WRITTEN QUESTION E-0562/02

by Eija-Riitta Korhola (PPE-DE) to the Commission

(27 February 2002)

Subject: Compatibility of Norwegian VAT legislation

From 1 July 2001, VAT legislation in Norway was changed(1), and reverse charge for services suitable to be remotely delivered, such as advertising services, was introduced in somewhat similar fashion as in the Sixth VAT Directive(2). Prior to the change, EU-domiciled companies were charged Norwegian VAT depending on whether such companies were registered for VAT in Norway or not(3).

The new legislation seems to contradict the former one, which actually remains in force. Therefore, Norwegian undertakings differ in their interpretation, and the practice on charging Norwegian VAT is not uniform for all the operators on the internal market. Also the wording suitable to be remotely delivered can be argued to be more restrictive than the scope of the EU Directive.

1. Is the Commission aware of current Norwegian VAT legislation?

2. Is the Norwegian VAT legislation compatible with the EU Directives and case-law of the European Court of Justice?

3. Is the restriction in suitable to be remotely delivered compatible with the EU Directives and case-law of the European Court of Justice?

4. If the Commission objects to Norwegian VAT legislation, what action would it take and in what time-frame?

5. Would such action be retroactive and apply to the VAT charges that have already been levied?

(1) Regulation No 121 of 15 June 2001.

(2) Article 9(2)(e), Sixth VAT Directive.

(3) Article 4, Regulation No 50.

Answer given by Mr Bolkestein on behalf of the Commission

(12 April 2002)

The Commission is not aware of the Norwegian VAT legislation, as Norway, not being Member of Union, is under no obligation to inform the Commission of its tax legislation.

As a general rule, there is no obligation for Norway to have its legislation compatible with the Community Directives in the area of VAT, as Community Directives only apply to Member States and not to third countries. This would apply also to the provisions concerning VAT reverse charges.

Nevertheless, Article 14 of the European Economic Area (EEA) Agreement, to which Norway is signatory, provides that contracting parties shall not impose, directly or indirectly, on the products of other contracting parties any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products. Furthermore, contracting parties shall not impose on the products of other contracting parties any internal taxation of such a nature as to afford indirect protection to other products.

The power to investigate the compatibility of an EEA European Free Trade Association (EFTA) contracting party's legislation with the EEA Agreement lies with the EFTA Surveillance Authority; the Authority has the power to initiate infringement procedures by bringing the matter to the EFTA Court of Justice, if it finds the legislation of a contracting party to be incompatible with the provisions of the Agreement. The Commission has no such power of action against Norway, as infringement procedures under the EC Treaty are only applicable vis-à-vis Member States and not vis-à-vis third countries.