VAT registration – when does a business have to register?
A business has to register once VAT-liable turnover and withdrawals together pass NOK 50,000 excluding VAT within a twelve-month period. That is not a calendar-year limit, so turnover has to be tracked continuously – it can be crossed mid-year. Notify without undue delay, and do not invoice with VAT before the registration is actually approved.
The threshold is NOK 50,000 over twelve months
For most businesses the duty to register arises once VAT-liable turnover and taxable withdrawals together exceed NOK 50,000 excluding VAT in a twelve-month period. This is not a calendar-year limit. If the business sold NOK 35,000 between October and December and a further NOK 20,000 in January, the threshold has been crossed – even though the turnover falls in two calendar years. For charitable and non-profit organisations the threshold is normally NOK 140,000. There are also some special rules, including for admission to sporting events. Keep this separate from the question of whether you are carrying on a business at all. You can be in business long before you reach NOK 50,000.
What counts towards the threshold?
It is turnover covered by the VAT Act that is relevant. Ordinary VAT-liable turnover counts. So can turnover that is zero-rated, such as certain forms of export. Turnover that is outside the scope of the VAT Act – many health, education and financial services – does not normally count. The difference between zero-rated and out of scope is covered in VAT exemptions for health, education and culture Where the same company carries on several VAT-liable activities, the turnover is assessed together. A limited company does not get its own NOK 50,000 threshold per line of business.
When is the threshold treated as crossed?
It is not necessarily the invoice date that decides. What matters is when the goods or services were delivered, and therefore when the turnover took place. Once turnover exceeds the threshold, the registration notification has to be sent without undue delay. The first NOK 50,000 does not become VAT-liable retrospectively. But the supply that takes the business over the threshold is as a starting point VAT-liable in full – not only the part above the threshold.
Do not invoice with VAT before registration is approved
Even where the duty to register has arisen, do not state VAT on an invoice before the business is actually entered in the VAT Register. Where you have to invoice before the registration has been processed, you can normally invoice without VAT and reserve the right to invoice the VAT afterwards once the registration is in place. After registration the VAT can either be invoiced afterwards with a reference to the original invoice, or the first invoice can be credited and replaced with a new one carrying the correct VAT.
Can you register before reaching NOK 50,000?
In some cases, yes. Pre-registration can be available where the business is expected to cross the threshold very shortly after turnover starts. It can also be available where the business has made substantial investments before starting up. For this scheme, purchases of at least NOK 250,000 including VAT count as substantial, and several further conditions apply. Pre-registration is particularly relevant for businesses with large investments before the income arrives.
VAT on costs from before registration is not lost
The business not having been VAT-registered when a cost was incurred does not necessarily mean the VAT has gone. Through the rules on retrospective VAT settlement, a registered business can as a general rule claim a deduction for input VAT on relevant purchases made up to three years before registration. The purchase has to have a sufficient connection to the registered business, and the ordinary rules on VAT deductions still apply – see VAT deductions That is why you keep the records from the start-up period.
Voluntary registration is not a general option
It is a widespread misunderstanding that a business with under NOK 50,000 of turnover can freely choose to register in order to recover VAT. It cannot. Voluntary registration is reserved for particular cases in the VAT Act. The most practical example is letting buildings to tenants who use the premises in qualifying activity – see Voluntary VAT registration for letting property
What happens if you register too late?
Where the business should have registered earlier, it can have to calculate and report VAT for the period after the duty arose. Interest can also accrue, and in some cases additional tax. If you find the error yourself, it is normally better to put it right quickly than to wait – see Voluntary disclosure
In short
Track VAT-liable turnover continuously and register once it exceeds NOK 50,000 within twelve months. Watch three things at the same time: do not wait for the calendar year to end, do not invoice with VAT before the registration is in place, and keep the records from the start-up period. We can handle the registration, check earlier turnover and make sure the VAT treatment around the registration date is right.
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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.
More on value added tax
- VAT deductions – what can you reclaim?
- VAT on services to and from abroad – how do you invoice correctly?
- VAT on imported goods – how it works
- The VAT adjustment rules for real property – how do they work?
- Voluntary VAT registration for letting property – when is it possible?
- VAT exemptions for health, education and culture – what applies?
- VAT periods and deadlines – when is the VAT return due?
- The annual VAT return – when can you apply for an annual period?
- Bad debts – when can you recover the VAT?
- VAT on winding up and bankruptcy – what has to be settled?
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