Proposed changes for Norwegian VAT in the 2026 national budget

In the national budget for 2026, the government has proposed to reduce the right to recognise losses on receivables between related parties.

In principle, businesses have the right to recognise output VAT as losses if a trade receivable cannot be recovered and must be found to be lost due to the debtor's inability to pay. Corresponding losses on loans or capital contributions, on the other hand, do not entitle VAT deduction. 

Under the new rules, trade receivables that are not paid over time can change their character from trade receivables to being considered a loan. Whether a trade receivable has changed its character to constitute a loan or a financing service can often be difficult and be subject to a broad and concrete overall assessment. 

Since there is a right to deduct VAT for trade receivables, but not a corresponding right to deduct losses on loans and capital contributions, this may provide an incentive for financing to be provided in the form of credit on deliveries rather than ordinary loans or capital contributions. In practice, it is seen that trade receivables between related parties can remain unsettled for a long time.

On this basis, the Government proposes that the right to recognise trade receivables between related parties as losses lapses after 24 months. The period of 24 months is proposed to be calculated from the date on which the VAT is calculated. This is provided that the sales documentation (invoice) has been issued timely according to the legislation. 

Any finally ascertained loss before the 24-month period has expired may still be deductible for VAT if the conditions for loss deduction are met. The 24-month deadline will not apply if the debtor is subject to estate administration. 

It is proposed that the change will enter into force on 1 January 2026.

The Ministry of Finance has also announced that it will follow up with similar tax regulations. 

VAT liability in connection with the supply of remotely deliverable services from a foreign head office to a Norwegian branch 

It is proposed that VAT shall be calculated on remotely deliverable services procured by a main enterprise abroad and consumed by a Norwegian branch. 

According to the destination principle, the right to tax VAT must be in the country where the service is used. This is handled by Norwegian enterprises calculating VAT under the reverse charge method when purchasing remotely deliverable services from abroad. If the purchase is related to VAT exempt turnover, the VAT will not be deductible and the VAT will be a final cost for the enterprise. 

International companies can often purchase services in one country, while in reality the service is used in several other countries. For example, a Swedish main enterprise may purchase IT services that are wholly or partly used by the enterprise's Norwegian branch/NUF. In principle, such services are subject to VAT in Norway in accordance with the Norwegian VAT Act cf. Section 3-30, second paragraph, but the provision has been interpreted and practiced in such a way that the Norwegian branch avoids tax calculation in Norway. In some cases, it is also seen that this type of purchase is neither taxed in Norway nor abroad, and the purchase is therefore in practice not taxed. 

The application of the provision has also resulted in different tax burdens for international companies and Norwegian companies. Foreign enterprises with a branch in Norway have received an economic advantage as their purchases have not been taxed, while Norwegian enterprises that have made similar purchases from abroad have had to calculate VAT on the purchase of services and have not been able to deduct the VAT.

In order to counteract the different tax burden for Norwegian enterprises and international enterprises, the Government proposes to clarify the VAT regulations so that purchases of remotely deliverable services purchased by a foreign enterprise will be subject to VAT for the part used by the Norwegian branch. It is proposed that the amendment will include both the purchase of remotely deliverable services that are directly and more indirectly for use in the Norwegian branch. 

The tax liability will only apply to the part of the purchase that is used by the Norwegian branch. The company must therefore have an overview of which parts of the company use the services. 

The VAT is to be calculated at the time of the invoice from the external seller. However, in order to simplify the VAT treatment for the enterprises, it will be proposed regulations that the distribution can be made based on budgeted amounts that are later corrected when the amounts are known. 

In order to counteract any double taxation, i.e. taxation both abroad and in Norway, it is proposed that there should be no obligation to calculate VAT if the enterprise can document that VAT has been calculated abroad and that it can be substantiated that the VAT is not deductible abroad. 

Similarly, it has been proposed that remotely deliverable services purchased in Norway and used by branches abroad will be given an extended opportunity to deduct or refund VAT. 

In order to keep the administrative costs for the enterprises lower, it is proposed that the regulations will not apply to enterprises that are entitled to deduct VAT on remotely deliverable services purchased abroad. This means that the proposal will in practice have an impact on Norwegian branches that have turnover that is wholly or partly exempt from VAT. This could be, for example, industries such as finance, banking, insurance, health, education, etc. 

The proposal is proposed to apply from 1 July 2026.

Reduction of the rate of exemption from VAT for electric cars

Sales and leasing of electric cars are exempt from VAT for sales prices up to NOK 500,000. The exemption has been justified by the desire to increase sales of electric cars. So far in 2025, electric car sales account for 95% of new car sales for passenger cars and the government therefore considers the goal of increasing sales of electric cars to have been achieved. For this reason, it is proposed to reduce the rate for the VAT exemption from NOK 500,000 to NOK 300,000. 

It is proposed that the reduction will apply from 1 January 2026. 

From 1 January 2027, it has been announced that the exemption will be phased out in its entirety.