Reduced VAT Rate on Water and Sewage Services from 1 July 2025

From 1 July 2025, an important change to the VAT Act takes effect: the VAT rate for water from waterworks and sewage services is reduced from 25% to 15%. The change is enacted in new Section 5-12 of the VAT Act and is further regulated in Section 5-12-1 of the VAT Regulations 1).

What is covered by the reduced rate?

The reduced rate applies to:

• Drinking water delivered via a water supply system, regardless of whether it is delivered to households or businesses.
• Sewage services, including removal and treatment of sanitary wastewater, as well as other wastewater treated together with sanitary wastewater 1).
• Delivery of water between municipalities, including where the receiving municipality has no waterworks of its own.
• Emptying of septic tanks and collection wells for sanitary wastewater.
• Rental and installation of water meters from municipalities 2).

Transitional rules for 2025

To simplify administration when introducing the new rate, transitional rules have been introduced:

• Municipalities and suppliers can choose to allocate fees proportionally between the first and second halves of the year, so that half of the 2025 fees are calculated at 25% and half at 15%, regardless of actual consumption 1).
• There is no requirement for a separate water meter reading at the time of transition.

What is not covered?

It is important to note that goods and services such as the installation of mini treatment plants, including contractor services and equipment, are not covered by the reduced rate. These will continue to be subject to the standard VAT rate of 25% 1).

Sources:

• Skatteetaten (Norwegian Tax Administration): Establishment of new VAT Regulation Section 5-12-1 1)
• Skatteetaten: VAT Handbook Section 5-12 3)
• Norsk Vann (Norwegian Water): News on reduced VAT 2)