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COUNTRY TRADING PROFILES
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Taxes - Accounting
Tax Rates |
Accounting Rules
Tax Rates
Consumption taxes
- Nature of the tax
-
virðisaukaskattur abbreviated to VSK (VAT)
- Tax rate
- 25.5% for most products and some services.
- Reduced tax rate
- 7% regarding food, books, hotels, radio and TV licence fees, newspapers and magazines, water and electricity used for domestic purposes. 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.
Corporate taxes
Tax rate
| Tax on corporate income |
20% |
- Capital gains taxation
- Capital gains are currently subject to the normal corporate income tax rate.
- Main allowable deductions and tax credit
- 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.
Individual taxes
Tax rate
| Income Tax |
Progressive rate from 24.1% to 33% |
| Up to ISK 2,400,000 |
24.1% |
| ISK 2,400,001 to ISK 7,800,000 |
27% |
| ISK 7,800,001 and upwards |
33% |
| Municipal income tax |
11.24% to 13.28%, average rate: 13.12% |
- Allowable deductions and tax credit
- 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.
 We can indicate you which local taxes are applied to your product.
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
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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
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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-authorised public accountant must perform a full-scale audit. Publicly listed companies must elect two auditors, one of whom must be a state-authorised public accountant.
You can contact an external auditor: Ernst & Young, Deloitte, KPMG, PricewaterhouseCoopers.
- Accounting news
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Invest Iceland: information about accounting standards in Iceland
© Export Entreprises SA, all rights reserved.
Last updates: May 2012
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