Value added tax (merverdiavgift)

Value added tax (merverdiavgift, MVA) is a broad public tax levied on the consumption of goods and services. As an indirect tax it is paid by the end user, which affects private individuals and businesses alike. VAT finances public projects and services, and redistributes resources for the benefit of society.

Who pays value added tax?

Everyone who buys goods and services on which VAT is levied pays this tax. In Norway there are four main rates:

• 0% (zero rate): Books, newspapers and exports.
• 12% (low rate): Passenger transport, cinema tickets and letting of rooms.
• 15% (medium rate): Foodstuffs and non-alcoholic beverages.
• 25% (standard rate): The standard rate for most goods and services.

The rates above are the Norwegian ones and apply to sales in Norway; they are not the same as the VAT rates in other countries.

What VAT means for your business

For businesses, VAT is a pass-through item. Businesses with VAT-liable turnover above NOK 50,000 over a twelve-month period are required to register in the Norwegian VAT Register (Merverdiavgiftsregisteret).

Certain services, however, fall outside the Norwegian VAT Act (unntatt). These include health services, education, financial services and insurance, cultural services, and the sale and letting of real property. If you sell only such services, you neither charge output VAT nor register, but nor can you deduct the input VAT on your own purchases.

That is a different thing from zero-rated turnover (fritatt), such as books and exports. Zero-rated turnover is inside the Act, is invoiced at 0%, and gives a full right to deduct input VAT.

Key aspects of VAT for businesses

• VAT registration requires accurate accounting records.
• Periodic reporting to the state is mandatory.
• The difference between input VAT and output VAT is reported and paid.