NORWAY: COVID-19 VAT IMPLICATIONS

Apr 1, 2020 | COVID-19

NORWAY – update 18th April

New rules for delayed payment of taxes and VAT

Due to the COVID-19 situation, the Government has earlier extended the reporting and due date for a number of taxes and VAT, as follows:

What Ordinary Deadline New Deadline
Tax return for wealth and income tax for businesses and companies 31.05.2020 31.08.2020
1. Term VAT 14.04.2020 10.06.2020

Advance tax second term for

private limited companies

14.04.2020 01.09.2020
Advance second term for self-employed individuals (first term) 15.05.2020 15.07.2020
Payroll Tax 15.05.2020 15.08.2020

Financial activity tax (second term)

15.05.2020 15.08.2020
Tax-free conversion 01.07.2020 01.09.2020

It has now also been proposed to make the current regulations for extensions to the due dates and late payments more flexible, including, on application, further extensions in due dates due to payment difficulties caused by COVID-19.

Whether an extension has been granted or not, it is proposed that the interest rate that applies for late payments will be a reduced rate of 6%. VAT reporting must still be filed as before.

VAT and other duties

Proposed to extend the submission deadline of the VAT compensation claim

Municipalities, county municipalities and private/non-profit enterprises that are subject to the VAT compensation scheme usually have a rather short deadline for filing its VAT compensation claim. For example, the requirement for January / February is already due on June 10.

If the submission deadline is not met, the companies will normally not be eligible to claim VAT compensation. Due to the Covid-19 situation, the short deadlines has created a huge pressure on the compensated companies that already have been charged with extra work due to the outbreak of the virus.

In this respect, the Government has proposed new rules for when a claim for compensation for the first period of 2020 should be considered statute-barred. It is proposed that the new deadline should coincide with the filing deadline for the VAT return on VAT compensation for the third period – ie, August 31, 2020.

 

Source Credit – PWC

NORWAY – update 17th April

The Government announced new measures including a VAT payment deferral and reduction of the low VAT rate. The tax offices closed for face-to-face meetings until further notice.
Norway approved legislation for Covid-19 measures. This includes a VAT payment delay from 14 April 2020 to 10 June 2020. They also further reduced the low rate of VAT; reduced from an initial 12% down to 6% (8% initially proposed). Parliament approved this for a temporary period of 1 April 2020 to 31 October 2020.

 

Source Credit – Accordance VAT

NORWAY – update 14th April

Reduction of the low VAT rate (incl. passenger transport, accommodation, cultural sector) from 12% to 8%

The Norwegian government published a release on 6 April summarizing the economic measures adopted and proposed in response to COVID-19. For businesses, the measures are summarized as follows:
Measures aimed at business and industries

  •  A compensation scheme for otherwise sustainable businesses with at least a 30% drop in revenue due to the virus outbreak. The amount of support will depend, among others, on the size of revenue loss, the size of the enterprise’s unavoidable fixed costs and whether the enterprise has been ordered by the government to close (separate release]).
  • A reduction in employer-paid days from 15 to 2 for temporary lay-offs, from 10 to 3 for care-related leave and from 16 to 3 for corona-related sick leave.
  • Allowing loss-making companies to re-allocate up to NOK 30 million of the loss in 2020 against taxed surplus from 2018 and 2019 and refunding the tax value of this loss in 2020.
  • Postponing deadlines for payment of value added tax, employer tax, advance tax for self-employed and companies, and several exercise taxes, including CO2
  • Reduction of the low VAT rate, which includes passenger transport, accommodation and parts of the cultural sector, from 12% to 8%.
  • Suspension of the tax on air passengers, for flights in the period from 1 January until 31 October 2020. Suspension of payments of aviation charges.
  • Purchase of domestic air routes where there is no basis for commercial operations due to the crisis. Budget allocation of NOK 1 billion.
  • An aviation guarantee scheme totalling NOK 6 billion, with a 90% government guarantee on each loan. NOK 3 billion is directed to Norwegian Air Shuttle, 1.5 billion to SAS and 1.5 billion to Widerøe and other airlines.
  • Temporary purchase of basic rail transport services (NOK 550 million)
  • Increased funding for Innovation Norway and the Research Council by a total of more than NOK 3 billion, and NOK 1 billion increased investment capital in Investinor.
  • A compensation scheme of NOK 1 billion to pre- and after school cares and day-cares.
  • A compensation scheme of NOK 900 million for culture, sport and voluntary sectors.

