The Directorate of Taxes concluded that a data processing service of data collected from the North Sea cannot be regarded as «other technical assistance» in the Value Added Tax Act § 6-32. This was justified on the grounds that although the service could be technical assistance, it was not “concerning facilities or facilities”.
We refer to your e-mail of 8 October where you address questions related to the Directorate of Taxes’ letter of 25 June 2010 to (a). They state that the statement creates uncertainty in the industry regarding the interpretation of the Value Added Tax Act (mval) § 6-32.
In your opinion, it is difficult to understand why the services in question do not fall under the term other technical assistance, cf. VAT Regulation (FMVA) § 6-32-2 (1).
The question is whether the seismological processing services referred to in the Directorate of Taxes’ statement of 19 February 1985 are covered by the exemption provision in the now repealed VAT Regulation no. 27 (F27) § 2 letter c which at the relevant time had the following wording:
Businesses subject to registration shall, on terms as mentioned in the Value Added Tax Act and these regulations, not calculate and pay value added tax on sales to the client as mentioned in § 1 of services if
…
c) The service applies to design, drawing, construction and other technical assistance regarding facilities or facilities as mentioned under a above. ”
The provision had two special conditions that had to be met. First, the service had to apply to technical assistance. According to this provision, it was not a requirement that the assistance had to be in the form of work on the facility, etc., cf. the exemplification with design, drawing and construction. These are “non-physical” services that according to current regulations are considered remotely deliverable. Secondly, the technical assistance had to apply to facilities as mentioned in section 2 letter a of the regulations.
The Directorate of Taxes assumes that what in the statement of 1985 was referred to as a processing service, for tax purposes was to be regarded as a service that concerned electronic data processing, cf. current section 13 second paragraph no. 6. cases could also be classified as technical assistance in relation to the exemption provision in F27 § 2 letter c. We refer in this connection to the Directorate of Taxes’ letter of 3 February 1981 to a county tax office regarding noise control in connection with noise improvement work. The case concerned questions about the obligation to pay tax for the collection, processing and computer processing of noise data, cf. the current election section 13 second paragraph no. The service resulted in a report on the success of the noise reduction work carried out. The service was not considered taxable as the service could not be considered technical assistancefor work on a specific project. This is how the Directorate of Taxes understands the criterion “for work on” that was not met in the specific case. The statement did not explicitly state whether the services were to be regarded as technical assistance, but the case shows that it can hardly be ruled out that services relating to electronic data processing in specific cases could be regarded as technical assistance.
However, the technical assistance also had to be “concerning facilities or facilities”, cf. F27 § 2 letter c. repaired or maintained. The exemption related to technical assistance was thus not aimed at the oil industry’s activity with exploration and utilization of subsea natural deposits in general.
The purpose of ground seismological surveys for the oil industry, and the subsequent processing of the data, is, according to what the Directorate of Taxes understands, to map oil deposits. The seismic can, among other things, provide information on where it is possible for the oil to be collected, and which routes the oil flows after it is formed. The services are therefore, as the Directorate of Taxes sees it, aimed at the oil as a product, and not the specific facilities that were mentioned in F27 § 2 letter a.
In our view, the same must apply in relation to the current FMVA § 6-32-2 (1).
On the basis of the above, we can not see that there is a basis for changing our conclusion, cf. the above-mentioned letter of 25 June 2010.
We assume that the statement in the Directorate of Taxes’ notification of No. 11/1990 regarding assignments concerning analysis of drilling core samples detached from own ground investigations must be understood accordingly. The statement on tax liability was limited to cases where a company analyzed drill core samples that had been obtained by others, and where the client was a subject that was covered by the relevant exemption provisions in the current F27 § 1.
With regard to the oil companies’ acquisition of technical expertise in drilling and well technology / well drilling, production technology, reservoir engineering work, we assume that these can to a large extent be regarded as technical assistance delivered in connection with a specific plant and or facility as mentioned in FMVA § 6 -32-2 (1). Whether drilling operation management can also be regarded as tax-free technical assistance in accordance with the provision must depend on a specific assessment in the individual case. The same applies to services within HSE, environmental planning, etc.
Whether a service is only an input factor in connection with the delivery of goods and services, or whether this is to be regarded as an independently traded service, must be decided on the basis of a specific assessment of each individual assignment. It is hardly unusual for a trader, as part of the performance of an exempt service, to use subcontractors who, in isolation, provide a taxable service. It can thus not be ruled out that a taxable analysis service provided by a subcontractor may be included as an input factor in a service that is exempt under FMVA § 6-32-2
Source: skatteetaten.no
