Iceland Tax Rates
Iceland operates a progressive income tax system with combined national and municipal rates reaching approximately 46.25%. The country features a 20% corporate tax rate, a 24% standard VAT, and relatively high social security contributions. As a Nordic country outside the EU but within the EEA, Iceland has its own tax policies while maintaining close alignment with European standards.
Top Income Tax Rate
46.3%
Corporate Tax Rate
21%
VAT / Sales Tax
24%
Capital Gains Tax
22%
Detailed Tax Information
Income Tax Brackets
Icelandic income tax combines national tax and municipal tax. National tax has three brackets: 22.5% (income up to ISK 4,536,000), 29% (ISK 4,536,001-12,720,000), and 37.95% (above ISK 12,720,000). Municipal tax averages 14.45% (ranging from 12.44% to 14.52%). A personal tax credit of ISK 64,926/month offsets the tax on lower incomes. Combined rates shown include municipal tax.
| Income Range | Tax Rate |
|---|---|
| ISK 0 – ISK 4.5M | 31.4% |
| ISK 4.5M – ISK 12.7M | 38.0% |
| ISK 12.7M+ | 46.3% |
Corporate Tax
Iceland levies corporate income tax at 21% for limited liability companies. Partnerships and cooperatives are taxed at 38.4%. Iceland offers a participation exemption for qualifying shareholdings and has implemented OECD BEPS measures.
Standard Rate
21%
Capital Gains Tax
Capital gains in Iceland are taxed at 22% for individuals. This applies to gains from shares, bonds, real estate (other than primary residence), and other capital assets. The rate applies uniformly without distinction between short-term and long-term holdings.
Rate
22%
VAT / Sales Tax
Iceland applies a standard VAT (virðisaukaskattur) rate of 24% and a reduced rate of 11%. Iceland is not an EU member but its VAT system is broadly aligned with EU principles through the EEA agreement.
Standard Rate
24%
Cryptocurrency Tax
Cryptocurrency gains are taxed at the 22% capital income tax rate. Disposals including sales, exchanges, and payments are taxable events. Iceland's central bank has issued guidance on crypto as an investment asset. Mining income is taxed as business income.
Tax Treaties
Iceland has approximately 45 double taxation treaties. The Nordic Tax Convention provides special provisions among the Nordic countries. Iceland participates in OECD initiatives as a member.
Treaty Network
45
Double taxation agreements
Major treaty partners:
Key Details
Relocate to Iceland
See how much you could save by moving here from your current country.
$-11,088
Tax in United States
$24K
24.4% effective
Tax in Iceland
$35K
35.4% effective
Additional Cost
45.5%
more tax annually
US Citizens: Important Note
US citizens are taxed on worldwide income regardless of residence. You'll still need to file US taxes, though the Foreign Earned Income Exclusion and Foreign Tax Credit may reduce your liability.
