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PR(06)34: The EFTA Surveillance Authority will examine the Norwegian VAT Compensation Act

19.7.2006

The EFTA Surveillance Authority today opened a formal investigation regarding compensation for input value added tax (VAT) granted by the Norwegian authorities according to the VAT Compensation Act. The Authority will examine whether the Act provides state aid to municipalities or municipal undertakings providing services in competition with private companies.

The provision of certain services, such as social services, health related services and educational services, is exempt from VAT in Norway. The private undertakings providing such services in competition with municipalities or municipal undertakings will have to pay VAT on their own acquisition of goods and services used to provide their services. According to the VAT Act, the same is the case for municipalities and municipal undertakings. However, through the VAT Compensation Act, these entities are compensated for the VAT they pay when acquiring goods and services.

The Authority’s preliminary opinion is that the VAT Compensation Act may result in state aid within the meaning of Article 61(1) of the EEA Agreement. The Authority is in doubt whether such aid is compatible with the EEA Agreement.

Today’s decision to open the formal investigation procedure will be published in the EEA Section of and the EEA Supplement to the Official Journal of the EU. The Authority will take its final decision after having reviewed comments from the Norwegian authorities and from any other interested third party.

For further information please contact:
Mr. Amund Utne, Director, Competition and State Aid Directorate,
Tel. (+32)(0) 2 286 18 50 or
Ms. Maria J. Segura Catalán, Officer, Competition and State Aid Directorate,
Tel. (+32)(0) 2 286 18 53

19 July 2006




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