Norway: VAT on e-services | KPMG Global
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Norway: VAT on e-services supplied by foreign companies to consumers

Norway: VAT on e-services

It has been widely reported that earlier in 2017, a foreign company was assessed NOK 30 million (approximately U.S. $3.8 million) including penalties and interest, for the company’s failure to report and pay value added tax (VAT) on its electronic dating services sold to Norwegian consumers.


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This VAT assessment provides an opportunity for foreign companies providing electronic services (e-services) to consumers in Norway to review the VAT rules.


The “VAT on electronic services” (VOES) scheme was implemented following a change in Norway’s law in July 2011. Measures under that law require all foreign companies supplying electronic services to Norwegian consumers, to report VAT at a standard rate of 25% on all sales. This applies even if the company has no establishment in Norway—as long as the company has Norwegian customers.

Electronic services

The definition of “electronic services” under the Norwegian VAT law covers a variety of services supplied to Norwegian consumers. Examples of services subject to VAT under the current rules include supplies of software, applications, games, music, films, digital books, and other electronic publications. Movie streaming services are also subject to VAT. 

The current definition of electronic services is based on EU VAT directives and regulations—EU VAT Directive (2206/112/EU) and the EU VAT Regulation (Council Implementing Regulation No. 282/2011 of 15 March 2011)—and these can serve as guidelines when establishing the VAT liability.

Exemptions from general VAT liability

VAT liability under the VOES scheme generally takes into consideration exemptions from VAT under the Norwegian VAT law. Thus, exemptions that apply for domestic businesses also apply for foreign businesses. For example, services in the form of lotteries and games of chance are not subject to VAT in Norway. Consequently, such services will also be exempt from the VAT liability of foreign companies supplying services (e.g., online poker and casino games supplied via the internet).

Consequences of non-compliance

As a general rule, the Norwegian tax administration generally has a five-year limitations period in which to make a VAT assessment. If there is evidence of gross negligence or intentional withholding of VAT established, the period for making the VAT assessment is 10 years from the last date of each reporting period.

Individuals who are customers of VAT on electronic services cannot deduct VAT on the services purchased from a foreign supplier. In any event, the audited company would find it difficult to invoice VAT to those individual customers if a tax audit revealed a VAT underpayment.

In the event of a “discretionary assessment,” a company might consider treating the entire tax bill as a cost, but this could be a large cost for any business if the tax administration were to decide to pursue the VAT liability for many prior years.

Additional penalty charges, interest

In addition to assessing the actual VAT liability, the tax administration typically may decide to impose a penalty, ranging between 20% and 60% of the underlying VAT charge, with the percentage depending on factors of the failure to report and pay VAT in the specific case. The penalty, thus, can be a large and unforeseen cost for any company.

It is also standard procedure to impose interest for any unpaid VAT in Norway. Because the original due date for payment of VAT is always based on the original payment date, a company could be subject to interest at a rate ranging between 6% and 13% over the period(s) or year(s) at issue. 

KPMG observation

Based on experience and on indications from the tax administration, tax auditors are expected to increase their focus on compliance with the VOES scheme. Because nonpayment of VAT on electronic services is considered a direct loss of revenue for the Norwegian government (given that individual customers cannot deduct VAT), it appears that the Norwegian government has an incentive to enforce the VOES legislation. Reports indicate that VAT audits under the VOES scheme have resulted in additional revenue totaling nearly NOK 500 million. Notably, the tax administration has already announced there were at least 20 new audits initiated in 2017.

It may be that many foreign companies providing e-services to consumers in Norway are unaware of the requirement that they must be registered under the VOES scheme. The tax administration can be expected to focus its audit resources on non-registered companies. Thus, foreign companies may want to consider that, as a first step, they are registered with respect to future e-service sales made to Norwegian customers.

Lastly, Norway has entered into international tax collection agreements with many countries. Accordingly, this is yet one more reason for multinational companies to determine their compliance with the rules under the VOES legislation. 


For more information, contact a KPMG tax professional in Norway:

Håkon Mathias Sterling Danielsen | +47 917 67 873 |

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