Increased payroll tax did not give a right to increased remuneration
Supreme Court judgment 7 March 2023, HR-2023-411-A, (case no. 22-078254SIV-HRET), civil case, appeal against judgment.
The State represented by the Ministry of Public Transport (The Office of the Attorney General represented by Torje Sunde) v.
Marti Nordnes DA (Counsel Fredrik Verling), Norwegian Association of Heavy Equipment Contractors (intervener)(Counsel Are Hunskaar)
A contractor demanded additional remuneration from the builder due to an increase in payroll tax. The contract gave the contractor the right to index adjustment of the contract sum, but such adjustment would only entail a very small – if any – upward adjustment of the remuneration. The Supreme Court found that none of the special provisions in the contract material presented by the contractor provided a basis for demanding remuneration for increased payroll tax beyond the index regulation. Decisive emphasis was placed on the wording of the contract and on the purpose of the index regulation. The Supreme Court also found that the builder, being entitled to withhold remuneration to cover accrued daily fines, may also withhold VAT on the withheld amount, and that this had been correctly handled by the developer.
Read the whole ruling (Norwegian only)
Areas of law: Construction law, contract law, VAT
Key paragraphs: 58-62, 66, 69
Justices: Webster, Matheson, Falch, Østensen Berglund, Sæther