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openaccountants/skills/iceland-vat.md
iceland-vat.md340 lines13.1 KB
v20
1---
2name: iceland-vat
3description: Use this skill whenever asked to prepare, review, or classify transactions for an Iceland VAT (VSK) return for any client. Trigger on phrases like "prepare VSK return", "Iceland VAT", "virðisaukaskattur", "Icelandic VAT filing", or any request involving Icelandic VAT. Iceland is NOT an EU member but IS in the EEA. This skill covers Iceland only. MUST be loaded alongside vat-workflow-base v0.1 or later. Does NOT require eu-vat-directive (Iceland is not EU). ALWAYS read this skill before touching any Iceland VSK work.
4version: 2.0
5---
6 
7# Iceland VAT Return Skill (VSK) v2.0
8 
9## Section 1 — Quick reference
10 
11**Read this whole section before classifying anything. The workflow runbook is in `vat-workflow-base` Section 1. Note: Iceland is NOT an EU member. The eu-vat-directive companion skill does NOT apply. Iceland follows its own VSK legislation with EEA adaptations.**
12 
13| Field | Value |
14|---|---|
15| Country | Iceland (Island) |
16| Standard rate | 24% |
17| Reduced rate | 11% (food, accommodation, books, newspapers, geothermal hot water, radio/TV licence) |
18| Zero rate | 0% (exports, international transport) |
19| Return form | VSK return (Virðisaukaskattsskýrsla) |
20| Filing portal | https://www.skattur.is (Skatturinn portal) |
21| Authority | Rikisskattstjori (Directorate of Internal Revenue) |
22| Currency | ISK (Icelandic Krona) |
23| Filing frequencies | Bi-monthly (standard: Jan-Feb, Mar-Apr, etc.); Monthly (large taxpayers, optional) |
24| Deadline | 5th of 2nd month after period end (e.g. 5 April for Jan-Feb) |
25| Companion skill (Tier 1, workflow) | **vat-workflow-base v0.1 or later — MUST be loaded** |
26| Companion skill (EU directive) | **NOT required — Iceland is not EU** |
27| EEA status | EEA member via EFTA. No intra-community supplies. No VIES. Goods from EU treated as imports. Services from abroad subject to reverse charge. |
28| Contributor | Michael Cutajar, CPA (Warrant No. 125122), ACCA |
29| Validated by | Deep research verification, April 2026 |
30| Validation date | April 2026 |
31 
32**Key VSK return fields:**
33 
34| Field | Meaning |
35|---|---|
36| A | Domestic sales at 24% — base |
37| B | Domestic sales at 11% — base |
38| C | Output VSK at 24% |
39| D | Output VSK at 11% |
40| E | Zero-rated sales (exports) |
41| F | Exempt sales |
42| G | Reverse charge on imported services — base |
43| H | VSK on reverse charge (output) |
44| I | Total output VSK (C + D + H) |
45| J | Input VSK on domestic purchases |
46| K | Input VSK on imports (customs) |
47| L | Input VSK on reverse charge services (input side) |
48| M | Total deductible input VSK (J + K + L) |
49| N | Net VSK payable (I minus M) or refundable |
50 
51**Conservative defaults:**
52 
53| Ambiguity | Default |
54|---|---|
55| Unknown rate on a sale | 24% |
56| Unknown VAT status of a purchase | Not deductible |
57| Unknown counterparty country | Domestic Iceland |
58| Unknown business-use proportion | 0% recovery |
59| Unknown SaaS billing entity | Reverse charge (all foreign = import of service) |
60| Unknown blocked-input status | Blocked |
61 
62**Red flag thresholds:**
63 
64| Threshold | Value |
65|---|---|
66| HIGH single-transaction size | ISK 500,000 |
67| HIGH tax-delta on single default | ISK 30,000 |
68| MEDIUM counterparty concentration | >40% |
69| MEDIUM conservative-default count | >4 |
70| LOW absolute net VSK position | ISK 800,000 |
71 
72---
73 
74## Section 2 — Required inputs and refusal catalogue
75 
76### Required inputs
77 
78**Minimum viable** — bank statement for the bi-monthly period. Acceptable from: Islandsbanki, Landsbankinn, Arion banki, Revolut Business, Wise Business.
79 
80**Recommended** — sales/purchase invoices, kennitala (10-digit ID), VSK number (IS + 5-6 digits), prior VSK return.
81 
82**Ideal** — complete register, customs declarations for imports, prior period reconciliation.
