Iceland - Other taxes and levies

Iceland - Other taxes and levies

Taxation of international executives

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Social security tax

Are there social security/social insurance taxes in Iceland? If so, what are the rates for employers and employees?

Employer and employee

Type of insurance

Paid by employer

Paid by employee  Total
Social security contribution 8.65% 0.00% 8.65%

An additional 0.65 percent is payable by employer with respect to seamen. The Social Security contribution is paid by the employer, not by the employee. In addition, employers must pay at least 8 percent of gross salaries into an obligatory pension fund (and if the employee pays into an alternative pension fund the employer has to pay extra 2 percent to the alternative pension fund).

Employees having a foreign E101 certificate do not have to pay the social security contribution. Their employers do have to pay 0.632 percent of their income to the Bankruptcy Fund.

Employees have to pay 4 percent pension fee into the obligatory pension fee and can pay up to 4 percent to an alternative pension fund.

Contributions are payable no later than the 14th of the month following the

month in which the contributions are due. They have to be made on behalf of all foreign employees.

Iceland has signed some totalization agreements.

Gift, wealth, estate, and/or inheritance tax

Are there any gift, wealth, estate, and/or inheritance taxes in Iceland?

A wealth tax has been imposed temporarily in Iceland. The wealth tax will be levied in the income years 2010, 2011, and 2012. The wealth tax in the income year 2011 is 1.50 percent of net wealth above ISK75,000,000 for individuals and above ISK100,000,000 for married couples.

Icelandic inheritance tax is payable, provided the deceased was domiciled in Iceland at the time of death. The rate is 10 percent of the estate exceeding ISK1,500,000.

Gifts are taxable as income. However, gifts made for a special occasion may be exempted, unless they are of an extraordinary value.

Real estate tax

Are there real estate taxes in Iceland?

Municipalities levy a real estate tax on the estimated value of immovable property, based on the size, and so on. The amount of tax varies, depending on the municipality.

Sales/VAT tax

Are there sales and/or value-added taxes in Iceland?

The standard VAT rate is 25.5 percent.

A reduced rate of 7 percent applies to the supply of the following goods and services:

  • hotel rooms, rooms in guest houses, and other accommodations, as well as campground facilities
  • newspapers, magazines, and periodicals (local or national)
  • books and audio books, whether written by Icelandic authors or translated
  • license fees for the use of radio and television broadcasting services
  • warm water, electricity, and fuel oil used for the heating of houses and swimming pools
  • food for human consumption and services
  • road tolls.

Unemployment tax

Are there unemployment taxes in Iceland?

The unemployment taxes are included in the social security contribution paid by employer.

Other taxes

Are there additional taxes in Iceland that may be relevant to the general assignee? For example, customs tax, excise tax, stamp tax, and so on.

Local taxes

Local taxes1: All taxpayers between the ages of 16 and 69 years of age, with a taxable base of at least ISK1,425,218 in 2011 must make a contribution fixed at ISK8,700 to the Construction Fund for the Elderly at assessment year 2012 (income year 2010)2 and a specific charge to the national broadcasting service fixed at ISK17,900 at assessment year 2012 (income year 2011).

Footnotes

1Act no. 4/1995, on Sources of Income for Municipalities.

2Act no. 82/1989, on the Affairs of Senior Citizens.

© 2016 KPMG ehf, an Iceland Limited Liability Company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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