VAT on winding up and bankruptcy – what has to be settled?

Stopping trading and deleting the company is not enough. Before the VAT registration ends, the final VAT return, the sale or withdrawal of stock and fixed assets, outstanding trade receivables and capital items still within their adjustment period all have to be settled. In a bankruptcy the estate is registered under its own organisation number, and the right to deduct shifts at the opening of proceedings.

When should the business be deleted from the register?

Once the VAT-liable activity actually ceases, the business has to notify Skatteetaten and be deleted from the VAT Register. Where the business continues but VAT-liable turnover falls below the NOK 50,000 registration threshold, it must as a general rule stay registered for at least two full calendar years. One bad year therefore does not mean the registration should end.

Remember the final VAT return

The final return may have to include ordinary output and input VAT up to cessation, VAT on the sale of stock and fixed assets, any withdrawal VAT, adjustment of capital items, and correction of bad debts. That is often the most complex VAT return the business ever files, and it arrives at the point when attention is elsewhere.

Stock and fixed assets

On an ordinary sale the usual VAT rules apply to the asset in question. Real property is as a general rule outside the scope of VAT, while ordinary stock and many fixed assets are normally sold with VAT. Where goods are taken out of the VAT-liable business for private use or other purposes outside it, that can trigger withdrawal VAT. That applies even where the owner simply keeps the goods – nobody paying anything does not mean no VAT arises.

What if the whole business is sold?

Where the business – or an independent part of it – is transferred to a new owner who will continue the activity, the transfer can fall within the exemption for a transfer of a business in section 6-14 of the VAT Act. That is a material difference from selling the assets individually, and the conditions should be settled before the sale agreement is drafted. See also Due diligence when selling a business

Unpaid trade receivables

Where the business has already reported output VAT on an invoice the customer later cannot pay, the VAT can on certain conditions be corrected. From 1 January 2026 a specific rule applies to related-party debts with a 24-month limit – see Bad debts

Check capital items before winding up

Capital items include machinery and other fixed assets where the input VAT on the cost is at least NOK 50,000, and new builds, extensions and conversions of real property where the input VAT is at least NOK 100,000. The adjustment period is five years for machinery and ten years for qualifying construction measures. Note the two different thresholds and the two different periods. They are easily confused.

Real property needs extra care

A sale of real property is as a general rule outside the scope of VAT. Where the property contains a construction measure still within its ten-year adjustment period, a sale can trigger a full negative adjustment for the remaining years – see The VAT adjustment rules for real property That is the single amount that most often surprises people on a winding up with property in the balance sheet.

Bankruptcy is handled differently from a voluntary winding up

When the district court opens bankruptcy in a VAT-liable business, the debtor is normally deleted from the VAT Register from the date of the bankruptcy. Where the debtor was required to be registered at the opening, the bankruptcy estate is registered under its own organisation number. No new NOK 50,000 threshold applies to the estate. The process up to the opening of bankruptcy is covered in Served with a bankruptcy petition, and the board's responsibility in Directors' liability and personal liability

Who has the right to deduct around the bankruptcy date?

For goods and services delivered before the opening of bankruptcy, the right to deduct belongs to the debtor. For what is delivered after the opening, it belongs to the estate. The dividing line is delivery, not the invoice date – which is why records around the bankruptcy date have to be gone through one by one.

Opening bankruptcy does not automatically trigger an adjustment

The opening of bankruptcy is not itself an adjustment event for capital items. An adjustment obligation can arise later, where the estate sells a commercial property still within its adjustment period, for instance.

What does abandonment mean?

In an ordinary abandonment the estate releases its claim on the asset. There is then no supply from the estate, and the asset does not automatically pass to the secured creditor. Where the estate instead transfers ownership to the secured creditor in return for a reduction of the debt, that can be a supply and trigger VAT. The difference between the two is large for VAT purposes and not always visible in the documentation.

The checklist before winding up

On a voluntary winding up the business should check the final VAT return, stock and fixed assets, sale versus withdrawal, any transfer of the business, unpaid trade receivables, capital items and adjustment periods, and any real property. In a bankruptcy you also have to keep a clear line between the debtor and the estate, and between transactions before and after the opening. On a voluntary winding up we can handle the closing settlement, the final VAT return, the treatment of assets and the adjustment rules. The company law procedure for a voluntary winding up, with the creditor period and deletion, is in Winding up a limited company

This is general guidance, not advice on your specific case. Deadlines, rates and amounts change – always check the current rules, or get in touch with us.

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