Europe · Tax guide
Iceland
Iceland taxes limited companies at 20%, charges VAT at 24%, and requires employers to pay social security tax and pension contributions on salaries. Taxes are administered by Skatturinn.
At a glance
- Corporate income tax
- 20%
- VAT
- 24%
- VAT registration
- ISK 2,000,000
- Withholding on dividends
- 20%
- Global minimum tax
- 15%
Limited companies
Reduced rate 11%
Taxable turnover in 12 months
To foreign companies, before relief
Groups with revenue of €750 million or more
Corporate income tax
Limited companies pay 20% on taxable profits, with prepayments during the year.
VAT
VAT is 24%, with a reduced rate of 11% for items such as food, books and accommodation. Registration is required once taxable turnover exceeds ISK 2,000,000 in twelve months; returns are every two months.
Employers
Employers pay 6.35% social security tax, plus at least 11.5% employer pension contribution on salaries, and withhold employees' income tax.
Payments abroad and the global minimum tax
Dividends paid to foreign companies carry 20% before treaty relief. Related-party transactions must be at arm's length. Groups with revenue of €750 million or more are subject to the global minimum tax at 15%.
Key dates
- Every two monthsVAT return
- MonthlyPayroll withholding and social security tax
Figures and sources
8 figures- Corporate income tax rate for limited companies20%Checked against the official source
- VAT standard rate24%Checked against the official source
- VAT reduced rate11%Checked against the official source
- Taxable turnover in 12 months above which VAT registration is requiredISK 2,000,000Checked against the official source
- Withholding on dividends to foreign companies (before treaty relief)20%Checked against the official source
- Global minimum tax rate15%Under professional review
- Group revenue for the global minimum tax€750 millionUnder professional review
- Employer payroll costs6.35% social security tax, plus at least 11.5% employer pension contributionUnder professional review
Indicative only. This assessment is a high-level overview of tax obligations in Iceland based on the information you provided and rules in force for 2026. It is not tax or legal advice. Consult an Icelandic tax adviser before making compliance decisions.