Next year, new rules are expected to come into effect in Norway which will align the VAT playing field between domestic and foreign online sellers. Similar measures have already been put in place across several non-EU countries, for example, Switzerland and Australia.
Under the current system, imported packages of goods entering Norway with a value not exceeding NOK 350 (approximately EUR 35) benefit from low value consignment relief. This means that such supplies are exempt from import VAT and any corresponding customs duties. The system was initially put in place to spare tax authorities from the administrative hassle of having to collect what were, at the time of implementation, comparatively negligible amounts of tax.
However, the rapid growth of cross-border ecommerce trade has been leading to distortions of competitivity between Norwegian and non-established businesses. It has also increased levels of potential tax revenue flying beneath the radar. As a result, Norway (and other tax authorities the world over) are having to rethink their views on this exemption.
Consequently, as of 1st January 2020, the proposed new rules will abolish this relief in Norway. From this date, all goods that are imported into Norway will be subject to Norwegian VAT and duties, where applicable. The supplier importing the goods into Norway will generally be required to register and account for Norwegian VAT due on the onward supply of those goods. But, if it chooses not to act as importer of record, the customer will be liable for the outstanding charges. It will be an important decision to decide on how this is managed.
At Sovos Accordance, we are monitoring the progress of these rules and shall report updates as they unfold.