NORWAY: Low value consignment relief removal and simplified registration scheme aimed introduced from 1 April 2020
The Norwegian Government is proposing to remove the current low value exemption for small consignment. At the same time, a simplified arrangement for the payment of VAT from non-Norwegian platforms is proposed with effect from 1 April 2020.
The national budget for 2020
The Norwegian government presented the national budget for 2020 on 7 October 2019, announcing changes to the national low-value consignment relief scheme. The current import VAT and duty relief for goods valued below NOK 350 is abolished. Furthermore foreign e-commerce traders (sellers and market places) are required to register for Norwegian VAT under a simplified MOSS-alike registration/reporting process called VOSC (VAT on small consignments).
NOK 350 limit abolished – introducing a simplified registration scheme
Norway follows the destination principle for VAT purposes. Imports to Norway are in principle subject to VAT and other customs duties, except for a current exemption for lower value goods (less than NOK 350 including freight and insurance costs). This exemption is abolished, and it is proposed that foreign sellers and online marketplaces is liable for VAT on cross-border sales of low value goods to final consumers in Norway through a simplified registration scheme aiming for introduction from 1 April 2020.
Foreign sellers and online marketplaces thus has to register, declare and pay VAT on business-to-consumer (B2C) supplies of low value goods/small consignments. The new rules are in accordance with OECD guidelines. The Government is assessing common solutions on how to practically enforce the new rules in relation to labelling and reporting shipments to document that VAT is levied at the time of sale.
Lower value goods
The VOSC-scheme applies to goods valued between NOK 0 – 3,000 (EUR 0 – 300). For values exceeding NOK 3000, the supplier will be able to let the consumers pay the import VAT (in practice handled by the Norway Post).
The VOSC-scheme is not applicable on import or sales of tobacco products, alcoholic beverages, other restricted or illegal goods according to Norwegian law, and food (goods meant for human consumption). These goods will be subject to ordinary VAT-treatment and customs duties, independent of value.
NOK 3,000 customs duty relief
The customs duty relief threshold is increased from NOK 350 to NOK 3,000 as a simplification measure for online marketplaces under the VOSC scheme. Clothing and textiles are generally subject to customs duties in Norway, hence this exemption will lead to an exemption for customs duties for foreign textile suppliers under the VOSC scheme.
According to the government’s proposal, it seems only these VOSC-registered entities will benefit from this duty relief. Hence, Norwegian importers of goods outside the VOSC-scheme must pay relevant duties and VAT on all import of goods, including lower value goods. The Government is aware that this leads to an unfortunate differential treatment between foreign suppliers and Norwegian traders especially in the textile industry, but considers it necessary to enforce foreign suppliers to follow the VOSC scheme.
Simplified registration system - VOSC
The foreign suppliers and online market places shall manage their VAT liability on sales of low value goods through on a quarterly basis through the VOSC-system (VAT on cross border B2C sales of small consignments) – an extension of the existing VOES-system (VAT on cross border B2C sales of electronic services).
These systems allows a simplified registration process, simpler reporting requirements, and fewer administrative burdens in general than a full ordinary registration in the Norwegian VAT Registry. VOSC-suppliers are not entitled to VAT deductions for expenses relating to their business activity in Norway, but may use the refund scheme for foreign traders.
Who is liable for VAT – Deemed supplier
An overall assessment has to be made as to who is liable for VAT under the VOSC-scheme. If the supply of goods are facilitated using an intermediary, i.e. online marketplaces facilitating the sales with an electronic interface (e.g. marketplace, platform, app, portal), the intermediary is normally the deemed supplier, based the degree of (direct and indirect) involvement in the supply to the Norwegian consumer. More detailed regulations will be issued in order to clarify the deemed supplier.