Under the Norwegian Tax Administration Act, all businesses operating in Norway or on the Norwegian Continental Shelf are obliged to report information regarding contracts given to non-Norwegian companies. This affords the Norwegian Tax Authority the ability to review information about work being undertaken within Norwegian jurisdictions and allows them to assess the Norwegian tax liability of personnel and companies. This contract and employee reporting is called an RF-1199.
The reporting has become very extensive and can be burdensome for companies which have a vast number of contracts with non-Norwegian companies. The reporting is prepared and submitted through its own dedicated web portal and should be submitted no later than 14 days after the contract start date. If not completed in line with this, the Authorities can and do issue fines to companies. These fines are typically calculated by looking at the number of contracts a company holds which have not been reported and the number of employees which should have been reported on them, and so they vary in amount. There is no standard amount and for the last 15 years the Norwegian Authorities have claimed tens of millions of Norwegian Kroner in fines for incorrect or late reporting of contracts in Norway.
The EFTA Surveillance Authority (ESA), the body that monitors the European Economic Areas rules within Norway, recently launched an enquiry into the reporting obligations. Several complaints lodged with the ESA suggested that the obligations stifle free trade within the EEA international market and are discriminatory on the basis that only contracts involving non-Norwegian companies are required to be submitted on the RF-1199 reporting.
The ESA subsequently upheld the complaints and concluded in December 2018 that the reporting obligation is in direct conflict with Article 36 of the EEA Agreement. Consequently, any fines issued for failure to complete the RF-1199 reporting are also illegal and should be reclaimed. We are to assume that the Norwegian Tax Authorities will impose a limitation period of 3 years as to the period for which these fines can be reclaimed. Therefore, we would advise any company which has received and paid a fine to Norway in relation to the RF-1199 reporting to move as quickly as possible with the repayment claim before they become unobtainable.
At the time of writing, the Norwegian Ministry of Finance are still considering their response, although the ESA expressed that possible alternatives to the reporting could be:
- to extend the obligation to include Norwegian contractors;
- to apply the reporting obligation only to contractors which are from outside the EEA or;
- to cease entirely the need to submit the reporting.
If you have any paid any fines for non-submission of RF-1199s and require assistance with any potential reclaim, or if you have any questions on how any of the above could impact your business, please do not hesitate to contact Kris Walker (firstname.lastname@example.org) or your usual AAB contact.
To find out more about Kris and the Payroll and Employment Taxes team, click here.