Norway VAT Reform: Tax Commission Recommends Raising the 12% Rate to 15%

Norway’s Tax Commission recommends increasing the 12% VAT rate to 15%, affecting passenger transport, accommodation and several leisure and cultural services. The proposal is part of a wider tax reform report and has not yet been adopted.

Norway’s Tax Commission has recommended simplifying the country’s Value Added Tax system by eliminating the current 12% low VAT rate and increasing it to 15%. If implemented, Norway would move from three main VAT rates – 25%, 15% and 12% – to two, with goods and services currently taxed at 12% moving to the existing 15% reduced rate.

The recommendation forms part of NOU 2026: 9 – The Road Towards a Better and More Predictable Tax System, submitted to the Ministry of Finance. The report does not itself change Norwegian VAT law. It has been sent for public consultation, with a consultation deadline of September 24, 2026, after which the government will consider the responses before deciding whether to bring proposals before Parliament.

For businesses operating in passenger transport, accommodation, tourism, entertainment and related sectors, the proposal is relevant because it would directly change the VAT rate applied to customer transactions and could require corresponding changes to POS, booking, ERP and accounting systems.

Norway currently applies a 25% standard VAT rate, a 15% reduced rate and a 12% low rate. The 15% rate applies primarily to food products and certain water and wastewater services, while the 12% rate applies to several service categories.

Under Section 9.6.2 of the Commission’s report, the recommendation is to reduce the number of reduced VAT rates from two to one by increasing the current low rate from 12% to 15%.

Services currently covered by the 12% rate include, among others, passenger transport, hotel and other accommodation services, cinema admission, broadcasting services, museum admission, amusement parks and similar attractions, and admission to sporting events. These transactions would therefore move to 15% if the recommendation is eventually enacted.

The Commission argues that maintaining several VAT rates creates distinctions between goods and services, increases compliance costs for businesses and the Tax Authority, and raises the risk of errors in VAT calculations. Moving the 12% categories to 15% would create one common reduced rate and remove one layer of VAT-rate differentiation.

The Commission states that if greater simplification or additional revenue were required as part of a wider tax reform, policymakers could consider increasing the current 12% rate directly to the 25% standard rate instead of 15%.

This does not mean that the Commission has proposed immediately applying 25% VAT to all goods and services currently benefiting from reduced rates. The concrete recommendation in Section 9.6.2 is the more limited transition from 12% to 15%.

Impact on affected businesses

The practical impact would be particularly visible in sectors where several VAT rates are already used within the same business.

The Commission specifically refers to the hotel and tourism sector. A hotel or tourism business may currently apply 12% VAT to accommodation and passenger transport, 15% to certain food products and 25% to restaurant services. Other activities may also fall outside VAT or be treated differently. Moving accommodation and transport from 12% to 15% would reduce one distinction, although businesses could still need to manage the 15% and 25% rates.

From a retail and system perspective, an adopted rate change would require affected businesses to review the VAT codes assigned to relevant services in Point-of-Sale Systems, booking platforms, ticketing solutions, ERP systems and accounting software. Prices, receipts and invoices would also need to calculate the correct VAT amount from the effective date.

Businesses selling mixed services would need particular attention. A hotel, for example, may sell accommodation, restaurant meals and other services within one customer journey, while a tourist attraction may combine admission with food, merchandise or other activities. The applicable VAT treatment must remain correctly assigned to each transaction even if one of the existing rates is abolished.

The recommendation does not introduce a new fiscal receipt requirement, reporting system or fiscalization model. Its main operational consequence would be a change in VAT calculation and transaction classification if the proposal is converted into legislation.

What should affected businesses do?

Businesses currently applying the 12% VAT rate should identify the services and system tax codes that would be affected by a potential move to 15%.

POS, booking, ticketing, ERP and accounting providers should monitor whether the recommendation develops into a government proposal and whether an implementation date or transitional rules are introduced.

Businesses should not change their current VAT rates yet. The applicable 2026 rates remain 25%, 15% and 12%.

Retailers and service providers offering transactions subject to several VAT rates should assess where a future change would affect product or service mapping, pricing, receipts, invoices and accounting.

From a retail compliance perspective, the proposal is worth monitoring because it could remove one VAT rate used across several customer-facing sectors. However, no system change is currently required. The next relevant steps are the completion of the consultation process and any subsequent government and parliamentary proposals.

The main source for these changes is the Ministry of Finance’s Tax Commission report submitted, NOU 2026: 9 – The Road Towards a Better and More Predictable Tax System. Source

Ivana Picajkić, Medior Legal Consultant at Fiscal Solutions

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