Key rates and amounts

Individuals: Withholding tax

Income from 0 – 927.087 ISK per. month
36,94%
Income exceeding 927.087 ISK per month
(only on the amount that exceeds the income threshold)

46,24%
Children (born 2004 or later) on income exceeding 180.000 ISK per year
6%
Personal tax credit per month ISK 56.447
Personal tax credit per year ISK 677.358

A list of municipal tax rates is available on the website of Icelandic Association of Local Authorities (only available in Icelandic).

More information regarding tax liability

More information on personal tax credit

Value added tax (VAT)


Standard rate Reduced rate
VAT rates 24% 11%
VAT calculated from total price
(price includes VAT)
19,35% 9,91%

Payroll tax

Employers pay the payroll tax based on the employee's wages.

General payroll tax
2019 6,60%
2018 6,85%
2017 6,85%

Capital gains tax

Capital gains tax for individuals is 22%

This applies to all capital gains such as sales profits, dividends and interests. However, interests have a tax-free limit. The first 150.000 ISK of interest bear no tax, after which the 22% taxation rate applies.

Rental income of residential properties are considered to be capital gains, that is if you rent out no more than two properties which fall under the Icelandic residential rental law. If those conditions are met 50% of the rental, income is tax free and without any deductions.

Icelandic National Broadcasting Service fee (útvarpsgjald)

Year
Amount Annual income threshold
Tax assessment 2019 ISK 17.500 1.750.783
Tax assessment 2018 ISK 17.100 1.718.678
Tax assessment 2017 ISK 16.800 1.678.001
Tax assessment 2016 ISK 16.400 1.637.600

More information about the Icelandic National Broadcast Service fee

The Senior Citizen's Construction Fund fee

Year
Amount Annual income threshold
Tax assessment 2019 ISK 11.454 1.750.783
Tax assessment 2018 ISK 11.175 1.718.678
Tax assessment 2017 ISK 10.956 1.678.001
Tax assessment 2016 ISK 10.464 1.637.600

More information about the Senior Citizen‘s Construction Fund fee

Per diem payments for domestic travel



January 1. February - 14. May 15. May -
Accommodation and transportation (24 hours) ISK 35.900 26.100 32.500
Accommodation (24 hours) ISK 24.600 14.300 20.600
Transportation - whole day trip (minimum10 hours) ISK 11.300 11.800 11.900
Transportation - half a day trip (minimum 6 hours) ISK 5.650 5.900 5.900

Per diem payments for international travel



General per diem payments
Jan-
Accommodation Other
Category 1 SDR 208 125 Moscow, Singapore, New York City, Tokyo, Washington DC.
Category 2 SDR 177 106 Dublin, Istanbul, Japan (except Tokyo), London, Luxemburg, Mexico City, Seoul
Category 3 SDR 156 94 Amsterdam, Athens, United States (except New York City and Washington DC), Helsinki, Barcelona, Geneva, Hong Kong, Canada, Copenhagen, Madrid, Oslo, Paris, Rome, Stockholm, Vienna
Category 4 SDR 139 83 Other destinations

Car allowance

For driving one's personal vehicle for the employer

0-1.000 km. ISK 110
1.001-2.000 km. ISK 108
2.001-3.000 km. ISK 106
3.001-4.000 km. ISK 93
4.001-5.000 km. ISK 91

Lodging tax

Lodging tax (Is. gistináttaskattur) for each taxable unit is ISK 300 per night.

The invoice or sales receipt must contain amount of lodging tax paid. Lodging tax is added to the VAT tax base and is in the same VAT rate as the lodging.

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