Tax Developments in Iceland 2025
April 2025Pillar Two Implementation:
- Iceland's government has included a bill in the 2025 parliamentary agenda to implement the OECD's Pillar Two global minimum tax rules.
- This involves introducing a 15% minimum tax on multinational corporations with annual revenues exceeding EUR 750 million.
- This aligns with the OECD Inclusive Framework and EU directives.
Iceland Expat Tax Withholding
June 2023Income from 0 – 409,986 ISK per. month: 31.45%
Income exceeding 1,151,012 ISK per month: 46.25%
Children on income exceeding 180,000 ISK per year: 6%
Personal tax credit per month: 59,665
Personal tax credit per year: 715,981
Iceland Georgia Tax Treaty
June 2015Iceland and Georgia signed on May 13, 2015 a double tax treaty, DTA.
According to the DTA the tax withholding rates will be 5%/10% for dividends, depending on the percentage of holding by the recipient, and 5% for payments of interest and royalties.
Iceland 2015 V.A.T. Rate
January 2015Starting January 1, 2015 the V.A.T. rate in Iceland is reduced from 25.5% to 24%.
Iceland Switzerland Tax Treaty
August 2014Iceland and Switzerland signed on July 10, 2014 a new protocol replacing the existing 1988 tax treaty between the two countries.
According to the new tax treaty the tax withholding rates will be 0%/15% on dividend and 0%/5% on royalties.
Interest will be taxed only in the recipient's state of residence.
Iceland's New Corporate Tax Rate
February 2011Starting January 1, 2011 Iceland's new corporate income tax rate is 20% compared to the 18% corporate tax rate in 2010.
Note: The information in this site is for general guidance only. Users of this site are advised to take professional advice before taking practical tax decisions.
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