Bookkeeping obligation
Anyone who conducts business and is obliged to submit VAT returns in Norway, has a bookkeeping obligation under the Norwegian Bookkeeping Act. This obligation includes foreign entities liable for VAT in Norway without having established a separate company in the country. Such entities are called “Norwegian-registered foreign businesses” (NUF).
The bookkeeping obligation does not apply to providers under the simplified registration scheme according to the Norwegian VAT Act, who only submit VAT returns on this basis.
Scope of the bookkeeping obligation
The bookkeeping obligation applies to the business conducted in Norway. For a VAT-liable NUF, this means the following:
- All activities and business areas of the NUF that are significant for mandatory financial reporting in Norway must be included in the bookkeeping. This means that the bookkeeping must include all information necessary for the preparation of the VAT return. If the NUF is also required to submit payroll reports (“a-meldinger”), the bookkeeping must additionally include all information necessary for the preparation of these reports.
- The content of the bookkeeping is further determined by the requirements of the Norwegian Bookkeeping Regulations for the content of specifications of mandatory financial reporting. Therefore, the bookkeeping for the NUF must include both the general ledger, customer sub-ledger, and supplier sub-ledger, so that separate bookkeeping, account, customer, and supplier specifications can be prepared. Furthermore, it must always be possible to prepare a VAT specification. In some cases, other specifications may also be relevant, such as specifications of payroll-related benefits.
Significance of the bookkeeping obligation
The bookkeeping for the VAT-liable NUF must be conducted in accordance with all the rules in the Norwegian Bookkeeping Act, the Norwegian Bookkeeping Regulations, and Norwegian good bookkeeping practices.
It would be too extensive to explain all the bookkeeping requirements. The most important thing to remember is that a complete set of separate accounts must be maintained for the NUF, as if it were a Norwegian company, for example, a limited liability company (AS). Generally, all Norwegian requirements regarding accounting systems, traceability, updating, documentation (vouchers), currency, language, storage, security, and electronic accessibility apply in the same way to a NUF as to a Norwegian company.
Bookkeeping conducted abroad
There is nothing to prevent the bookkeeping for the NUF from being carried out by the foreign main enterprise. However, it is important to remember that the bookkeeping must fully comply with Norwegian bookkeeping legislation, as mentioned above. It is not permissible to maintain the accounts for the NUF in accordance with the rules that apply in the country where the main enterprise is established. Generally, this includes, among other things (not an exhaustive list of all requirements):
- A general ledger, customer sub-ledger, and supplier sub-ledger must be maintained for the NUF alone, separate from the main enterprises bookkeeping.
- The bookkeeping must be conducted using VAT codes that enable the preparation of the VAT return and VAT specification.
- The requirement for continuous numbering of vouchers must be complied with for the Norwegian business in isolation; the NUF cannot share voucher series with the main enterprise.
- The bookkeeping must be conducted in Norwegian kroner and the language must be Norwegian, Swedish, Danish, or English.
- Outgoing invoicing must be conducted in accordance with the requirements of the Norwegian Bookkeeping Regulations, including a separate invoice number series for the NUF.
- The storage of the NUF's accounting material must follow Norwegian rules, including requirements for what must be stored, storage period, storage location, and security.
- The bookkeeping for the NUF must be kept electronically accessible for 3,5 years after the end of the financial year and shall be reproducible in the standard format “SAF-T Accounting”.
Bookkeeping conducted in Norway
Of course, all Norwegian bookkeeping rules as mentioned above apply when the bookkeeping for the NUF is conducted in Norway. When using a standard Norwegian accounting system adapted to Norwegian rules, this is rarely problematic.
Remember that the bookkeeping conducted in Norway must include a complete set of accounts for the Norwegian business. The bookkeeping must include both profit and loss accounts and balance sheets, with both the general ledger and sub-ledgers. All transactions and dispositions related to the business in the NUF must be recorded, including any payments for purchases and sales, etc., that occur in the bank account of the foreign main enterprise.
It is not sufficient to maintain a simple "VAT account" with only sales and purchases. This normally applies even if accounts for the NUF are also maintained abroad. The reason for maintaining "double accounts" is often that the foreign accounts do not meet all Norwegian rules.
Use of a VAT representative
Everything described above applies regardless of whether the NUF is registered in the Norwegian VAT Register by a VAT representative or not. The only differences are that a VAT representative ...
- … may be responsible for ensuring that the VAT is calculated and paid
- … is responsible for ensuring that the bookkeeping obligation under the Bookkeeping Act is complied with
- … must be indicated with name and address on the NUF's outgoing invoices
- … must keep a copy of all the NUF's outgoing invoices.