The Norwegian value-added tax exemption for low-value goods imported by consumers
does not constitute state aid, according to a decision taken by the European
Free Trade Association Surveillance Authority (ESA).
The ESA came to this conclusion after investigating a complaint from the Enterprise
Federation of Norway (Virke) that the VAT exemption on imports into Norway with
a value not exceeding NOK350 (USD41.50) unfairly discriminates against domestic
Virke argued that the VAT exemption provided for in Section 5-9-1 of the Norwegian
Customs Regulation constitutes a form of state aid within the meaning of Article
61(1) of the European Economic Area (EEA) Agreement because it deprives the
Norwegian Government of tax revenue.
According to Virke, foreign vendors benefit from this aid indirectly because
under normal circumstances they have the right to deduct the VAT initially levied
on them, passing the effective taxation burden on to final consumers.
Virke cited a previous case involving state aid measure in favor of electric
vehicles (Decision No 150/15/COL), in which the ESA found that a zero-rating
VAT scheme for electric vehicles and batteries indirectly favored manufacturers
and dealers of electric vehicles or batteries for electric vehicles. Virke said
this decision supports its own case because the VAT exemption for imported goods
of lesser value will increase demand for the products eligible for exemption.
Thus, an indirect advantage will be provided for dealers and manufacturers of
However, in a statement summarizing its decision (Decision 155/16/COL), published
on July 13, the ESA said that the measure in question "does not favor certain
undertakings or the production of certain goods, as required by Article 61(1)
of the EEA Agreement."
"ESA found that the exemption has the effect of expediting and simplifying
the customs clearance process. It is thus necessary for the functioning and
effectiveness of the Norwegian custom system. Consequently it must be considered
as justified by the nature and general scheme of the system."