Source-cited draft: tax overview for Iceland (tax year 2025) — rates, thresholds and rules with primary-source citations. Unverified; pending local-accountant review.
Source-cited draft.Written from sources but not reviewed by a licensed practitioner, so it may be incomplete or wrong. General reference only; don't file or take a position on it without professional review.
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Overview description
Iceland levies progressive personal income tax (combined state + municipal), a flat-rate corporate income tax, and a value added tax. The tax authority is Skatturinn (Iceland Revenue and Customs) and the standard tax year is the calendar year.
Standard tax year
Calendar year (1 January – 31 December); other fiscal years allowed only with approval of the Internal Revenue DirectorateAct No. 90/2003 on Income Tax (Lög um tekjuskatt), https://taxsummaries.pwc.com/iceland/corporate/tax-administration
Currency
Icelandic króna (ISK)Act No. 90/2003 on Income Tax
Tax authority
Skatturinn (Iceland Revenue and Customs)Act No. 90/2003 on Income Tax, https://www.skatturinn.is/english/
Basis of taxation
Residents are taxed on worldwide income; non-residents are taxed only on Iceland-source incomeAct No. 90/2003 on Income Tax, https://taxsummaries.pwc.com/iceland/individual/residence
Headline personal income tax (combined state + average municipal)
Progressive: 31.49% / 37.99% / 46.29% across three bandsAct No. 90/2003 on Income Tax; Skatturinn key rates 2025, https://www.skatturinn.is/english/individuals/key-rates-and-amounts/2025/
Corporate income tax rate — limited liability companies (hf./ehf.)
20%Act No. 90/2003 on Income Tax (https://taxsummaries.pwc.com/iceland/corporate/taxes-on-corporate-income)
Does VAT exist?
Yes — VAT (virðisaukaskattur) applies; standard rate 24%, reduced rate 11%Act No. 50/1988 on Value Added Tax (Lög um virðisaukaskatt), https://www.skatturinn.is/english/individuals/key-rates-and-amounts/2025/
Capital income tax (dividends, interest, capital gains)
22%Act No. 90/2003 on Income Tax, https://www.skatturinn.is/english/individuals/key-rates-and-amounts/2025/
Main corporate return deadline
Generally 31 May of the year following the tax year (extensions to 30 September for professionally prepared returns)Act No. 90/2003 on Income Tax, https://taxsummaries.pwc.com/iceland/corporate/tax-administration
Standard VAT filing frequency
Bi-monthly (every two months); return and payment due one month and five days after the period endsAct No. 50/1988 on Value Added Tax, https://taxsummaries.pwc.com/iceland/corporate/other-taxes
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Other Iceland computations in the OpenAccountants Tax Library.