Icelandic VAT returns

VAT registered businesses must file regular returns with the Icelandic Tax Authority. These are usually filed electronically – the exception is the annual VAT return which may be paper-based.

How often are Icelandic VAT returns required?

The VAT return filing frequency depends on the business’ monthly turnover levels.

Bi-monthly for all businesses except:

    • Weekly for fishery supplies
    • Monthly for businesses regularly in a VAT credit position
    • Bi-annually for agricultural supplies
    • Annually if annual taxable sales are below ISK4 million

What Icelandic VAT can be deducted?

VAT registered businesses may offset their VAT due on taxable sales (output VAT) with VAT suffered on allowable costs (input VAT). This includes import VAT charged on the arrival of goods into Iceland.  VAT incurred on assets not used in the provision of taxable supplies, e.g. cars used partially/wholly for private use, is excluded.

Pre-VAT registration costs may not be submitted for VAT deduction.

What are the deadlines for filing Icelandic VAT returns?

VAT returns must be submitted by the 15th of the month following the reporting period end.  Any VAT due should be remitted by the same timetable.

Type of return Frequency Filing deadline Document Format
VAT return Monthly 1 month and 5 days following the end of the taxable period RSK 10.01 PDF
  Bi-Monthly 1 month and 5 days following the end of the taxable period RSK 10.01 PDF
  Annually 1 month and 5 days following the end of the taxable period RSK 10.01 PDF

How are Icelandic VAT credits recovered?

Where the amount of input VAT exceeds the output VAT, a credit arises in the VAT return. Generally, the tax authorities will investigate before a refund is paid. This process must be completed within 21 days of the submission of the VAT return.

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. 

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