Iceland VAT / Sales Tax

Detailed vat / sales tax rates and rules for Iceland in 2026.

VAT / Sales TaxISK

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%

Registration Threshold

ISK 2,000,000 (approximately €13,000) in annual turnover

Reduced Rates

11% — Food and beverages, hotel accommodation, books, newspapers, magazines, hot water, electricity, public transport

How Iceland VAT / Sales Tax compares

Iceland’s standard VAT / sales tax rate of 24% is the 7th highest of 203 countries TaxAtlas tracks, above the global average of 13.7% and Europe’s regional average of 19.9%.