Iceland Corporate Income Tax

Corporate income tax rates and base (2025)

Iceland taxes limited liability companies at a flat 20%, while transparent/other entity forms such as general partnerships are taxed at a higher rate. Resident companies are taxed on worldwide income.

• Corporate income tax rate — limited liability companies (hf./ehf.) — 20% % (Act No. 90/2003 on Income Tax)
• Income tax rate — partnerships and other legal entities (incl. general partnerships taxed as separate entities) — 37.6% % ((approx — some sources cite 38.4%; confirm entity classification)) (Act No. 90/2003 on Income Tax)
• Tax base — Worldwide income less deductible operating expenses (all costs needed to earn, secure and maintain income) (Act No. 90/2003 on Income Tax)
• Non-resident companies — Taxed at the same rates as resident companies on Iceland-source income / permanent establishment profits (Act No. 90/2003 on Income Tax)
• Inter-company dividends — Dividends received by a resident company are effectively exempt — a deduction equal to received dividends generally eliminates tax ((approx — confirm conditions)) (Act No. 90/2003 on Income Tax)
• Tax loss carryforward — Losses may be carried forward for up to 10 years; no carryback ((approx — confirm 10-year period)) (Act No. 90/2003 on Income Tax)
• Withholding tax on dividends to non-residents — 20% (corporate recipients may reclaim down to 20% effective rate / refunds available; reduced under treaties) % (Act No. 90/2003 on Income Tax; Act No. 94/1996 on Withholding of Tax on Financial Income)
• Withholding tax on interest to non-residents — 12% (corporations) / 12% standard; commonly cited at 12-13% % ((approx — confirm; PwC cites 13% gross, statutory 12%)) (Act No. 90/2003 on Income Tax)
• Withholding tax on royalties to non-residents — 20% (standard CIT rate applied gross; reduced under treaties) % (Act No. 90/2003 on Income Tax)
• Corporate tax year — Calendar year; other fiscal years require approval of the Internal Revenue Directorate (Act No. 90/2003 on Income Tax)
• Corporate tax return deadline — Generally 31 May following the tax year; extension to 30 September for professionally prepared returns (Act No. 90/2003 on Income Tax)
• Advance corporate tax payments — Monthly advance payments of 8.5% of the prior year's assessed income tax, due on the 1st of each month from February to September % (Act No. 90/2003 on Income Tax)
• Final corporate tax balance — Any balance after final assessment (available end of October) payable in equal installments by 1 November and 1 December (Act No. 90/2003 on Income Tax)