Inventory of Legal and Administrative Obstacles in EU Border Regions Entry No: 001
Inventory of legal and administrative obstacles in EU border regions Entry no: 001
Border obstacle Complicated requirement for a VAT representative in Norway
Specific problems caused by the identified obstacle Swedish export companies not established in Norway but selling to Norway and having an annual turnover exceeding 50 000 NOK must be registered for VAT in Norway through a “VAT representative” (i.e. tax attorney responsible for the calculation and payment of VAT). Sweden has a similar system, but it excludes businesses established in other EU countries and the Nordic countries. A Norwegian company which sells to customers in Sweden will therefore administer the VAT itself.
Wider policy context The Agreement on the European Economic Area (EEA) is the cornerstone of relations between Norway and the European Union (EU). The EEA extends the internal market, with its four freedoms, to Norway, Iceland and Liechtenstein. In addition the agreement establishes a system that ensures equal conditions of competition. Not covered by the EEA Agreement are, among other policy fields, the EU customs union and the common trade policy. To maintain homogeneity, the EEA Agreement is continuously updated and amended to ensure that EU internal market legislation is implemented in national legislation of the EEA EFTA states. As EEA and EFTA states are not members of the EU, they are constitutionally not able to accept direct decisions by the European Commission or the EU's Court of Justice. Separate EEA EFTA bodies have therefore been set up to parallel these EU bodies (i.e. EFTA Surveillance Authority, EFTA Court).
Affected policy area Industry and Trade (1) Exportation of goods and cross-border provision of commercial services, including e-commerce (1.1) Type of obstacle Legal Link to legislative or The obstacle emerges from the particular status of a given EU border (e.g. administrative practices border between EU countries and EEA countries or Switzerland; border between Schengen/non-Schengen countries; border between Eurozone/non-Eurozone countries etc.) Geographic scope Along the entire length of specific EU land borders between Member States or with neighbouring non-EU countries (i.e. NO, CH, LI and AD) Case SE-NO (esp. southern part of the SE-NO border)
Impact on cross-border Level 2: 'moderate negative impact' integration Cross-border trade and also cross-border economic integration is adversely impacted Negative direct effect of the This Norwegian rule strongly affects the southern land border area obstacle (triangle between Oslo-Gothenburg-Karlstad), which is the economically most active part that accounts for more and closer contact between the two countries than anywhere else at the 1,620 km long Swedish- Norwegian border. Nearby all companies in the immediate cross-border zone are SMEs (larger companies are located in Oslo and the Swedish major cities) and intense mutual exchange relations exist between both countries. For Swedish export companies which are located in Swedish border regions and selling to Norway (mostly SMEs), the start-up cost for this VAT-representative service can be between 10 000 and 50 000 SEK. According to the EFTA Surveillance Authority, however, Norway violates the EEA rules with its requirement for a VAT representative. Overall significance: “strong negative direct effect” (score: +3) Other secondary effects The consulted source does not indicate that other factors are further increasing or alleviating the negative direct effect of this border obstacle. Overall significance: “no secondary effects” (score: 0) Wider relevance of the obstacle The obstacle is highly border- and country-specific and therefore not of a for the EU and other border wider relevance for the entire European Union or for many other internal regions EU-land border regions. However, the Norwegian VAT-representative system may also affect some companies located in the northernmost Finish border area (i.e. FI-NO)
Potential solutions to address obstacles at a given border National-level solution: The Norwegian Ministry of Finance has already launched a major review of the entire system (incl. the VAT representative procedure) which will take time until it is completed.
Sources Svinesundskommittén (2015): Border obstacles for trade and industry. Eliminate every single border obstacle. Strömstad, Sveden (2nd edition). Project “Gränshinder för näringslivet” (2015): On-line database of border obstacles. http://www.granshinder.com/granshinderdatabas/
Disclaimer/explanatory comment Neither the European Commission nor any person acting on its behalf may be held responsible for the use to which information contained in this publication may be put, nor for any errors which may appear despite careful preparation and checking. This publication does not necessarily reflect the view or the position of the European Union.
Date 01.06.2016