Waiver from specific provisions in the bookkeeping Act and regulation
Exceptions to storage location requirement under regulations
Section 7-4 of the Bookkeeping Regulation outlines some exceptions to the rule that accounting records must be kept in Norway. If a company meets the conditions for these exceptions, they don't need to tell or apply to the Directorate of Taxes.
Section 7-5 of the Bookkeeping Regulation allows companies to store electronic accounting records in other European Economic Area (EEA) countries under certain conditions, including notifying the tax office in writing. The Directorate of Taxes has the power to issue regulations regarding which EEA countries meet these conditions. They have already issued regulations allowing companies to store electronic accounting records in Denmark, Finland, Iceland, and Sweden without having to apply. If a company wants to store their accounting records in these countries, they need to notify the Directorate of Taxes and provide information about which parts of the records will be stored abroad, where they will be stored, and how the authorities can access them. Any changes to the storage location must also be reported.
Approval-based exceptions to accounting record storage location requirements
If a company has to keep accounting records but can't use the exceptions outlined in sections 7-4 or 7-5 of the Bookkeeping Regulation and wants to store the records abroad, it must ask the Directorate of Taxes for permission under section 13 of the Bookkeeping Act. From 1 July 2010, the Directorate of Taxes has received 777 applications for permanent storage of accounting records abroad. Many of these applications are for storage in the Nordic Region and would now meet the conditions for exemption under section 7-5 of the Bookkeeping Regulation. The Bookkeeping Act assumes that accounting records are kept in Norway, so to get permission to store them abroad, a company must show that they can't meet the legal requirement to keep them in Norway. Cost savings are not a good enough reason for permission to be granted. So far, permission has been granted mainly when storage abroad is part of a common accounting solution within a group company or similar amalgamated entities, and that the storage is taking place in a group company or similar abroad or under the control of such a company. They have also placed emphasis on whether the data is stored in a country with which Norway has entered into a tax treaty. Accounting records stored abroad must be available in a readable form in Norway, and control authorities must be able to access them. Mandatory accounting reports and documentation of the accounting system must be in Norwegian, Swedish, Danish or English even if the accounting and storage takes place abroad.
To obtain permission for storing accounting records outside of Norway, the records must be able to be printed from a terminal in Norway. If the records only exist on paper, they must be stored in Norway.
When applying for permission, certain information must be provided, such as the name and organization number of the entity, the reasons for the application, a brief description of the accounting records, any affiliations with group companies involved in storing the records abroad, the name and address of the storage location abroad, confirmation that the records can be read and printed from a terminal in Norway, and information about the languages used in the accounting reports and documentation. If permission for exemption from the storage requirement is granted, the server address(es) must be provided to the Tax Administration and will be kept confidential.
Dispensation for reduced storage period of accounting records
Many businesses that have ceased trading apply for a reduced storage period for their accounting records. However, the Directorate of Taxes has noted that simply ceasing trading is not a sufficient reason to be granted dispensation. The requirement to store accounting records for a certain period of time is a fundamental part of running a business with a bookkeeping obligation, and is also required by other laws, such as company law. For example, a dissolution board must ensure there are enough funds to store the records for a satisfactory period of time.
In some cases, dispensation may be granted if a business has an excessive amount of paper vouchers, but this is only considered if it is abnormal for the sector and the size of the business, and if it is difficult for the applicant to comply with the full storage period. However, it is rare for a reduced storage period of less than 3.5 years to be granted.
There are also cases where accounting records are damaged and costly repairs are needed, which may warrant a reduced storage period. To apply for a reduced storage period, businesses must provide their name and organization number, a brief description of the accounting records, reasons why storage is difficult, and any relevant information about public authority controls.
Buyer's sales document and reporting requirements
When the Bookkeeping Regulation came into effect, there were some cases where the buyer could create a sales document for the seller, but this is no longer allowed except in specific cases outlined in section 5-2-1, subsection 2, letters a to d.
Since July 1, 2010, the Directorate of Taxes has received 270 requests to be exempt from the requirement that sales documents must be issued by the seller in accordance with section 5-2-1, subsection 1 of the Bookkeeping Regulation. Almost all of these applications were received before the regulation was changed on December 20, 2006, to add a new exception to the requirement that sales documents are issued by the seller, as described in section 5-2-1, subsection 3, letter e of the regulation. This exception applies to buyers who base commissions or other payments to the seller on factors such as scope, weight, quality, or similar characteristics.
At the same time, another subsection was added to section 5-1-3 of the regulation, allowing buyers with a bookkeeping obligation who are permitted to issue sales documents on behalf of the seller under section 5-2-1, subsection 3, to report the total amount paid to the seller in the accounting year rather than numbering each individual sales document. These new provisions regulated the previously established practice of exemption by the Directorate of Taxes.
The Directorate of Taxes explains that for the buyer to create their own sales document under section 5-2-1, subsection 3, letter a of the Bookkeeping Regulation, the seller cannot know the basis for the invoice. This means that if both the buyer and seller know the basis for the invoice, the seller must still issue the sales documents as required in section 5-2-1, subsection 1. However, if the seller needs to obtain some or all of the invoice basis from the buyer, they can use the exception provision described in section 5-2-1, subsection 2, letter e. Since the Directorate of Taxes did not receive enough applications, they were unable to establish a dispensation practice for the new exception in section 5-2-1, subsection 3, letter e.
