Registration in the Value Added Tax Register for foreign businesses
Av partner/advokat Preben Kløvfjell
Foreign enterprises which carry out assignments in Norway must comply with the Norwegian VAT rules in the same way as Norwegian companies. This means that if you carry out an assignment where the turnover in Norway exceeds NOK 50,000 over a 12-month period, you must register the enterprise in the VAT Register on the Norwegian Tax Administration´s website. The registration is necessary regardless of whether the company intends activities over a longer or shorter period.
In order to register your enterprise in the VAT Register, you must register it in the Norwegian Register of Business Enterprises (Foretaksregisteret) or the Norwegian Register of Legal Entities (Enhetsregisteret).
If you need to register as a foreign company in Norway and do not have a fixed place of business in the country, you must be registered with a Norwegian VAT representative. You must do this when you register your company in the Norwegian Register of Legal Entities (Enhetsregisteret) or the Norwegian Register of Business Enterprises (Foretaksregisteret). However, there are exceptions for enterprises domiciled in the EEA countries Austria, Belgium, Bulgaria, Czech Republic, Denmark, Estonia, Finland, France, Faroe islands, Germany, Greenland, Greece, Hungary, Ireland, Island, Italy, Croatia, Cypros, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden or United Kingdom. Enterprises from these countries can be registered in the VAT Register without a VAT representative.
If you come from one of the EEA countries referred to above, you can decide whether or not you wish to use a representative. If you choose to use a representative, the representative is not under joint and several liability for payment of VAT. The cost of using a representative will need to be considered in view of the benefits of using a representative that is familiar with Norwegian affaires.
Both you and your representative are responsible for ensuring compliance with the relevant bookkeeping rules. In addition, your sales documents must also state the name and address of the representative. Both you and your representative must retain copies of sales documents.
Upon registration, rights and obligations are conferred on the foreign company under the regulatory framework governing VAT, in line with those conferred on Norwegian businesses, for example the right to deduct VAT. Registration is conditional upon the general prerequisites for registration having been met.
Fixed place of business – tax liability for the foreign enterprise
A foreign company with activity in Norway will as a rule be liable to tax in Norway from the first day of business, in accordance with Norwegian internal tax law.
However, Norway has entered into bilateral and multilateral tax conventions with a number of countries to avoid double taxation and prevent tax evasion. Normally, a foreign company can only be taxed in Norway for activity here if the company is considered to have a fixed place of business in Norway.
The foreign company’s tax liability is assessed specifically in each case by the Norwegian Tax Administration. The assessment is based on what type of assignment it is and the duration of the assignment. Prior to the conclusion of the agreement, it is advisable to examine the current tax convention between Norway and the country in question.
If you have employees or you pay salary, pensions or other benefits, you’ll be subject to the reporting obligation in the a-ordning scheme and must submit a-meldings.
The reporting obligation concerns an obligation to provide information concerning employment, salary and other benefits, withholding tax deductions, employer’s national insurance contributions and financial activity tax on salary. You must report information concerning employment every month up to and including the month in which the employment ends. Report information concerning the employment even in months the employee has not received any salary.
If salary payments to a person exceed NOK 1,000 per year, you must specify this in the a-melding.
You must submit a-meldings from and including the month in which the threshold amount is exceeded and for as long as you’ve got payments or employment. Only when you don’t make any payments and set an end date for the employment relationships should you stop submitting a-meldings.
Information about contracts, contractors and employees
All contracts given to a foreign contractor onshore or offshore must be reported in the Norwegian Assignment and employee register.
It’s the client’s duty to report the assignment. The client must inform the Norwegian Tax Administration about all contracts and sub-contracts given to a foreign company or person, when the value of the assignment exceeds NOK 20,000 in form RF-1999. The form is found on the Norwegian Tax Administration´s website.
The foreign contractor is obliged to report the employees that work on the assignment. The contractor must provide information about all employees that work on assignments in Norway or on the continental shelf. The Tax Administration will issue D -numbers and tax deduction cards according to the information given on form RF-1198.
You must have «read access» to form RF-1199/RF-1198 in Altinn for the organization number registered on the assignment in order to view reported information in the register. If you’re going to report information, you must have «write access». The accesses are assigned in Altinn and one must log in with an electronic ID.
Registration requirements for the employee:
The individual employee must register upon arrival in Norway.
Prior to this, it is expedient if the foreign company has submitted form RF-1998 to register the individual employee in the Assignment and employee register as mentioned above.
The registration process will be faster if the forms RF-1999 and RF-1998 are sent in advance of the employee’s arrival in Norway.
