Iceland VAT

Iceland introduced Value Added Tax (VAT) in January 1990. The local term is Virðisaukaskattur.

Icelandic VAT is generally based on the European Union VAT regime since Iceland is a member of the European Economic Area. It is administered by the Ministry of Finance.

What activities require an Icelandic registration?

Non-resident companies providing the following taxable goods or services may have to apply for a VAT registration number:

  • Domestic provision of taxable goods or services
  • Domestic reverse-charge services received in Iceland. These services include: consultancy; advertising; agency; telecoms; and copyright, trademarks and IP.
  • Importing goods

Most B2B services provided to Icelandic businesses do not require a registration from the foreign provider – the reverse charge should be applied instead.

Need help with your Icelantic VAT compliance?

Researching Icelantic VAT legislation is the first step to understanding your VAT compliance needs. Avalara has a range of solutions that can help your business depending on where and how you trade. 

Latest Icelandic news

Iceland scraps e-book VAT 2019

April 10, 2018

Iceland’s Ministry of Finance and Economic Affairs is to reclassify electronic books as zero-rated for Value Added Tax from 1 January 2019. E-books are...

Iceland considers Occupancy Tax over VAT

December 12, 2017

The new Icelandic government has scrapped plans to introduce VAT on short-term room and house rentals. Instead, it will review an Occupancy Tax -...

Iceland VAT rate to 22.5% 2019

April 6, 2017

The Icelandic government is planning to reduce its standard VAT rate from 24% to 22.5% from 1 January 2019. The announcement came as part...