Iceland Taxes

Corporate Income Tax (CIT):

• The standard corporate income tax rate is 20%.
• For specific companies, such as financial institutions, the corporate tax rate is 37.6%.

Individual Income Tax (PIT):

• Individual income tax rates are progressive.
• Tax brackets range from 31.49% to 46.29%.
• There are personal tax credits.

Value Added Tax (VAT):

• The standard VAT rate is 24%.
• A reduced VAT rate of 11% applies to specific goods and services, such as books and certain food items.

Capital Gains Tax:

• Capital gains for individuals are taxed at a rate of 22%.
• Capital gains for companies are taxed at the corporate income tax rate.

Payroll Tax:

• Employers pay a payroll tax of 6.35%.

Property Tax:

• Municipalities levy property taxes.
• Rates vary depending on the municipality and property value.

Withholding Taxes:

• Withholding tax may apply to dividends, interest, and royalties paid to non-residents.
• The rates vary depending on the type of income and applicable double taxation treaties.

Tax Residency:

• Tax residency is determined by factors such as the number of days spent in Iceland and the individual's center of vital interests.
• Specific rules apply to determine residency status.

Double Taxation Treaties:

• Iceland has double taxation treaties with numerous countries.
• These treaties aim to prevent double taxation.

Digital Platform Reporting:

• Digital platforms must report income distributed to sellers, starting January 1, 2025.

International Tax Cooperation:

• Iceland participates in the automatic exchange of financial account information (CRS).
• Iceland participates in the automatic exchange of information under the Crypto-Asset Reporting Framework (CARF).

Pillar Two:

• Iceland will implement the OECD's Pillar Two global minimum tax rules.
• This includes the introduction of a 15% minimum tax on multinational corporations with annual revenues exceeding EUR 750 million.