For approximately 20 years, several cruise companies have operated in Norwegian waters without charging VAT, on the assumption that international cruises are exempt from such taxation. However, recent practice from the Norwegian Tax Administration and a judgment from the Oslo District Court indicate that a number of international cruise operations may in fact be subject to VAT under Norwegian law.
This article reviews the relevant legal framework and recent developments. Companies offering international cruise services should be prepared to reassess their VAT treatment.
Relevant Legal Framework
As a general rule, the supply and withdrawal of services relating to passenger transport is subject to VAT at the reduced rate under Section 5-3 of the Norwegian VAT Act. Cruise transport is therefore, as a starting point, subject to VAT within the Norwegian VAT area.
Passenger transport may, however, be exempt from VAT if it constitutes transit through the Norwegian VAT area only. This requires that the transport takes place directly to or from locations outside the VAT area, cf. Section 6-28 of the VAT Act.
The exemption does not apply where the service constitutes a roundtrip and the stay within the Norwegian VAT area exceeds 24 hours. A roundtrip typically refers to journeys where the purpose is for the passengers to experience destinations, locations, and attractions, rather than transportation from one place to another.
Long-standing Practice: No VAT on International Cruises
In a guidance letter issued in 2004 the Ministry of Finance stated that international cruises in transit through Norwegian VAT territory should not be regarded as carrying out VAT-liable passenger transport in Norway. This interpretation was reflected in the VAT Handbook from 2005 until 2022.
Many industry participants interpreted this as a general exemption from VAT for international cruises, including those calling at Norwegian ports with stays exceeding 24 hours. As a result, several shipping companies did not charge VAT or report such activities for VAT purposes.
Clarification of the Legal Position: Decision by the Tax Appeals Board
In decision SKNA1-2019-107, the Tax Appeals Board clarified that the decisive factor for VAT liability is whether the cruise qualifies for the transit exemption, or whether it instead must be considered a roundtrip subject to the 24-hour rule. The decision confirmed that international cruises are not generally exempt from VAT, and that each case must be assessed individually under Section 6-28 of the VAT Act.
The statement may be understood to imply that the Ministry never intended international cruises to be generally exempt from VAT.
Following this decision, the Ministry of Finance issued a further statement in 2022 clarifying the scope of the transit exemption. The Ministry emphasised that where a cruise has significant activity and connection to Norway, such as calling at several Norwegian ports and allowing passengers to disembark, it should be regarded as a roundtrip. In such cases, the applicability of the VAT exemption must be assessed against the 24-hour threshold.
The 2022 statement may be understood to suggest that the Ministry never intended international cruises to benefit from a general VAT exemption.
Oslo District Court Judgment (TOSL-2024-156985)
In 2024, the Oslo District Court considered whether Hurtigruten’s international cruises constituted VAT-liable supplies in Norway. The cruises started and ended abroad, lasted 13–14 days, and visited at between seven and ten Norwegian ports. The stay along the Norwegian coast ranged from approximately 4.5 to 11 days.
The Court held that cruises visiting Norwegian ports are not covered by the exemption for cross-border passenger transport. The decisive factor is whether the roundtrip exceeds 24 hours within the Norwegian VAT area. Notably, the District Court did not consider itself bound by previous administrative practice.
The Court further held that onboard sales are subject to the same VAT treatment as the underlying passenger transport and accommodation services.
The judgment has been appealed and is not yet final. A decision from the Court of Appeal is expected in autumn 2026.
Practical Implications – What Should the Industry Do Now?
Although the District Court’s judgment is not yet legally binding, it, indicates the direction of legal developments.
We recommend that the cruise industry monitor this case closely and begin reviewing which cruise itineraries may become subject to VAT when operating in Norwegian waters.
A practical starting point is to map out travel routes and assess whether the stay within the Norwegian VAT area exceeds 24 hours. Companies should also consider whether ticket and package pricing needs to be adjusted in light of potential VAT liability and evaluate how onboard catering and accommodation services may be affected.