Norway – New VAT Framework for remotely deliverable services

Last December, the Norwegian Parliament passed amendments to the VAT Act, which included modifications to the VAT rules for the cross-border provision of remotely deliverable services within Multi-Location Entities (MLEs). Newly adopted provisions will significantly change the tax rules for the provision of cross-border services. 

Timeline 

Adopted amendments to the VAT Act, that change the taxability rules for cross-border provision of remotely deliverable services, shall come into effect on July 1, 2026. 

Scope of Changes 

Under the current VAT rules in Norway, MLEs could procure remotely deliverable services through a head office based in an EU Member State, whilst the services are actually used by their establishment in Norway, without incurring additional VAT costs in Norway. 

The transfer of services within MLEs with different establishments, as in the example above, is not considered a taxable revenue. In this case, under the current rules in Norway, when a foreign establishment purchases remotely deliverable services, e.g., head office, and the service is used by its establishment in Norway, the foreign establishment is tax-exempt from VAT and Norwegian duties. 

This creates unequal taxability rules between MLEs with establishments in Norway and domestic taxable persons, who are VAT-accountable for the acquisition of the same type of services when used for VAT-exempt activities. 

The amendments to the VAT Act align Norway’s VAT rules for the cross-border provision of remotely deliverable services with the OECD destination-based principle for the taxation of these services. 

New VAT Rules 

When a foreign MLE purchases a remotely deliverable service that is later used by its establishment in Norway, it will be subject to the Norway VAT Act(under the reverse charge regime) when the following conditions are met: 

• The service is purchased by an MLE establishment based outside Norway 
• The service is intended for use (either fully or partially) by the establishment of the MLE based in Norway; and
• The service, if supplied in Norway, would not be tax-exempt

Norway VAT amendments align its taxation rules with the OECD destination-based principle when it comes to the transfer of services for businesses with establishments in different countries: if a service is purchased by a foreign establishment but actually used by the establishment in Norway. 

Are you aware of the new rules for intra-company transfers for electronically supplied services?