83 
84### Iceland-specific refusal catalogue
85 
86**R-IS-1 — Non-registered.** *Trigger:* not registered, turnover below ISK 2,000,000. *Message:* "Non-registered entities do not file VSK returns."
87 
88**R-IS-2 — Partial exemption.** *Message:* "Mixed supplies require proportional attribution. Use a qualified tax adviser."
89 
90**R-IS-3 — Fishing vessel / special investment schemes.** *Message:* "Fishing vessel and special investment zone schemes out of scope."
91 
92**R-IS-4 — Faroe Islands trade.** *Trigger:* trade with Faroe Islands. *Message:* "Faroe Islands are a separate Danish territory, not part of Iceland for VSK. Specialist review needed."
93 
94---
95 
96## Section 3 — Supplier pattern library
97 
98### 3.1 Icelandic banks (exempt — exclude)
99 
100| Pattern | Treatment | Notes |
101|---|---|---|
102| ISLANDSBANKI, ÍSLANDSBANKI | EXCLUDE | Financial service, exempt |
103| LANDSBANKINN | EXCLUDE | Same |
104| ARION BANKI, ARION | EXCLUDE | Same |
105| REVOLUT, WISE (fee lines) | EXCLUDE | Check subscriptions |
106| VEXTIR, INTEREST | EXCLUDE | Interest |
107| LAN, LOAN | EXCLUDE | Loan principal |
108 
109### 3.2 Icelandic government (exclude)
110 
111| Pattern | Treatment | Notes |
112|---|---|---|
113| RIKISSKATTSTJORI, RSK | EXCLUDE | Tax payment |
114| TRYGGINGASTOFNUN | EXCLUDE | Social insurance |
115| RIKISSKRÁ | EXCLUDE | National registry |
116 
117### 3.3 Icelandic utilities
118 
119| Pattern | Treatment | Field | Notes |
120|---|---|---|---|
121| ORKUVEITA REYKJAVIKUR, OR | Domestic 24% or 11% | J | Electricity/hot water — hot water at 11% |
122| RARIK | Domestic 24% | J | Electricity |
123| HS VEITUR | Domestic 11% | J | Geothermal heating at 11% |
124| SIMINN | Domestic 24% | J | Telecoms |
125| VODAFONE IS, NOVA | Domestic 24% | J | Telecoms |
126 
127### 3.4 Insurance (exempt — exclude)
128 
129| Pattern | Treatment | Notes |
130|---|---|---|
131| SJOVA | EXCLUDE | Exempt |
132| VARDAR | EXCLUDE | Same |
133| TM TRYGGINGAR | EXCLUDE | Same |
134| VIS INSURANCE | EXCLUDE | Same |
135| TRYGGING, INSURANCE | EXCLUDE | All exempt |
136 
137### 3.5 Post and logistics
138 
139| Pattern | Treatment | Notes |
140|---|---|---|
141| ISLANDSPÓSTUR, ICELAND POST | EXCLUDE for standard post; 24% for parcel | |
142| DHL, UPS, FEDEX | Domestic 24% or import | Check if import |
143 
144### 3.6 Transport
145 
146| Pattern | Treatment | Notes |
147|---|---|---|
148| STRÆTO, STRÆTÓ | Domestic 24% | Public bus |
149| ICELANDAIR (international) | 0% | International flight |
150| ICELANDAIR (domestic) | Domestic 24% | Domestic flight |
151 
152### 3.7 Food retail
153 
154| Pattern | Treatment | Notes |
155|---|---|---|
156| BONUS, KRONAN, HAGKAUP, NETTO IS | Default BLOCK | Personal provisioning |
157| VEITINGAHÚS, RESTAURANT | Default BLOCK | Entertainment |
158 
159### 3.8 SaaS — ALL foreign suppliers (reverse charge — Iceland treats all foreign as import of service)
160 
161Since Iceland is NOT EU, ALL foreign SaaS is treated identically: reverse charge under Act 50/1988 Art. 35.
