New regulations on cash register systems
The set of rules adopted includes a new Cash Register Systems Act (the «Act») and a Cash Register Systems Regulation (the «Regulation»). While the Act mainly contains general provisions, particularly relating to penalties and basic requirements such as the arrangement of the system and product declarations, the more detailed requirements are found in the Regulation. The Act and the Regulation merely apply to suppliers of cash register systems.
Certain amendments to the Bookkeeping Act and the Bookkeeping Regulation were also necessary, so that the rules also apply to the users of the systems. These amendments are already adopted, but do not enter into force before 1 January 2019.
The main objective of the new regulations is to require certain functions to be present, or absent, in the systems. The suppliers are not obliged to apply any specific technical solutions in their systems, but may choose any solution insofar as it fulfils the requirements in the regulations. As long as a particular function is not prohibited, it may be included in the system provided that it is sufficiently described in the system description.
In addition to the preparation of a system description, suppliers must submit a product declaration to the Directorate of Taxes confirming compliance with the regulations. On its webpage, the Directorate provides a list of all suppliers having submitted a product declaration. The system description must be delivered to the users along with the cash register system, and must explain the structure and functions of the system, including how it may be inspected.
All cash register systems must include an electronic journal in which nearly all of the operator’s use of the system is registered. The electronic journal may not be filed in a format which will make it easy for the operator to modify. The purpose of the requirement is to improve the conditions for inspecting the cash register systems.
The period of transition
Currently, the new regulations only apply to the suppliers of cash register systems. System users will not be obliged to use compliant systems before 1 January 2019, and then only as a result of obligations imposed through the Bookkeeping Regulation. The lacking correlation between the obligations imposed on suppliers and users, creates a two-year transition period under which the suppliers are prevented from marketing and selling incompliant systems, but still are allowed to service existing incompliant systems delivered to its customers prior to entry into force of the new regulations.
Not surprisingly, the period of transition raises a number of issues, including to what extent may the supplier update a customer’s existing cash register system? Is the supplier allowed to add new functions by way of updates, and what qualifies as new functions? Is it legal, in the period of transition, to deliver new, non-compliant cash points for new branches established within an existing chain of stores?
The Directorate has provided its view on certain questions, for example stating that a new branch in a store chain may establish a new cash point even if the system is non-compliant, but the guidance provided by the Directorate is far from clarifying all of the issues arising.
Our experience from communicating with the Directorate is that the Directorate on a general basis is rather restrictive in its interpretation of the rules, at least in so far as the transition period is concerned. There are for example few changes that a system supplier can do to its system before it is deemed to be a «new» system subject to the requirements in the regulations. This creates a problem for system suppliers who want to add functionalities to its systems.
Issues relating to the EEA Agreement
In the preparatory works, the Department of Finance discusses whether the new regulations may contradict the principle of free movement of goods in the EEA Agreement. The principle of free movement limits the national authorities’ leeway in adapting new legislation, , not only in relation to the wording, but also in relation to the interpretation. We are of the opinion that some of the interpretations published by the Directorate might be stricter than what is necessary to counteract the misuse of cash register systems.
As an example, reference is made to whether it would be sufficient to disable functions that are defined as illegal. While the Directorate requires illegal functions to be completely removed from the system, we cannot see why it is not sufficient that such functions are disabled, when that technically would make it impossible for Norwegian users to use or re-enable the illegal functions. Due to the fact that suppliers often have customers in several country who are using the same cloud service, just doing necessary adjustments in the system in order to ensure compliance with the regulations in the user’s country, would obviously be more cost efficient than having to deliver separate systems to users in each country. It would seem likely that the Directorate’s interpretation could imply considerable extra costs for suppliers, both Norwegian and foreign, wishing to deliver cash register systems to Norwegian customers.
Positive socio-economic impacts
There is in our opinion no doubt that the regulations will, in spite of the costs related to the investments in new cash register systems, lead to considerable advantages for the society as a whole, resulting in less black cash revenue, and particularly for the users of cash register systems, improving a competition on equal terms. What we have taken issue with, is whether the Directorate’s interpretation and application of the regulation in some instances is disproportionate to what it is meant to achieve, and also in some instances fail to take sufficient consideration to technological developments that affect the construction and functioning of cash register systems, including the fact that cash register systems are more often based on cloud services.
Notwithstanding that arguments could be made that some of the Directorate’s interpretations are too restrictive, we advise system suppliers to proceed with caution during the transition period, in particular when performing maintenance and updates on existing non-compliant systems.