed amendment to Section 3-30 of the VAT Act ensures services used in Norway are taxed there, even if acquired by entities outside Norway.
• VAT should be calculated on services used by the Norwegian branch, even if processed in a foreign head office.
• The tax base is limited to the value of externally acquired services, excluding added value from internal processing.
• Indirect costs like IT and HR services should be subject to Norwegian VAT.
• Services produced exclusively by a foreign head office are not taxed in Norway.
• The proposal mainly impacts the financial sector, such as banking and insurance, which are VAT-exempt.

Source: schjodt.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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