162 
163| Pattern | Billing entity | Field | Notes |
164|---|---|---|---|
165| GOOGLE | Google Ireland Ltd (IE) | G/H + L | Reverse charge import of service |
166| MICROSOFT | Microsoft Ireland (IE) | G/H + L | Same |
167| ADOBE | Adobe Ireland (IE) | G/H + L | Same |
168| META, FACEBOOK | Meta Ireland (IE) | G/H + L | Same |
169| SPOTIFY | Spotify AB (SE) | G/H + L | Same (even though EFTA/EEA) |
170| NOTION | Notion Labs Inc (US) | G/H + L | Same |
171| ANTHROPIC, CLAUDE | Anthropic PBC (US) | G/H + L | Same |
172| OPENAI, CHATGPT | OpenAI Inc (US) | G/H + L | Same |
173| AWS EMEA SARL | LU entity | G/H + L | Same |
174| GITHUB | GitHub Inc (US) | G/H + L | Same |
175| FIGMA | Figma Inc (US) | G/H + L | Same |
176| CANVA | Canva Pty Ltd (AU) | G/H + L | Same |
177 
178### 3.9 Payment processors
179 
180| Pattern | Treatment | Notes |
181|---|---|---|
182| STRIPE (transaction fees) | EXCLUDE (exempt) | Financial service |
183| PAYPAL (transaction fees) | EXCLUDE (exempt) | Same |
184| VALITOR, BORGUN | EXCLUDE for transaction fees | Icelandic card processors; fees exempt |
185 
186### 3.10 Professional services
187 
188| Pattern | Treatment | Notes |
189|---|---|---|
190| LÖGMAÐUR, LAWYER | Domestic 24% | Legal |
191| ENDURSKOÐANDI, AUDITOR | Domestic 24% | Accounting |
192 
193### 3.11 Payroll (exclude)
194 
195| Pattern | Treatment | Notes |
196|---|---|---|
197| TRYGGINGAGJALD | EXCLUDE | Social insurance levy |
198| LAUN, SALARY | EXCLUDE | Wages |
199| TEKJUSKATTUR | EXCLUDE | Income tax |
200 
201### 3.12 Internal transfers and exclusions
202 
203| Pattern | Treatment | Notes |
204|---|---|---|
205| MILLIFÆRSLA, OWN TRANSFER | EXCLUDE | Internal |
206| ARÐUR, DIVIDEND | EXCLUDE | Out of scope |
207| AFBORGUN, LOAN REPAYMENT | EXCLUDE | Loan principal |
208| HRAÐBANKI, ATM | Ask | Default exclude |
209 
210---
211 
212## Section 4 — Worked examples
213 
214### Example 1 — Foreign SaaS reverse charge (Notion)
215**Input:** `03.04.2026 ; NOTION LABS INC ; -2,200 ISK`
216**Treatment:** All foreign services: reverse charge at 24%. Field G (base), Field H (output VSK). Input in Field L. Net zero.
217 
218### Example 2 — Foreign SaaS (Google — also reverse charge, no EU distinction)
219**Input:** `10.04.2026 ; GOOGLE IRELAND LIMITED ; -127,500 ISK`
220**Treatment:** Same as Example 1. Iceland does NOT have intra-EU treatment. All foreign = reverse charge.
221 
222### Example 3 — Entertainment
223**Input:** `15.04.2026 ; GRILLIÐ RESTAURANT ; -33,000 ISK`
224**Treatment:** Restaurant. Entertainment input VSK not deductible. Block.
225 
226### Example 4 — EU B2B service sale (no zero-rate — just non-domestic)
227**Input:** `22.04.2026 ; STUDIO KREBS GMBH ; +525,000 ISK`
228**Treatment:** Service sold to German company. Export of service. Field E (zero-rated export). No output VSK.
229 
230### Example 5 — Accommodation (reduced rate)
231**Input:** `Sales: Hotel room in Reykjavik ; +45,000 ISK`
232**Treatment:** Accommodation at 11%. Field B (base), Field D (output VSK at 11%).
233 
234### Example 6 — Import of goods
235**Input:** `Customs declaration: Computer from US ; ISK 240,000 + ISK 57,600 import VSK`
236**Treatment:** Import VSK paid to customs. Input in Field K.
237 
238---
239 
240## Section 5 — Tier 1 classification rules (compressed)
241 
242### 5.1 Standard 24% (Act 50/1988, Art. 14(1))
243Default. Sales: Field A/C. Input: Field J.
244 
245### 5.2 Reduced 11% (Art. 14(2))
246Food, accommodation, books, newspapers, geothermal hot water, radio/TV licence.
247 
248### 5.3 Zero rate (Art. 12, 42)
249Exports: Field E. International transport: Field E.
250 
251### 5.4 Exempt
252Financial, insurance, healthcare, education, postal, gambling, residential rental.
