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-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: Invest Iceland: information about accounting standards in Iceland

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.

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

Corporate Taxes

Company Tax: 0.2
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.

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: 0/15%/18%, Interest: 15/18%, Royalties: 20%.

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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Intellectual Property

National Organizations: The organisation 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

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.

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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 Icelandis 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

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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Iceland: Business Environment