VAT treatment of Norwegian data centre services

Norway's rapidly growing data centre industry raises important value added tax (VAT) questions regarding the supply of these services to foreign customers. Norwegian VAT legislation is largely structured along the same lines as the EU framework, although the EU VAT Directive is not binding on Norway under the EEA Agreement.

In Case C-215/19, the Court of Justice of the European Union (CJEU) held that colocation services in a data centre do not constitute an exempt letting of immovable property, nor are they connected with immovable property. Where that is the case, the supply of services is generally taxable at the place where the recipient has its place of business.

Norwegian VAT law does not contain directly equivalent place of supply rules to those in EU law, which results in a more complex assessment than under the EU framework. Two binding advance rulings shed light on the VAT treatment of data centre operations where foreign customers own the servers placed in Norwegian data centres.

In this context, data centre services comprise the operation of server infrastructure – including data rooms, power supply, cooling, and physical security – where the customer does not operate these functions independently. The central question is whether such services qualify for VAT zero-rating when supplied to foreign businesses.

The first ruling from the Norwegian Tax Appeal Board (Nw. Skatteklagenemnda) (October 2020, published March 2026) concerned services ensuring 24/7 uptime for customers' servers, enabling them to process, store, and distribute large volumes of data. The second ruling from the Norwegian Tax Administration (Nw. Skatteetaten) (October 2025) addressed the VAT treatment of similar services and the operator's right to deduct VAT on the importation of customers' servers.

Both rulings address the fundamental question of whether data centre services constitute a single supply or multiple supplies, and whether zero-rating under Section 6-22 of the Norwegian VAT Act applies.

Composite supply vs multiple supply

A key issue in the taxation of data centre services concerns the distinction between a composite supply and a multiple supply for VAT purposes.

The Tax Appeal Board drew a distinction between two categories of customer arrangements. The first concerns customers purchasing "data power" as a single service using the provider's own assets. The second concerns customers purchasing services relating to the operation of their own servers. Where the customers own the servers, the arrangement typically requires a range of services: storage, electricity, cooling, internet connectivity, physical installation and support, security, and digital operations services.

The Tax Appeal Board and the Tax Administration both rejected the argument that data centre operations constitute a composite supply consisting of a principal element accompanied by one or more ancillary elements that share its VAT treatment. Instead, the authorities determined that the arrangements in question involved multiple distinct services, each of which must be assessed for VAT purposes according to its nature.

Remotely deliverable vs place-bound services

Digital operations services that are delivered remotely are, by their nature, remotely deliverable and benefit from zero-rating under Section 6-22 (2) of the VAT Act when supplied to foreign customers. However, the storage element – requiring specialist physical adaptations including cooling solutions, IT infrastructure, and continuous monitoring – must be considered a place-bound service delivered in Norway.

Services "used entirely outside the Norwegian VAT territory"

Both applicants argued that their services should be zero-rated under Section 6-22 (1) as services "used entirely outside" Norway, since the foreign customers had no Norwegian operations.

However, the Tax Appeal Board held that the storage services are linked to specific physical locations in Norway, involving continuous monitoring, power supply, security, and temperature regulation. They are therefore delivered, received, and utilised within the Norwegian VAT territory. In the 2025 ruling, the Tax Administration concluded that foreign customers place equipment physically in Norway in order to take advantage of services delivered in a purpose-built data room, meaning the services are delivered, received, and utilised within the VAT territory.

Import VAT deduction

Both rulings confirm that data centre operators acting as declared customs consignees and customs debtors can recover import VAT on customers' servers under the VAT Act, treating this as a cost directly linked to the operator's taxable business.

Refund of Norwegian VAT

Foreign businesses that do not carry out VAT-taxable activities in Norway cannot deduct the VAT incurred on Norwegian data centre services – nor will it be deductible in their home jurisdiction. To ensure neutrality, foreign businesses may apply for a refund of VAT incurred in Norway.

A refund requires that the nature of the foreign business would have necessitated VAT registration had it been operated in Norway. Applications may be submitted quarterly; current processing time is approximately 12 months.

Key takeaways and practical implications

Foreign customers of Norwegian data centres should be aware that several elements of the service are likely to attract Norwegian VAT – even where the customer has no business operations in Norway. The argument that services are "used entirely outside" the VAT territory has been consistently rejected by the Norwegian tax authorities.

The rulings establish that:

• Data centre services comprise multiple distinct services, each requiring separate VAT assessment
  
• Remotely deliverable elements benefit from zero-rating
  
• Place-bound storage elements remain taxable, as they are consumed within Norway
  
• Operators retain the right to deduct import VAT on customer equipment
  
• Foreign customers may apply for a VAT refund
  

Businesses should be aware of the implications of these rulings, and plan accordingly. Schjødt has extensive experience advising on all aspects of data centre operations in Norway, including the tax and VAT implications of cross-border data centre arrangements.

Read more about our expertise with date centres.