– If you are going to start an online store in Norway now, you must set up the warehouse in Sweden immediately. Foreign online stores have a big competitive advantage, says Eric Sandtrø to news. Eric Sandtrø is behind Fjellsport.no, Komplett.no and Jollyroom, among others. Eric Sandtrø is one of the most prominent online store founders in the country. Photo: Fredrik Hagen / NTB On 1 January this year, the intermediate tax limit of NOK 350 on goods from abroad disappeared. But it is still possible to buy textiles from abroad for up to NOK 3,000 without paying duty, if the foreign company is registered in the VOEC list. The VOEC scheme For online shopping of goods with a value of less than NOK 3,000 from abroad, the main rule is that the foreign sellers/e-commerce platforms calculate and pay value added tax. The sellers/e-commerce platforms can use a simplified registration and reporting scheme (VOEC – VAT On E-Commerce). As the tax is paid at the sale, the importation of goods itself is exempt from the obligation to declare (customs) at the border. It is therefore lucrative for foreign online shops to be registered on this list. Water in the Supreme Court The online store Boozt Fashion in Sweden, which operates with Norwegian prices and Norwegian language, sells large quantities of clothing to Norwegians. They have previously been registered in Norway, and have thus been forced to pay 10.7 per cent duty on all clothing they have sold to Norwegian customers. But since they are Swedish, they have wanted to register on the VOEC list in order to avoid paying customs duties on the clothes they sell to Norwegians. At Boozt, there are Norwegian prices and Norwegian language, even though the store is from Sweden. Photo: Boozt Group The Tax Agency disagreed with this, but Boozt won the case in both the District Court and the Court of Appeal. Earlier this week, the Supreme Court rejected the appeal to the Swedish Tax Agency, and thus Boozt can register on the VOEC list and avoid customs duties on goods they sell to Norwegian customers. – We are taking note of the Supreme Court’s decision and will now assess more closely what consequences the decision has, says Astrid Dugstad Tveter, head of section in the Norwegian Tax Agency to news. – Dramatic for Norwegian trade According to the company, this will save them around NOK 45 million annually. Or if you look at it another way: The Norwegian state will lose NOK 45 million annually. – This is dramatic for Norwegian trade, says Jarle Hammerstad, head of industry policy in Virke. Because although Boozt’s victory in the court may be positive for Norwegian consumers who get cheaper clothes, according to Virke, it will be a major competitive advantage for foreign online stores. For Norwegian online shops, they still have to pay up to 10.7 percent duty on textile goods they import into the country to sell to Norwegian customers. – Boozt is not the largest foreign online store either. Now, for example, Zalando, which sells even more clothes to Norwegian consumers, can also use this duty exemption, says Hammerstad. Jarle Hammerstad, head of industry policy in Virke. Photo: Virke Zalando also exits Norway The German online store Zalando, which in the third quarter of this year sold clothes worth around NOK 40 billion, confirms to news that, following Boozt’s victory in the Norwegian courts, they will also apply to register on VOEC – list. They do not want to comment on how much they will save on this, but there is reason to believe that it is much more than Boozt. – Zalando is twice as big as Boozt in textiles in the Norwegian market. So here we could be talking about 80–90 million saved a year, says Hammerstad in Virke. Hammerstad explains that they have been in contact with the government and have had several meetings with the Ministry of Finance to try to get them to remove the customs exemption. Urges Norwegian shops to move abroad Nettbutikk founder Eric Sandtrø is shocked that the duty exemption on textiles still exists. – This is a study in poor business policy, Sandtrø believes. – All online shops that are going to target customers in Norway must ensure that they establish themselves abroad, he says. – What would happen if they moved abroad with the companies you have started? – The environment loses, the state loses and we lose jobs. I don’t understand who is taking advantage of this other than the foreign online stores. – But surely this will make the clothes cheaper for consumers? – I also think it’s fun to shop for cheap clothes online, but take away the duty for Norwegian shops as well. Ensure a level playing field. Komplett.no is one of the stores Eric Sandtrø is behind. Photo: Ole Berg-Rusten / NTB The Storting says no Next week, the Storting will vote on a proposal to remove or reduce the textile duty exemption before the presentation of the state budget for 2026. According to Raudt leader Marie Sneve Martinussen, this proposal will not get a majority, as Ap , Sp, Høgre and Frp are against. – Raudt believes