11 minute read 23 Jun 2021
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The new digital VAT return 2022 – FAQs

By Cecilie Dyrnes

Partner, Tax, EY Norway

Committed and curious with a strong focus on competence development. Also writes textbooks and tweets about VAT. Loves being out at sea and on mountain tops, both in summer and in winter.

11 minute read 23 Jun 2021
Related topics Tax

The Norwegian Tax Authority has announced that a new VAT return will be implemented effective from 2022, replacing the current form-based VAT return. 

This alert answers frequently asked questions in relation to the new reporting process, based on what we know so far.

1: Which of the different Norwegian VAT returns will be replaced from 2022?

Today there are seven different Norwegian VAT returns: 1) Ordinary VAT return (RF-0002) – this is the normal VAT return applicable for most businesses, 2) VAT return for businesses within agriculture, forestry and fishery (RF-0004), 3) Reverse charge VAT returns (RF-0005) – for businesses and public enterprises not registered for VAT, 4) VAT compensation returns (RF-0009) – generally relevant for municipalities/counties and specific types of businesses within health/social services or education, 5) VAT returns for non-Norwegian suppliers within e-commerce (VOEC), 6) VAT return for quota-fishery and 7) VAT report for shipwrecks/major loss of equipment on fishing vessels

The VAT returns to be replaced from 2022 are 1) and 2) – i.e. RF-0002 and RF-0004. New versions for the other types of VAT return will be implemented during 2022. The exact timeline for replacement of these is not yet decided. 

2: When will the new digital VAT return be implemented?

The new digital VAT return will be implemented from 1 January 2022 i.e. from and including the first VAT return period of 2022. The Norwegian Tax Authorities have stated that no transition period nor possibility to apply for an exemption is planned.

3: What is new about the new digital VAT return?

The digital VAT return, unlike the current return, will not be form-based and will not have a fixed set of boxes. The new VAT returns will, as a starting point, be based on direct reporting from the ERP-system via a specific API. Standard SAF-T VAT codes will be used for completing the new VAT return. These codes were developed during the implementation of SAF-T accounting in 1 January 2020.

In addition, the new return will contain separate fields for areas such as bad debts or VAT adjustments and reversals of input VAT etc.

If a company has no transactions to report during a given period, nil returns will still be required to be submitted but the process will be easier with the new digital return as it will not be necessary to fill out several pre-determined boxes. Instead it will be possible to simply “check" one specific box to confirm the nil return.

4: How are SAF-T codes set up?

The SAF-T code setup consists of 30 codes, of which 25 will be mandatory in the digital VAT return, provided there is transaction activity related to the specific codes. Numbers reported in the digital VAT return will therefore not differ from the numbers previously reported, but the report will be more divided.

Regarding the VAT Compensation Scheme, in which municipalities and certain private entities that provide public task can claim a refund of their paid VAT, the same codes will be used with the addition of a “K”-prefix.   

5: Is this part of a common European specification of VAT codes in EU/EEA countries?

No. Norway utilizes its own SAF-T VAT Codes. Therefore, they are likely to differ to VAT codes used in the VAT returns of other European countries.

6: Will current VAT periods change?

No. The current system of periodic VAT reporting will be continued. The normal reporting will still be bi-monthly. Taxpayers will still be able to apply for shorter periods or yearly returns if certain criteria in the Tax Administration Act are met.

7: Will due dates for VAT returns and payments change?

No. Current due dates for VAT returns and payments will remain unchanged. 

8: Will there be special regulations for certain sectors, such as the public sector?

No. Certain sectors or industries will not be subject to special regulations. Municipalities and other public entities registered in the Value Added Tax Register are therefore subject to the same regulations as privately held businesses. 

9: Will submission of the VAT return directly from the ERP-system (“system to system-reporting”) be mandatory?  

No. Businesses may opt to submit the VAT return directly from the ERP system or submit via a specific web portal named “Mine MVA-Meldinger”. How this portal will look or the technical specifications of the portal to enable submission are not yet clarified. The VAT reporting will be based on the standard SAF-T codes regardless of whether the VAT returns are submitted directly from the ERP system or through the special web portal.