There are several conditions that must be in place before the foreign employee can start working in Norway. In the following, we will briefly account for some of these requirements.
A D-number is a temporary identification number that can be given to foreign citizens who aim to stay in Norway for less than six months. The Norwegian Tax Administration will only give D-numbers to those who are tax liable in Norway, to those who need a Norwegian tax deduction card, and to those who pay VAT/duties in Norway. If you need a D-number for other reasons, it will be requisitioned by the authority/company or financial institution that needs it.
A D-number is assigned when a person applies for a tax deduction card. Applicants must visit a tax office or Service Centre for Foreign Workers (SUA) office in person to have their identity verified. You’ll find your D-number on your tax deduction notice, which you’ll receive in the post after you have applied for a tax deduction card.
Your employer will need your D-number, which is your Norwegian identity number. You’ll also need this number as personal identification in many situations.
Tax deduction card
The tax deduction card is an electronic document that states how much tax your employer must deduct from your salary.
You’ll receive a tax deduction notice with information about your tax deduction card when we have considered your application for a tax deduction card. This is your confirmation that you have received a tax deduction card.
The tax deduction notice also states your Norwegian identity number.
Most new foreign workers will pay tax according to a simplified tax scheme the first year they work in Norway. The scheme is called PAYE (Pay As You Earn) for foreign workers and means that you’ll pay a set tax percentage, which your employer will deduct before paying your salary. Under this scheme, you do not have to claim deductions, and you do not have to submit a tax return nor wait for your tax assessment.
You can choose to pay tax according to the general tax rules instead of the PAYE scheme. You make your selection when you apply for a tax deduction card or later in the income year by changing your tax deduction card. Please note that if you opt out, you cannot change your mind.
Within certain industries in Norway, it is necessary to hold a permit in order to be able to run your own business. All those who carry out work on building and construction sites, including both Norwegian and foreign workers, must have an HSE card. The HSE card identifies the enterprise you are working for and who you are. The HSE card helps to provide a better overview of the organisations present on a building and construction site.
It is the employer who must ensure that anyone who carries out work on building and construction sites has a valid HSE card.
All those who work at building and construction sites must have a valid HSE card. There is no ban on working during the application period until the HSE card has been received, but the employer must be able to document that the HSE card has been ordered. Before the HSE card is been received, the worker at the building and construction site must be able to document which enterprise he/she is working for. Such documentation may, for example, be a contract of employment or confirmation that the HSE card has been ordered. Provided the registration obligations are fulfilled, the enterprise should receive the HSE card within one week of ordering.
For some types of employment, an employer can order HSE cards before employment commences. Note that the contracting authority can impose stricter requirements than those in the regulations through its own requirements in contracts. They can thus require that all employees have HSE cards when starting work at the building or construction site. The Norwegian Labour Inspectorate has no authority in respect of such contracts. This is a matter between the contracting authority and the contractor.
Workers who are nationals of an EU/EEA/EFTA country no longer need to apply for a residence permit in Norway, they can register electronically on the website of the Directorate of Immigration (UDI).
Those who register must then report to the police or to a Service Centre for Foreign Workers. Nationals of EU/EEA/EFTA countries with valid ID cards or passports have a right of residence for three months in Norway.
If you want to stay in Norway for more than three months, you need to have a job. As mentioned, you do not have to apply for residence, but you have to register electronically. After registration on the internet, you must go to the nearest police station. If you live in a police district with a Service Center for foreign workers, you need to show up here. You must show a valid identity card or passport, and a certificate of employment og employment contract that is in accordance with the provisions of the Norwegian law “arbeidsmiljøloven”.
If the conditions for the registration are fulfilled, you will receive a registration certificate. This certificate is free of charge and it is valid indefinitely. Registration certificates are only valid if the conditions are met, which is if you fulfil a residence permit as for example an employee or student. You can change the basis of stay, for example from being an employee to become self-employed. You do not need to report this.
After five years, you have an opportunity to apply for permanent residence.
It is important to note that if you stay outside of Norway for more than six months during a calendar year, the basis of residence is lost. In the event of a new stay in Norway, the EEA citizen will have to register again.
Exceptions may be made if the absence is due to authorized absence, such as pregnancy, childbirth, serious illness, studies etc. In that case, absence of a maximum of 12 continuous months will be accepted.
Law Firm Tveter & Kløvfjell AS works with issues relevant for foreign companies from the EU / EEA / EFTA who want to conduct business in Norway. If you need legal assistance in connection with the establishment of a company, please contact the lawyers at Law Firm Tveter & Kløvfjell AS, who have expertise and experience within company law. Please send a non-binding e-mail to email@example.com or call us on +47 22 17 74 00.