that the rules should be as equal as possible for Norwegian and foreign online shops, and therefore supports the proposal to remove or reduce the textile duty exemption, says the Raudt manager. Raudt manager Marie Sneve Martinussen. Photo: Aurora Ytreberg Meløe She thinks it is completely illogical that there should be a duty exemption for foreign players who sell the same products to Norwegian customers. – In practice, the current system functions as a tax haven that contributes to the state missing out on potentially large revenues. It is high time that the government came forward with concrete measures to counteract this development, which is not sustainable, says Sneve Martinussen. – Not general The Ministry of Finance points out to news that the customs duty obligation of 10.7 per cent for textiles is not general. – The customs duty rate is from 5.6 to 10.7 per cent of the customs value, depending, among other things, on the type of goods and the country of origin of the goods. Some clothing and textiles are exempt from customs duty through free trade agreements, the Ministry of Finance informs news. This applies, among other things, to clothing and textiles originating in the EEA area and around 30 other countries or regions. – The customs duty exemption in the VOEC scheme is unfortunate and not desirable, but has been considered necessary to ensure a well-functioning VOEC scheme with good support, they explain. This is why the VOEC scheme was introduced The Ministry of Finance explains here why the VOEC scheme was introduced: Before 2020, Norwegian buyers could import goods with a value of less than NOK 350 without paying taxes (“the NOK 350 limit”). The reason why we had the NOK 350 limit was that the administrative costs of demanding fees were disproportionately high compared to the fees that would have been calculated. It came from the fact that the fees were claimed as part of the customs declaration of the goods. This was normally handled by a freight forwarder, who charged the consumer for the work on the customs declaration. With increased international trade, the NOK 350 limit became an increasingly large competitive disadvantage for Norwegian companies. Extensive undervaluation of consignments to Norway was also observed, which meant that duty-free goods with a real value of more than NOK 350 were imported. The result was the importation of a large volume of goods to consumers in Norway without VAT being paid. Thus, this limit was abolished in 2020. In order for it to be possible to abolish the NOK 350 limit, it was crucial to have a more cost-effective collection mechanism. In line with recommendations from the OECD, Norway therefore introduced a simplified registration and reporting scheme for value added tax – the VOEC scheme (Vat On E-Commerce). The arrangement is that the foreign providers are obliged to register and calculate and claim Norwegian value added tax. In contrast to the past, tax is calculated and collected at the sale in the online store. In practice, the tax treatment will thus be the same as for sales in physical stores in Norway. When the goods reach the border, they are exempt from the obligation to declare customs, as the value added tax is already calculated at the hall. Thus, the goods can be imported with low administration costs for consumers. In order for foreign providers to be able to handle their duties, the arrangement must be simple. One of the simplification measures is the exemption from customs duty, which was proposed by the Solberg government. The basis for the customs duty exemption was that the regulations for calculating and determining customs duty are complicated. The e-commerce platforms, which are the primary tax subjects in the VOEC scheme, often mediate goods that are traded globally from hundreds or thousands of sellers in different countries. It will be demanding for them to take care of the customs regulations. The oversight of a well-functioning VOEC scheme has therefore been considered so weighty that, on this point, it defended a differential treatment between foreign VOEC-registered companies and Norwegian companies that import corresponding duty-covered goods. When abolishing the NOK 350 limit, it was assumed that VAT revenues would increase by approximately NOK 700 million. kroner. The Ministry of Finance believes that the VOEC scheme has been decisive in ensuring VAT neutrality between Norwegian and foreign providers. The Ministry of Finance wrote in an e-mail to news that they are following the development and making an ongoing assessment of possible changes that could contribute to the VOEC scheme working better. – Part of this is to monitor whether the EU or other countries with similar arrangements make changes to their arrangements, they explain. Published 08.11.2024, at 17.48
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Foreign online stores such as Zalando and Boozt avoid customs duty – Norwegian Mountain Sports must pay – news Rogaland – Local news, TV and radio
