Taxation of international executives
Are there social security/social insurance taxes in Iceland? If so, what are the rates for employers and employees?
|Type of insurance||
Paid by employer
|Paid by employee||Total|
|Social security contribution||8.65%||0.00%||8.65%|
An additional 0.65 percent is payable by employer with respect to seamen. The Social Security contribution is paid by the employer, not by the employee. In addition, employers must pay at least 8 percent of gross salaries into an obligatory pension fund (and if the employee pays into an alternative pension fund the employer has to pay extra 2 percent to the alternative pension fund).
Employees having a foreign A1 certificate do not have to pay the social security contribution. Their employers do have to pay 425 percent of their income to the Bankruptcy Fund.
Employees have to pay 4 percent pension fee into the obligatory pension fee and can pay up to 4 percent to an alternative pension fund.
Contributions are payable no later than the 14th of the month following the
month in which the contributions are due. They have to be made on behalf of all foreign employees.
Iceland has signed some totalization agreements.
Are there any gift, wealth, estate, and/or inheritance taxes in Iceland?
There is no wealth tax in Iceland.
Icelandic inheritance tax is payable, provided the deceased was domiciled in Iceland at the time of death. The rate is 10 percent of the estate exceeding ISK1,500,000.
Gifts are taxable as income. However, gifts made for a special occasion may be exempted, unless they are of an extraordinary value.
Are there real estate taxes in Iceland?
Municipalities levy a real estate tax on the estimated value of immovable property, based on the size, and so on. The amount of tax varies, depending on the municipality.
Are there sales and/or value-added taxes in Iceland?
The standard VAT rate is 24 percent.
A reduced rate of 11 percent applies to the supply of the following goods and services:
Are there unemployment taxes in Iceland?
The unemployment taxes are included in the social security contribution paid by employer.
Are there additional taxes in Iceland that may be relevant to the general assignee? For example, customs tax, excise tax, stamp tax, and so on.
Local taxes1: All taxpayers between the ages of 16 and 69 years of age, with a taxable base of at least ISK833,671 in 2019 must make a contribution fixed at ISK11,740 to the Construction Fund for the Elderly at assessment year 2020 (income year 2019)2 and a specific charge to the national broadcasting service fixed at ISK17,900 at assessment year 2020 (income year 2019).
Is there a requirement to declare/report offshore assets (e.g. foreign financial accounts, securities) to the country/jurisdiction’s fiscal or banking authorities?
1Act no. 4/1995, on Sources of Income for Municipalities.
2Act no. 82/1989, on the Affairs of Senior Citizens.
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