Iceland's tax system includes corporate income tax, value-added tax, payroll tax, capital gains tax, withholding tax, property tax, and customs duties. Businesses operating in Iceland must comply with the tax regulations and fulfill their tax obligations. It is advisable to consult with a tax professional or refer to the official website of the Icelandic Tax and Customs Authority for the most up-to-date information and guidance. By understanding and adhering to the tax laws in Iceland, businesses can effectively manage their tax responsibilities and contribute to the growth of the Icelandic economy.
Corporate Income Tax:
Iceland imposes a corporate income tax on the profits earned by companies operating within its jurisdiction. The corporate income tax rate in Iceland is a flat rate of 20% as of the knowledge cutoff date in September 2021. This rate applies to both resident and non-resident companies engaged in commercial, industrial, or professional activities in Iceland.
Types of Business Taxes in Iceland:
Value Added Tax (VAT): Iceland operates a VAT system, known as "Virðisaukaskattur" (VSK). VAT is levied on most goods and services. The standard VAT rate in Iceland is 24%. However, certain goods and services may be subject to reduced rates, such as the 11% rate for food and the 0% rate for exports.
Payroll Tax: Employers in Iceland are required to pay payroll taxes, which include social security contributions and other levies. These contributions fund various social benefits, such as healthcare and pensions. The payroll tax rates vary based on factors such as the employee's salary and the type of employment.
Capital Gains Tax: Iceland imposes a capital gains tax on the profits derived from the sale or transfer of certain assets, such as real estate, shares, and securities. The tax rate for capital gains depends on the type of asset and the holding period.
Withholding Tax: Iceland imposes withholding tax on certain types of payments made to non-residents, such as dividends, interest, royalties, and technical service fees. The withholding tax rates vary depending on the nature of the payment and may be subject to tax treaties between Iceland and the recipient's country of residence.
Property Tax: Property owners in Iceland are subject to an annual property tax based on the assessed value of their properties. The tax rates and assessment methods may vary between municipalities.
Customs Duties: Imports to Iceland may be subject to customs duties based on the Harmonized System (HS) classification of goods. The rates vary depending on the type of goods being imported.
Icelandic Tax Authority Website:
For detailed and up-to-date information on business taxes in Iceland, it is recommended to visit the official website of the Icelandic Tax and Customs Authority (Skatturinn), which is the tax authority responsible for tax administration in the country.
Icelandic Tax and Customs Authority Website: Official Icelandic Tax and Customs Authority Website