253 
254### 5.5 Reverse charge — ALL foreign services (Art. 35)
255No EU/non-EU distinction. All services received from abroad: self-assess at 24%. Field G (base), Field H (output). Input in Field L.
256 
257### 5.6 Imports of goods
258Import VSK assessed by customs. Input: Field K.
259 
260### 5.7 No intra-community rules
261Iceland has NO intra-EU acquisition/supply mechanism. Goods from EU countries are imports. Services from anywhere are reverse charge.
262 
263### 5.8 Blocked input
264- Entertainment: blocked
265- Personal use: blocked
266- Motor vehicles: restricted (deductible only if exclusively for business)
267 
268---
269 
270## Section 6 — Tier 2 catalogue (compressed)
271 
272### 6.1 Vehicle costs — *Default:* 0%. *Question:* "Exclusive business use?"
273### 6.2 Entertainment — *Default:* block.
274### 6.3 Foreign SaaS — *Default:* reverse charge at 24%.
275### 6.4 Owner transfers — *Default:* exclude.
276### 6.5 Tourism/hospitality — *Default:* 11%. *Question:* "Confirm accommodation vs food service."
277### 6.6 Import goods — *Default:* check customs declaration.
278### 6.7 Cash withdrawals — *Default:* exclude.
279 
280---
281 
282## Section 7 — Excel working paper template
283 
284Per `vat-workflow-base` Section 3. Column H accepts Iceland VSK field codes (A-N). Bottom-line: Field N (net payable/refundable = Field I minus Field M).
285 
286---
287 
288## Section 8 — Iceland bank statement reading guide
289 
290**CSV conventions.** Islandsbanki and Landsbankinn use semicolons, DD.MM.YYYY. ISK amounts.
291 
292**Icelandic language.** leiga (rent), laun (salary), vextir (interest), millifærsla (transfer), reiðufe (cash).
293 
294**Currency.** ISK only. Convert foreign at Central Bank of Iceland rate.
295 
296**No IBAN.** Iceland uses IBAN with IS prefix but is NOT in the EU SEPA zone for all purposes.
297 
298---
299 
300## Section 9 — Onboarding fallback
301 
302### 9.1 Entity type — *Inference:* ehf. = company; einstaklingsrekstur = sole trader.
303### 9.2 VSK registration — *Fallback:* "VSK-registered?"
304### 9.3 Kennitala — *Fallback:* "Kennitala? (10 digits)"
305### 9.4 VSK number — *Fallback:* "VSK number? (IS + 5-6 digits)"
306### 9.5 Filing period — Bi-monthly default.
307### 9.6 Tourism/hospitality — *Fallback:* "Tourism or accommodation business?"
308### 9.7 Exports — *Fallback:* "Do you export goods or services?"
309 
310---
311 
312## Section 10 — Reference material
313 
314### Sources
3151. Log um virðisaukaskatt (Act No. 50/1988, as amended)
3162. Regulation No. 630/2008
3173. EEA Agreement (cross-border service rules)
3184. Central Bank of Iceland exchange rates
319 
320### Known gaps
3211. Fishing vessel schemes not covered.
3222. Svalbard-equivalent special zones not detailed.
3233. Tourism sector-specific rules could be expanded.
324 
325### Change log
326- **v2.0 (April 2026):** Full rewrite. Icelandic banks (Islandsbanki, Landsbankinn, Arion). EEA-not-EU distinction clarified throughout.
327- **v1.0 (April 2026):** Initial skill.
328 
329## End of Iceland VAT Return Skill v2.0
330 
331This skill is incomplete without `vat-workflow-base` v0.1+. Note: `eu-vat-directive` is NOT required for Iceland.
332 
333---
334 
335## Disclaimer
336 
337This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional before filing or acting upon.
338 
339The most up-to-date, verified version of this skill is maintained at [openaccountants.com](https://openaccountants.com).
340 

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About

Use this skill whenever asked to prepare, review, or classify transactions for an Iceland VAT (VSK) return for any client. Trigger on phrases like "prepare VSK return", "Iceland VAT", "virðisaukaskattur", "Icelandic VAT filing", or any request involving Icelandic VAT. Iceland is NOT an EU member but IS in the EEA. This skill covers Iceland only. MUST be loaded alongside vat-workflow-base v0.1 or later. Does NOT require eu-vat-directive (Iceland is not EU). ALWAYS read this skill before touching any Iceland VSK work.

ISty-2025

IS skill: