Since 1 January 2017, suppliers to the Norwegian market have been subject to the Cash Register Systems Act and the Cash Register Systems Regulations. This legislation, which we discuss in further detail in a separate blog post intended for bookkeepers, is introduced to prevent the possibility of avoiding taxes on revenues coming from cash sales. One of the requirements is that for every cash register system delivered to the Norwegian market a product declaration must be submitted to Altinn, electronically. BDO therefore recommends that every entity with a bookkeeping obligation performs an assessment of their system portfolio to ensure which systems should have a valid product declaration. If the system does not meet the legal requirements, they should contact their supplier and, if relevant, their auditor. In that sense, bookkeepers must be aware that both a system description and a product declaration must accompany any purchase, rental or loan of a cash register system.
The Norwegian Tax Administration have issued a list of all cash register systems with a product declaration. In cases of non-Norwegian suppliers, every importer of the cash register system must then submit a product declaration, provided that the supplier has not submitted one itself. Non-Norwegian suppliers must have a Norwegian business registration number in order to submit a product declaration. The supplier itself will be liable to pay a non-compliance penalty if selling cash register systems without a product declaration. Pursuant to the Norwegian Cash Register Systems Act, this will correspond to 30 standard court fees (NOK 33,900 for 2018).
Digital transaction log and SAF-T
Standard Audit File for Tax (SAF-T) system will be introduced to all Norwegian bookkeepers with effect from 1 January 2020. Pursuant to the new legislation, it is also required that bookkeepers should produce files in the standard format (SAF-T) determined by the Norwegian Tax Administration from their cash register systems. All cash register systems must be able to produce such files, either directly from the electronic journal within the cash register system, or another electronic storage medium. It must be possible to produce the files in a standardised format (XML). All continuous use of the cash register system must therefore be recorded in an electronic journal and secured by means of access management and digital signatures.
Many commercial companies are unaware that the Norwegian Tax Administration requires that the cash register system’s technical design meets certain standards. This means that bookkeepers will also be obliged to submit reports and receipts from the cash register system in a standardised format. It is important to be aware that the introduction of SAF-T means you must prepare for more than just new routines and regulations. Bookkeepers, auditors and supervisory authorities will gain a unique opportunity to access financial data in a standardised form, which in turn means more effective ways of working.
The electronic journal must be located in Norway
The fact that more and more systems suppliers offer cloud storage for financial information comes into direct conflict with the regulations relating to the prescribed location for stored data. The Bookkeeping Regulations make it clear that such documentation must be stored in Norway or, by agreement, another EEA country. The statutory requirement for the electronic journal stipulates that this must always be stored in Norway, since it is deemed to be part of the cash register system as a whole. This could potentially cause problems for both the supplier and the bookkeeping entity. All stakeholders must therefore be aware that the responsibility for storing the cash register system and the electronic journal will always fall to the bookkeeping entity.
In principle, however, the system supplier will always be liable for ensuring that the entire cash register system complies with the statutory requirements. It is important to note that the party who last made modifications to the system’s functionality is deemed to be the supplier. The agreement between the system supplier and the user must therefore specify which components of the system the bookkeeper is to be liable for.
It is essential to point out that the product declaration must be submitted by a legal entity other than the user of the system. This would also apply to departments within larger groups and corporations that deliver tailor-made solutions to franchisees, since in-house development of cash register systems is not permitted. In that way the liability is maintained with the system supplier. The Norwegian Tax Administration has also stated on their website that no exceptions should be made for international companies.
Bookkeeping entities must adapt existing or procure new cash register systems
BDO are well familiar with corporations who engage in franchise businesses and make use of in-house software such as cash registers and order systems. With effect from 1 January 2019, those entities will either have to adapt their existing systems via separate legal entities or procure cash register systems that meet the new legal requirements. Through the provision of consulting and auditing services, BDO has experienced this to be a common case with both franchisees or group subsidiaries in particular. Large business groups and companies operating over a wide geographic area often seem to have substantial variations in the types cash register systems that are used within the group or company. If this issue is not assessed, the result might be a substantial potential cost for the parent company at a later point in time.
As a bookkeeping entity, one is liable for the following regarding internal routines and typical use of the cash register system:
• Registration of cash sales and other day-to-day transactions by means of a cash register system with a product declaration.
• Duty to store cash in an integrated cash drawer.
• Printout of sales receipts and delivery receipts (special requirements apply to credit sales, e.g. details relating to the means of payment, ID no. and what types of goods/services have been sold).
• Daily settlement, as well as documentation of returns, corrections and registration of cash float.
• Storage of the cash register system as a whole, including the system description and transfer of the electronic journal.
Please don’t hesitate to contact us if you have any questions relating to this issue.