Iceland
Northern Europe • UTC+0 • Atlantic/ReykjavikIcelandic Personal Income Tax
Iceland's tax system is progressive, with personal income tax rates ranging from 22.5% to 31.8%. The system also includes corporate taxes and VAT.
Income Tax
22.5%–31.8%
Progressive rates
Corporate Tax
20%
Standard corporate tax rate
VAT / GST
24%
Standard VAT rate
Nomad Visa
Available
Digital Nomad Visa
Tax System Overview
Iceland's tax system is progressive, taxing residents on worldwide income and non-residents on Icelandic-source income. It includes personal income tax, corporate tax, and VAT.
System Type
Progressive personal income tax
Resident Taxation
Taxed on worldwide income.
Non-Resident Taxation
Taxed only on Icelandic-source income.
Tax Year
January 1 – December 31
Income Tax Bands
Iceland's progressive income tax bands based on annual taxable income in ISK (2025).
Tax Treaty
Double Taxation Agreements help avoid being taxed twice on the same income.
United Kingdom
Treaty ActiveThe treaty between Iceland and the UK prevents double taxation on income, reduces withholding taxes, and clarifies residency rules.
Key Benefits
Prevents double taxation on income earned in both countries.- Reduced withholding tax on dividends, interest, and royalties.
Totalization Agreement
These agreements coordinate social security systems, ensuring workers pay into only one system at a time.
United States of America
Agreement ActiveIceland and the US have a social security totalization agreement that prevents workers from paying social security in both countries simultaneously.
Coverage Areas
Facts
- Prevents double taxation of social security contributions for US–Iceland workers.
- Allows workers who split careers between the two countries to combine contribution periods.
Other Countries with Agreements
Business & Freelancing
Corporate Tax Rate
20% standard rate for corporations
VAT Registration
Mandatory if annual turnover exceeds ISK 2,000,000.
Freelancer Rules
Freelancers are taxed under the same progressive income tax system as individuals.
Crypto Policy
Cryptocurrency gains are taxed as capital gains.
Frequently Asked Questions
Digital Nomad & Benefits
Visa Details
Tax Perks
- No wealth tax in Iceland.
- Competitive corporate tax rate of 20%.
Filing Roadmap
Register for a Tax ID
Obtain a tax identification number from the Icelandic tax authorities.
Gather Income Documents
Collect all necessary income statements and documentation for the tax year.
File Your Tax Return
Submit your tax return online through the Icelandic tax portal by March 31.
Pay Any Tax Due
Ensure any taxes owed are paid by the filing deadline to avoid penalties.