The Tax Authorities’ validation of the VAT returns will be the same regardless of the method of submission of the return. Thus, the standard SAF-T tax codes must be used in the bookkeeping/ERP-system, or the existing tax codes in the accounting system must be mapped to the standard SAF-T codes. The Norwegian Tax Authorities have indicated that direct submission of the VAT returns via “system to system reporting” will most likely be mandatory in the future. Public consultations will be issued before such reporting can be mandatory. However, the Norwegian Tax Authorities strongly recommend using the “system to system reporting” method. 

10: VAT reporting for VAT groups – how will this work?  

In VAT groups, the different companies may often use different ERP-systems for their accounting.  The Tax Authorities have stated that the web portal “Mine MVA-Meldinger” should be used as the solution for consolidated VAT reporting on behalf of VAT groups under the new rules. The Tax Authorities have not yet outlined the technical details applicable for the VAT reporting of VAT groups. 

11: Will it be possible to submit comments to the Tax Authorities in the digital VAT return?

Yes. There will be open fields to add comments related to each SAF-T VAT code and for the return as a whole. In addition, it will be possible to upload up to 50 separate attachments of up to 25 MB per VAT return. Thus, it will be easier to explain certain transactions and to connect them to the report under each code. 

12: What does validation of format and content at time of submission entail? 

Validation means that the format, content and composition of the VAT return are automatically controlled or checked by the Tax Authorities’ system/portal. The return could be rejected if discrepancies are identified during submission.  

The validation may, for example, check that the sum of calculated VAT from every code equals the total VAT of the report and that outgoing VAT equals VAT rate applied to the basis of the calculation e.g. the net amount.

The aim of validation is to check correctness and completeness of the reports filed by the taxpayers and for the Tax Authorities to notify the taxpayers of any discrepancies in the VAT reporting without opening an audit or control. If the VAT return is considered to be invalid (“ugyldig skattemelding”), e.g. if VAT adjustment amounts, or claimed refund of VAT on bad debts are reported with incorrect codes, the VAT return will not be accepted as submitted. In case of minor discrepancies in the VAT returns (“avvikende skattemelding”), the VAT return will be accepted as submitted, but the taxpayer will be notified of the discrepancy and will likely be requested to review and correct the return. 

Validation upon submission will be carried out regardless of whether the VAT return is submitted by system-to-system reporting or if submitted through the web portal, as mentioned in question 9 above

13: Will reports be made at transaction level in the digital VAT return? 

No. Today’s practice of reporting amounts at an aggregated level will be continued. However, the Tax Authorities have stated that they are actively working on the process to implement reporting at transaction level in addition to the digital VAT return (so called “Sales and Purchase Report”/”Sales Listing”).

14: What will a Sale and Purchase Report/Sales Listing entail?

The Sales and Purchase Report/Sales Listing is a periodic report of information at transaction level (invoice data). This will include invoice number, invoice date, parties to the transaction, total fee and VAT. The report will be required in addition to the general VAT return and will be due on the same dates as the VAT returns. 

The Tax Authorities have indicated that the Sales and Purchase Report/Sales Listing should cover all sales and purchase transactions, including B2C sales and credit notes. Names of persons will not appear in the lists, and the Tax Authorities have stated that the solution will ensure GDPR compliance. 

The Sales and Purchase Report will be mandatory for all VAT registered entities and entities covered by the Bookkeeping Act. However, exceptions will be made to small businesses. The criteria for exemptions is not yet outlined by the Tax Authorities. A potential solution could be to base the criteria on the same requirements currently used to determine whether a taxpayer is covered by the SAF-T regulations according to the Bookkeeping Regulations (bokføringsforskriften). This section in the Bookkeeping Regulation makes an exception for businesses with less than 5 million NOK in turnover. Small businesses using ERP systems will likely be required to submit a Sales and Purchase Report as they are generally required to be able to provide bookkeeping in SAF-T format for review. 

