Norway: Split VAT treatment required for data center services provided to foreign customers with customer-owned servers (Tax Appeals Board decision)
Norwegian VAT treatment of planned data center services sold to foreign business customers with no establishment or business activity in Norway
Norway’s independent administrative tax appeals board (Skatteklagenemnda) on March 12, 2026, published its decision in Case SKNS1-2020-134, in which it reviewed a binding advance ruling regarding the Norwegian value added tax (VAT) treatment of planned data center services sold to foreign business customers with no establishment or business activity in Norway.
The company planned to host customers’ customer-owned servers in Norway and keep them running with high uptime by providing specialized premises, power (billed separately based on actual consumption), cooling, network connectivity, physical security, fire protection, and monitoring/operations support.
The company argued that customers bought one integrated “data center operations service” and that Norway should treat the entire package as zero-rated export of services under section 6-22 of the VAT Act. This provision removes Norwegian VAT when:
- The service qualifies as remote deliverable (meaning the service, by its nature, does not tie to a specific physical place) and the recipient operates outside Norway, or
- The service serves exclusively for use outside Norway.
The tax office, and later the secretariat, rejected the “single service” view and treated the arrangement as separate elements that customers can buy and price independently (for example, server hosting/physical storage in Norway and electricity), even if the elements together support uptime. They also relied on prior practice (including BFU-2012-25) that typically splits remote deliverable information technology (IT) operations from place-bound hosting and physical handling.
The Tax Appeals Board agreed with the secretariat and denied the appeal. The decision required the company to split the transaction and apply VAT based on each element’s nature: it can treat genuinely remote deliverable digital operations/monitoring as zero-rated when sold to qualifying foreign business customers, but it must treat physical hosting/storage and other place-bound services performed and used in Norway as VAT-taxable.
KPMG observation
The case highlights that the VAT treatment of bundled transactions (in this case data center operations services) must be carefully reviewed on a case-by-case and country-by-country basis. Businesses should design agreements, service descriptions, and invoice line structures in line with economic realities to support their position.
For more information, contact a KPMG tax professional:
Philippe Stephanny | philippestephanny@kpmg.com