Doing Business in Iceland
Basic information about doing business in Iceland
Regulatory Constraints and
Exchange Controls: No restrictions are imposed in Iceland on buying or selling of foreign exchange.
Foreign Ownership of Business: In principle, foreign ownership of business is unrestricted. However, some limitations apply to specific sectors, namely fishing, primary fish processing, energy production and aviation.
A wide range of portfolio investment options are available through licensed securities trading companies.
Official Attitude and
Advantages offered by Iceland for industrial investors include the most competitive electricity prices in Europe at 2-3 US cents/kWh for large industrial users, depending upon delivery terms, and industrial steam at 6 barg or USD 3 per metric tonne. Industrial sites with good natural harbours, for small and large ventures, are available in many parts of the country, and many local authorities have designed development strategies and scenarios which provide for new investments. Highly skilled labour is available, including experts in software and a wide range of research fields.
Special incentives are granted for film and TV production in Iceland, whereby 12% of total costs are refundable. Production cost incurred in other EEA countries is also refundable within certain limits.
The Icelandic Tax System
In December 2001 Parliament passed a law to implement wide-ranging tax reforms, both for business and households. The reforms include a range of changes in tax rates and reference amounts, and abolition of inflation accounting for tax purposes and in accounting, which constitutes a large step in aligning the Icelandic tax system to that of other countries. Corporate income tax has been reduced from 30% to 18% as of January 1st, 2002, thereby ranking among the lowest tax rates within the OECD member countries.
Some features of Icelandic tax law:
• Corporate income tax of 18% on
net income only levied by the state;
Taxes on Businesses in
International Trading Companies, registered in Iceland but engaged in trading which does not involve Iceland, are liable for 5% corporate income tax. Companies in Iceland pay net worth tax, as do individuals. Real-estate taxes are paid locally by businesses, along with local service charges.
Personal Income Taxes in
Personal income tax is withheld at source and paid as you earn. It is divided into national income tax (25.75%) and municipal income tax (averaging 12.79%), making a total of 38.54%.
Financial income of individuals is taxed at the rate of 10%.
Resident individuals are taxed on their worldwide income.
Non-resident individuals become tax residents if they stay in the country for more than 183 days out of a 12-month period.
A non-resident individual is taxed on Icelandic-sourced income.
1) Exchange rate (average buying/selling)on
March 1, 2003: USD 1 = ISK 79.
Financial Reporting and Audit
Requirements in Iceland
Companies above a certain size which are publicly quoted and have subsidiaries are required to prepare consolidated group accounts. Tax returns are filed with local tax authorities.
Corporations registered in Iceland, with the main part of their income from foreign sources, can apply to keep their books of accounts and records in a foreign currency.
Limited liability companies registered on an official financial market are allowed to issue their share capital in a foreign currency. Other limited liability companies with the main part of their income from foreign sources will be able to issue their share capital in a foreign currency provided that certain requirements are met.
Guidance and Services for
Potential Investors in Iceland
For the latest update of these informations, check the Invest in Iceland Agency website: http://www.invest.is
Invest in Iceland Agency –
Invest in Iceland Agency –
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