The Sales and Purchase Report will be mandatory for public entities that are liable to VAT, i.e. municipalities. 

The implementation of this more detailed reporting at transaction level will require public hearings, hearings in Parliament and amendments of the relevant Acts. The Sales and Purchase Act will expand the requirement to provide information compared to the current statutory duties. A hearing was expected in 2021. 

As hearings have not yet been held, it is unlikely that the Sales and Purchase Report will not be implemented until 2023. 

15: Will testing of digital VAT reporting be available?

Yes. The Tax Authorities plan to open the new digital VAT reporting for testing by taxpayers in the second half of 2021. According to a published summary from a meeting between the Tax Authorities and ERP system providers in February 2021, the system providers have, to a variable extent, started their preparations to meet the digital reporting requirements. The ERP system suppliers have indicated to the Tax Authorities that the ERP systems should generally be prepared for system to system reporting by the time the test portal opens later in 2021.

According to our experience with SAF-T, businesses should enter dialogue with their system providers in due time in order to be prepared before testing starts.

16: What happens if the taxpayer’s VAT codes are not mapped to the SAF-T VAT codes?

If the taxpayer is not SAF-T ready and has not mapped their VAT codes to the SAF-T VAT codes, there is a risk that the VAT returns are not able to be submitted when due in 2022. We strongly recommend a thorough review of VAT codes and mapping in due time before 2022. Reviewing mapping will identify incorrect use of VAT codes and may prevent the digital return from not being validated at submission, see question 12 above. 

17: What is the difference between SAF-T accounting and the new VAT return based on SAF-T VAT codes?

SAF-T accounting is regulated in the Bookkeeping Regulation § 7-8. The regulations include the obligation to submit certain accounting data in a standard format (SAF-T) for review upon request from the Tax Authorities. The SAF-T file submitted is a so-called “auditing-file” containing transaction level data, allowing the Tax Authorities to review and analyze historic numbers in the accounts.

The digital VAT return is a report on turnover, input and output VAT on an ongoing basis. The taxpayers are not required to submit a full SAF-T file for each VAT period.  The ongoing VAT reporting will, however, be based on the standard SAF-T VAT codes and will include aggregated sums of transactions registered on each of these codes. It is therefore important to reconcile the VAT return and SAF-T financial data before submitting the report.  

18: Will it be possible to submit corrective VAT returns?

Yes. However, from 2022 it will no longer be possible to submit an additional VAT return where solely the details to be corrected or added are included. To correct the historical VAT reporting, the taxpayer will need to submit a new full VAT return to replace the previously submitted return. 

19: What are the consequences for late filing of the new VAT return?

The regulations in the Tax Administration Act will be applicable for the new digital VAT return. The consequences for late filing will remain the same as today - A daily penalty fee up to a maximum of approx. NOK 1m could be imposed for late filing. 

20: Where can I find public information about digital VAT reporting?

For further reference, visit the Norwegian Tax Authority.

In need of assistance?

We are happy to help you prepare your digital VAT report. Our interdisciplinary team consists of professionals in the fields of Tax, Law, Accounting and IT. We cover all aspects of SAF-T and VAT and have vast experience in most IT-systems.

  • Cecilie Aasprong Dyrnes, Lawyer, Partner EY Indirect Tax
  • Siri Midling Larsen, Lawyer, Associate Partner EY Indirect Tax
  • Morten Jensen, Associate Partner EY FAAS
  • Bente Kroslid Eide, Senior Manager EY FAAS
  • Sverre Jarl Enger, Manager EY FAAS Tech

Summary

It is crucial to focus on the correct use of the SAF-T VAT codes in order to be compliant with the new VAT return. 

About this article

By Cecilie Dyrnes

Partner, Tax, EY Norway

Committed and curious with a strong focus on competence development. Also writes textbooks and tweets about VAT. Loves being out at sea and on mountain tops, both in summer and in winter.

Related topics Tax