II:
TAX/VAT for artist
In short, artworks with a non-commercial character is not subjected to VAT. However, artists who offer services subjected to VAT are required to register at the VAT-register.
The process of tax return is a smooth one if you do your accounting thoroughly, and make sure to keep a close eye on income and spending in your sole proprietorship.
Her og der has in collaboration with VISP have arranged webinar about tax paper in English which you can find here https://www.youtube.com/c/VISPProduksjonsenhetforvisuellkunst
The tax office has a chatservice where you can ask questions about your taxes: https://www.skatteetaten.no/en/contact/chat-with-us/ and a Facebook page: https://www.facebook.com/skattenmin/ where you can post questions
Tax
Being an employee with a payroll income and at the same time running your own company is not a problem. The net profit from your sole proprietorship is taxable together with other income, such as salary income from another employer. On the other hand, a net loss will be deductible (given that you have additional income). This is especially helpful during a start-up phase.
When you have your own sole proprietorship you can choose how you want to pay your taxes. Some artists wait to see what they have to pay or get back when the tax papers have been processed. If you have underpayed taxes and the amount is more than 1000 kr, it will be split in two invoices. cOthers choose to pay taxes in advancement or they set money aside to pay the underpayed taxes for the following year. If you want to estimate how much taxes you should pay, you can use this tax calculator from the Tax Office https://www.skatteetaten.no/en/forms/calculate-your-tax/
It’s a widespread misunderstanding that you don’t have to pay taxes on the money you give yourself from your business: even if you don’t give yourself one krone from your business you will be taxed by the profit in the business (income less costs).
Read more about Tax in Norway at Info Norden.
Tax Return (Selvangivelsen)
Every year, in March, tax papers for the previous year are sent out by the government to everyone who lives and works in Norway. When you receive your papers you are obliged to ensure the numbers are correct, before you submit your taxes. The deadline to submit your papers are usually May 31th, but if you are delayed you can apply for a deadline extension. Remember to apply for it in good time through the scheme RF 1114. Link here: https://www.skatteetaten.no/en/forms/rf-1114-application-to-defer-the-deadline-for-tax-return-submission--self-employed-persons/
Check webinar about tax paper here https://www.youtube.com/c/VISPProduksjonsenhetforvisuellkunst
The Tax office have som updated information about the changes of the tax papers https://www.skatteetaten.no/en/forms/income-statement-for-visual-artists/ They also have a chat service if you have questions when you are filling out the forms.
Artist Grant and Tax
The following types of artist scholarships are tax-free:
- Artist grant based on completed art education.
- Artist grant granted by the Parlament
- Artist grant awarded as an honorary and / or cultural award by the state, county municipality or municipality. All other payments of artist grants are usually taxable if it is considered to have a sufficient connection to the artistic activity. The tax authorities have made an ABC guide about taxes and here is a link about the artist grants (in Norwegian):
About VAT for artist
In short, artwork with a non-commercial character is not subject to VAT. However, artists who offer services that are subject to VAT are required to register at the VAT-register. You will find more information about VAT at https://www.skatteetaten.no/en/business-and-organisation/vat-and-duties/vat/
Norwegian Association for Art and Craft (NK) has made a guide for VAT for artists (in Norwegian) https://norskekunsthandverkere.no/om-norske-kunsthandverkere/presserom/mva-veiledning-kunsthandverkere
Any registered organization (which you are) that has a taxable turnover of more than NOK 50 000 per year, that is subject to VAT, has an unconditional obligation to register in the VAT-register.
It follows from the VAT Act that a fee shall be paid for all sales of goods and services not specifically excluded from the Act. The law differentiates between works of art of commercial character and artwork limited in the Ministry of Finance's regulation of 22 August 1997 (No. 108). Artworks with non-commercial character are in general excluded from VAT. Artworks of a commercial character, including functional items, are subjected to VAT.
The term “work of art” is defined in the VAT Revenue Regulations section 1-3-2, and further elaborated in the value added tax guide as follows:
● Paintings, drawings and pastels made entirely by hand as well as collages (material images) and the like.
● Original prints, prints and lithographs.
● Original sculptures and statues, regardless of material.
● Carpets - original, numbered and signed tapestry tapestries.
The tax exemption for artwork includes only original works of art.
You must add 25% outgoing VAT on the selling price of the items sold (that are subjected to VAT).
Discounts for Inbound VAT
Similarly, you receive deductions for inbound VAT on all costs directly related to the manufacture and sale of VAT-related items, including VAT on commission to sales. You’ll also be able to deduct a portion of the inbound VAT on costs that cannot be attributed directly to the taxable or duty-free production. Example: rent, electricity, telephone, accounting costs, and so on.
If your yearly VAT subjected sales are more than NOK 50 000 and less than NOK 1 million, you can deliver a yearly VAT-report. Otherwise you’ll deliver a report every second month, which most people choose to do in order to have better control on the accounts.
Accounting
It is crucial that you establish a solid system for your accounting. Some artists hire an accountant to avoid frustration and possible problems with the accounting; decide if this would be best for you. When you submit your tax papers your income and expenses must be specified in different categories, such as sales, grants, equipment, studio-rent, etc. If you use these categories in your personal accounting as well it’ll be easier to fill out the tax papers. Also, it’ll be easier to monitor how much you’ve spent/earned in the different categories.
Many artists in Norway use electronic accounting such as Fiken. Others prefer to fill out Excel-sheets (but this can only be used if you have less then 600 vouchers per year.
Invoice
To send an invoice to a client/customer you need an organization number (see chapter above – registration). Public institutions might require that the invoice you send be an electronic one (e-faktura). SendRegning and ContaFaktura are some of the online invoicing sites that help you create and send an electronic invoice. If you have a business account in DNB (or another bank) your online bank might have the option to send electronic invoices directly from your account.
Fiken is another site which has integrated invoicing, accounting and other services that can be useful for your sole proprietorship.
You may also ask fellow artists about their experiences with the different platforms in order to help you find the one that works for you.