Iceland: Legislation providing economic and tax relief (COVID-19)
Iceland: Legislation providing economic and tax relief
Parliament on 30 March 2020 passed two different legislative acts as relief measures in response to the coronavirus (COVID-19) pandemic.
In general, the first of the two legislative acts is intended to mitigate the economic effects of the coronavirus. The second is a supplementary budget act.
Previously parliament enacted three other laws regarding:
- Increased right to unemployment benefits for part-time employees
- Individuals who are quarantined with no signs of being infected, were guaranteed income
- Postponement of payment deadlines for social security tax and withheld public levies at source
Employers can elect to postpone the payment deadlines of up to three payments of social security tax and withheld public levies at source that fall due between 1 April 2020 and 1 December 2020. The payment deadline for all postponed payments will be 15 January 2021.
The payment deadline for payments previously postponed from 1 March 2020 to 1 April 2020, will be postponed even further till 15 January 2021. There are conditions to be satisfied to invoke the right to the postponement, such as substantial operational difficulties in 2020 due to immediate and unforeseen loss of income, directly or indirectly caused by the COVID-19 outbreak (among other conditions).
- Similarly, and subject to conditions, payers of real estate taxes on business property can postpone up to three tax payments.
- The Minister of Finance and Economic Affairs has been authorized to issue regulations to reduce or suspend the prepayment of income tax for the income of 2019, and there may be a new payment deadline for prepayments.
- Currently the deadlines for value added tax (VAT) are not being postponed. However, there are guidelines indicating that the Icelandic tax authorities will not impose penalties if VAT payments are not made before the deadline on 6 April 2020, for the reporting period of January and February 2020.
Read an April 2020 report [PDF 211 KB] prepared by the KPMG member firm in Iceland
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