Financial Institutions Face New Compliance Procedures in Svalbard and Jan Mayen

Overview

Businesses and public sector institutions operating in Norway’s remote territories of Svalbard and Jan Mayen must adhere to new compliance procedures regarding value-added tax (VAT) on services purchased from abroad. This move aims to ensure that Norwegian tax laws are upheld.

Key Compliance Requirements

• Businesses and public sector institutions purchasing services from abroad in Svalbard and Jan Mayen must calculate and charge VAT.
• The buyer is responsible for paying VAT in Norway, regardless of where the service is provided.
• Services must be remotely deliverable to trigger VAT reporting obligation.
• Financial institutions and other businesses with a head office or branch in Norway are subject to the guidelines.

Examples of Remotely Deliverable Services

• Advisory and consultancy services
• Accounting services
• Digital products supplied via the internet
• Hiring out of labor

Treatment of Intra-Company Transactions

In cases where a foreign supplier provides services that cannot be delivered remotely, such as on-site work, the supplier is required to register for Norwegian VAT if they have a fixed place of business or are affiliated with a Norwegian enterprise.

Reporting and Payment

• Buyers registered in the VAT Register must report VAT as output VAT in their tax return for VAT, with no lower threshold amount.
• Buyers not registered in the VAT Register must report via the tax return for VAT for reverse tax liability, with a minimum VAT basis amount of NOK 2,000 per quarter.

Conclusion

Financial institutions operating in Svalbard and Jan Mayen are advised to review these guidelines carefully to ensure compliance with Norwegian tax laws. By understanding the new compliance procedures, businesses can avoid potential penalties and maintain good relations with Norwegian authorities.