An application for dispensation must include the following information:
- The name and organization number of the entity with bookkeeping obligations.
- Similar information for the other parties involved in the transaction.
- The reason for the application.
- Information on turnover, transaction scope, value-added tax liability, etc.
- A description of the relevant procedures and documentation that the buyer will provide to reduce the increased existential risk that arises when the buyer prepares their own sales document (expenditure voucher).
- Whether there is a need for exceptions from the requirement of consecutively numbered vouchers from the seller, as described in section 5-1-3 of the Bookkeeping Regulation. The enterprise may include other information in the sales document that makes it possible to verify the completeness of the seller's part, such as accumulated revenue between the parties so far in the accounting year.
- If the application concerns an existing scheme, an example of the sales document (settlement) must be attached, along with any additional documentation on the buyer's part.
Advance invoicing: When and how to apply for permission
Section 5-2-9 subsection 2 of the tax code allows businesses to apply for permission to prepare sales documents, such as invoices with VAT, before they actually provide their goods or services (advance invoicing). This can be useful in certain situations, such as when dealing with funeral homes, who may need to wait for the ground to settle before they can erect headstones months after a funeral. Being able to document all expenses related to the funeral right away can be important when settling an estate.
The tax authorities have also received applications from businesses who want to issue sales documents in advance for services that will be provided over a period of more than one year. The tax authorities have considered whether the law only allows for advance invoicing for up to one year, or whether it is possible to allow advance invoicing for longer periods of time in special circumstances. They have concluded that the law does not prohibit extended advance invoicing where there are special circumstances that justify it.
For example, they allowed a magazine company to invoice subscribers in advance for a period of two years because the customers were mainly private individuals who couldn't deduct VAT, and because the scheme had been in place for a long time. However, they denied an application from a property company who wanted to invoice rent for a 20-year period in advance because practical matters like this are not considered special circumstances.
To apply for permission for advance invoicing, a business must provide information about their name and organization number, the reason why they can't follow the usual rules, information about their turnover and transactions, and details about the category of buyers who will be invoiced in advance and whether they can deduct VAT. They must also include an example of the sales document they will use.
The requirements and exceptions for cash registers
Since July 1, 2010, the Directorate of Taxes has received 167 requests for permission to operate without a cash register or other equivalent systems, as required under Section 5-3-2, subsection 1 of the Bookkeeping Regulation.
The Directorate of Taxes can only grant permission in cases of "special circumstances." This means that they have only approved requests in instances where using a cash register or other equivalent system is considered extremely impractical, or there are other valid reasons for dispensation. There are also some limited exceptions, such as when complicated electronic solutions must be customized, or when the entity responsible for bookkeeping will stop operating within a reasonably short amount of time.
When considering applications, the Directorate of Taxes first determines whether it is possible to use a cash register or other equivalent system as required by the regulation. Claims that other forms of documentation can be as secure as a cash register are not sufficient on their own since the regulation primarily requires cash sales to be documented with a cash register. If dispensation is granted, the assumption is that there are suitable alternative documentation methods in place.
Many applications come from businesses that make occasional sales or those with low cash sales measured in NOK. Section 5-4, subsection 1 of the Bookkeeping Regulation allows for exceptions for occasional or itinerant cash sales that do not exceed three times the National Insurance basic amount (3 G) during a financial year (as of June 2009 this is NOK 218,643 excl. VAT). Check the regulations regarding exceptions from the requirements for a cash register and for itinerant businesses and joint cash register to learn more about the terms “occasional or itinerant cash sales”.
In order to be exempt from the requirement to use a cash register, there are two conditions that need to be met. First, the cash sales must either be occasional or itinerant. Second, the total amount of cash sales must not exceed 3 G.
If an enterprise has cash sales that do not exceed 3 G, this alone is not enough reason to be exempt from using a cash register. For example, a pedicurist who sees clients once a week and receives regular cash payments would not be considered to have occasional cash sales, even if the total amount of cash sales is less than 3 G.
However, if the number of cash sales transactions is very small compared to the total number of sales transactions, or if the cash sales are so infrequent that they can be described as occasional, then the enterprise may be exempt from using a cash register. For instance, a psychologist who has only four cash transactions per month, which is a small portion of their total sales, may qualify for an exemption.
If an entity with a bookkeeping obligation believes that their activity does not qualify for an exemption but also finds it difficult to use a cash register, they may apply for a dispensation. The application must include the name and organization number of the entity, the grounds for the application (including why the Bookkeeping Regulation cannot be met), a description of the goods or services being sold and the scope of cash sales, and a description of any other methods used to document cash sales.
It's worth noting that many entities have tried to justify their exemption based on difficulty using a cash register because of climate-related reasons. However, the Directorate of Taxes has not granted dispensation on this basis. For more information, you can refer to Storting's discussion on the requirement for cash registers.