Guarantee and loan schemes for businesses

  • A state guarantee scheme for bank loans to enterprises, with a total guarantee volume of NOK 50 billion. The state guarantees 90% of each bank loan. Entered into force on March 27, after approval by the EFTA Surveillance Authority.
  • A government bond fund with an investment budget of NOK 50 billion to increase liquidity and access to capital in the Norwegian bond market.
  • Increased borrowing limit in Innovation Norway’s loan scheme by NOK 1.6 billion.

Note – The update does not include the further reduction of the reduced VAT rate from 12% to 7%.

 

Source Credit – Orbitax

NORWAY – update 7th April

Tax, Social Security, Benefits, and Quarantine Measures

Norway’s government has introduced various tax, social security, benefits, and travel/immigration measures to help the country combat – and cope with – the spread of COVID-19. Measures include: closure of all tax offices and the Service Centre for Foreign Workers (SUA); proposed reduction in employers’ social security contribution obligation and payment deadline extension; increase in number of days for parental leave in connection with closed schools and child-care needs; “lower rate” of VAT temporarily reduced; and reduced or waived penalties for late submissions. 

Norway’s government has introduced various tax, social security, benefits, and travel/immigration measures to help the country combat – and cope with – the spread of COVID-19.

Measures include:

  • Closure of all tax offices and the Service Centre for Foreign Workers (SUA).
  • Proposed reduction in employers’ social security contribution obligation and payment deadline extension.
  • Increase in number of days for parental leave in connection with closed schools and child-care needs.
  • “Lower rate” of VAT temporarily reduced.
  • Relief from imposable fines and penalties for late reporting/filing.

WHY THIS MATTERS

The series of measures ushered in by Norway’s government are intended to help combat the spread of COVID-19 in the country and to bring relief to individuals and their employers as they come to grips with the changed situation in their daily lives and business operations arising from the restrictions tied to work, travel, and daily life.

The government’s measures related to tax reductions, delayed payment obligations, expanded sick pay and parental leave, and relief for other compliance obligations, should give taxpayers some very welcome breathing room to preserve their cash-flow and take additional time to organise their home, business, and tax affairs in these trying times.

VAT-Update

  • The VAT “lower rate” is temporarily reduced from 12 percent to 6 percent.  This is a temporary arrangement to apply for a limited time-period from 1 April until 31 October 2020.  The reduced rate scheme applies to passenger transport, accommodation, public broadcasting, as well as access to cinema, sporting events, amusement parks, and adventure centers.
  • Payment of VAT for the first period 2020 (January to February), with an original due date 14 April, will be postponed until 10 June 2020. 

 

Source Credit – KPMG

NORWAY – Update 31st March (3)

  • By fulfilling specific conditions, it is possible for companies to reallocate a deficit in 2020 against taxed profits the previous two years. A limit of NOK 30 million has been set for the reallocation of the deficit for 2020.
  • The payment of advance tax for companies for the second term was initially due April 15, but the deadline is now extended to September 1 2020.
  • Payroll tax was initially due May 15, but has been proposed postponed until August 15.
  • The Government has proposed to reduce the employer’s contribution by 4 percentage points from 14.1% to 10.1% for the second term.
  • Financial activity tax (2. term) was initially du May 15, but has been proposed postponed until August 15.

NORWAY – Update 26th March (2)

  • The Government is considering extending the payment due date to 10th June 2020 for VAT due Q1
  • The due date for VAT filing has not been extended
  • Temporary reduction to 8% from 1st April to 31st October 2020 for services and goods that are currently subject to 12% rate

NORWAY – Update 25th March (1)

  • Low rate of VAT could be reduced from 12% to 8% from 20th March 2020 to 31st October 2020.
  • VAT Payment deadlines (1st period for 2020) could be extended from the original deadline of 14th April 2020 to 10th June 2020.

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