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flag Iceland Iceland: Business Environment

In this page: Accounting Rules | Tax Rates | Intellectual Property | Legal Framework | Standards | Business Practices

 

Accounting Rules

Tax Year
The fiscal year begins on 1 January and ends on 31 December of the same year.
Accounting Standards
As a European Economic Area (EEA) member, Iceland applies the European IAS/IFRS regulations.
Accounting Regulation Bodies
Icelandic Ministry of Finance.
Accounting Reports
The annual report must contain a profit and loss account, a balance sheet and an annual report.
Publication Requirements
The Law refers to the notion of "good accounting method" as regards the methods of companies for the elaboration of financial statements.
All capital companies have to send a copy of their annual report to the legal authorities of the country. This annual report must contain a profit and loss account, a balance sheet and an annual report.
The report must be in Icelandic, Danish or English. However, companies registered in Iceland, whose income mainly comes from foreign sources, can present a report in a foreign currency and language.
Professional Accountancy Bodies
The Institute of State Authorized Public Accountants in Iceland
Certification and Auditing
Every limited company in Iceland is required to elect an auditor or inspector and have its annual accounts audited. For public limited companies, a state-authorized public accountant must perform a full-scale audit. Publicly listed companies must elect two auditors, one of whom must be a state-authorized public accountant.
You can contact an external auditor: Ernst & Young, Deloitte, KPMG and PricewaterhouseCoopers.
Accounting News
Invest Iceland: information about accounting standards in Iceland

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Tax Rates

Consumption Taxes

Nature of the Tax
virðisaukaskattur abbreviated to VSK (VAT)
Tax Rate
24% for most products and some services.
Reduced Tax Rate
7% for food, books, hotels, radio and TV license fees, newspapers and magazines, water and electricity used for domestic purposes. 11% for e-books. No VAT for exports, public health-care services, schools, postal services, insurance and banking services.
Other Consumption Taxes
Excise duties are levied on certain products such as automobiles, petroleum and diesel fuel.

Learn more about Service Providers in Iceland on Globaltrade.net, the Directory for International Trade Service Providers.

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Corporate Taxes

Company Tax
20%
Capital Gains Taxation
Capital gains are currently subject to the normal corporate income tax rate.
Main Allowable Deductions and Tax Credits
Non-resident companies can deduct part of their expenses. For further information visit the Invest Iceland website.
Other Corporate Taxes
Industrial tax, property tax, social security contributions, stamp duty.
For further information visit the Invest Iceland website.
Other Domestic Resources
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 

Country Comparison For Corporate Taxation

  Iceland OECD United States Germany
Number of Payments of Taxes per Year 29.0 12.0 11.0 9.0
Time Taken For Administrative Formalities (Hours) 140.0 176.0 175.0 207.0
Total Share of Taxes (% of Profit) 33.0 42.7 46.7 46.8

Source: Doing Business - Last Available Data.

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Individual Taxes

Tax Rate

Income Tax Progressive rate from 22.9% to 31.8%
Up to ISK 2,897,703 22.9%
ISK 2,897,703 to ISK 8,874,108 25.8%
ISK 8,874,108 and upwards 31.8%
Municipal income tax Between 12.44% and 14.48%
Allowable Deductions and Tax Credits
There may be different possible deductions according to situation and income (deduction of payments to obligatory pension funds, personal tax credit for all individual taxpayers).
For further information visit the Invest Iceland website.
Special Expatriate Tax Regime
There are in general no special provisions for expatriates.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
See the list of the conventions signed
See the list of agreements signed
Withholding Taxes
Dividends: 0/18%, Interest: 10%, Royalties: 20%.

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Sources of Fiscal Information

Tax Authorities
Internal Revenue Directorate
The Directorate of Tax Investigations in Iceland
State Internal Revenue Board
Other Domestic Resources
Directorate of Customs
Information about taxes on the Invest Iceland website

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Learn more about Taxes and Accounting in Iceland on Globaltrade.net, the Directory for International Trade Service Providers.

Intellectual Property

National Organizations
The organization in charge of the protection of intellectual property in Iceland is the Patent Office of Iceland (Einkaleyfastofan) Iceland signed the Paris Agreement regarding the protection of industrial property and the agreement which established the World Intellectual property Organization (WIPO). As for patents, the country adheres to the Munich Agreement for European patents, as well as to the Patent Cooperation Treaty (PCT). Iceland did not sign the Madrid Agreement concerning the international register of trademarks but adhered to the 1989 protocol , which came into force in Iceland on January 1st, 1997.
 

National Regulation and International Agreements

 
Type of property and law Validity International Agreements Signed
Patent
 
Patent Law 1996
20 years Patent Cooperation Treaty (PCT)
Trademark
 
Trademarks Act 1997
5 years, renewable Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks
Design
 
Design Protection Act 1996
5 years, renewable up to 25 years  
Copyright
 
Copyright
For the author's lifetime and up to 50 years after his death Berne convention For the Protection of Literary and Artistic Works
Rome ConventionFor the Protection of Performers, Producers of Phonograms and Broadcasting Organizations
WIPO Copyright Treaty
WIPO Performances and Phonograms Treaty
Industrial Models
 
Design Protection Act
5 years, renewable up to 25 years  

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Legal Framework

Independence of Justice
The country’s judiciary is independent. 
Equal Treatment of Nationals and Foreigners
The country’s judicial system guarantees equal treatment to foreign nationals.
The Language of Justice
 Icelandic is the judicial language used in Iceland.
Sources of the Law and Legal Similarities
 The main source of the law is the constitution of 1944 which has been amended many times. The legal system is based on a civil law system originating in Danish law. Iceland has not accepted compulsory ICJ jurisdiction. 

Learn more about Lawyers and Legal in Iceland on Globaltrade.net, the Directory for International Trade Service Providers.

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Standards

National Standards Organizations
IST, Icelandic Standards
Integration in the International Standards Network
The organization responsible for norms and certificates of compliance is Icelandic Standards (Stadlarad). IST is a member of the European Committee for Standardization (CEN), the European Committee for Electrotechnical Standardization (CENELEC), the European Telecommunications Standards Institute (ETSI), the International Organization for Standardization (ISO), and of the International Electrotechnical Commission (IEC).
Classification of Standards
The Icelandic standards are the IST. Iceland observes the classification of international standards of the International Organization for Standardization (ISO).
Online Consultation of Standards
To look up standards on line, visit the website of Icelandic Standards or the website of ISO.
Certification Organizations
Icelandic Standards: organization for certification and standardization

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Business Practices

General Information
Kwintessential, how to behave when doing business in Iceland
Opening Hours and Days
Banks open Monday to Friday from 9.15 am to 4 pm; Lansbanki's branch, in Keflavik airport, is open every day from 6.30 am to 6.30 pm.
Shops are open Monday to Friday from 9 am to 6 pm, and on Saturday from 10 am to 4 pm.
Supermarkets open every day from 10 am to 10 pm.
Public Administrations are open Monday to Friday from 9 am to 4 pm.
 

Public Holidays

New Year's Day 1 January
Maundy Thursday 9 April
Good Friday 10 April
Easter Monday 13 April
Earth Day 22 April
1st Day of Summer 24 April
Ascension May
Labor Day 1 May
Whit Monday May
National Day 17 June
Christmas Eve (1/2 day) 24 December
Christmas Day 25 December
Saint Stephen 26 December
New Year's Eve (1/2 day) 31 December
 
 

Periods When Companies Usually Close

Christmas holidays Beginning of January
Spring holidays Mid March
Summer holidays June, July and August
Autumn holidays November
 

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Last Updates: February 2015