Norway overhaul of VAT on remote services cost sharing between offices – 1st July 2026
The Norwegian government has announced plans to reform how value-added tax (VAT) is allocated on partially-exempt services delivered across borders, particularly those provided remotely. The objective is to create fairer competition between domestic and foreign firms while securing additional state revenue, and would make Norway first to follow OECD VAT guidance on this issue.
The new framework is scheduled to take effect from 1 July 2026 and could boost annual tax income by as much as NOK 800 million once fully phased in. See more in our Norwegian VAT guide.
Strengthening the “destination principle”
Currently, gaps in the VAT system allow international companies—often operating with both a head office and branch structure—to bypass VAT on services consumed in Norway. Under today’s rules, the head office and branches are treated as a single entity for VAT purposes, a setup heavily used in sectors such as finance. This has left Norwegian firms at a disadvantage compared to overseas competitors.
To address this, the government will tighten rules so that VAT is levied in Norway whenever remotely delivered services—such as IT support, consultancy, or marketing—are used domestically, even if the service contract was signed abroad. Only purchases from third-party suppliers fall within scope, including transactions routed through VAT groups abroad.
VAT will be calculated on the share of the service that is actually consumed in Norway. Any additional value created within a company’s foreign branch before the service is passed on to Norway will remain outside the tax net.
Deduction and refund mechanisms
The proposals also strengthen businesses’ rights to deduct or reclaim VAT on services acquired for use outside Norway. This ensures that Norwegian companies will not face an unintended tax burden on cross-border operations. The right of deduction applies whether or not VAT is charged in the country where the services are eventually used.
Broad coverage, limited exemptions
The Ministry is aiming for wide application of the new tax rules. Both direct and indirect use of remote services in Norway will be taxable. Exceptions will apply only for self-supplied services and activities where VAT is fully recoverable.
Safeguards against double taxation will also be introduced: if a company can prove that VAT was already paid abroad without the possibility of local deduction, Norwegian VAT will not be levied. To streamline compliance, businesses will be permitted to use existing allocation methods and budget data to estimate their VAT liability, with adjustments required later if needed.
Alignment with OECD practice
The reform is inspired by the OECD’s guidance on VAT allocation, which emphasises taxing services based on where they are consumed. Stakeholders who participated in the consultation round generally supported the direction of the reform, though organisations such as Finance Norway and the Confederation of Norwegian Enterprise highlighted the need for clearer practical instructions.
