Starting a business is an exciting step, but it involves a number of legal decisions. Getting the basics right from the start saves time and trouble later. Here are the main points for setting up a business in Iceland.
Choosing a company form
The first big decision is the legal form. The most common in Iceland is the private limited company (einkahlutafélag, ehf.), which limits the owners' personal liability to the capital they invest.
Other forms include the public limited company (hf.), the partnership (sf.) and the sole proprietorship. Each affects liability, taxation and management. The right choice depends on your activity and the number of owners.
Registration
A company is registered with the Register of Enterprises (Fyrirtækjaskrá), run by Iceland Revenue and Customs (Skatturinn). You will need to submit the articles of association and pay in the share capital.
Founders and board members need an Icelandic ID number (kennitala), which foreigners can obtain through Registers Iceland. Once your turnover passes a low annual threshold, the business must also register for VAT.
Articles of association
The articles of association (samþykktir) set out the company's basic rules: its purpose, share capital, board and how decisions are made. Careful drafting now prevents problems later.
Shareholder agreements
If there is more than one owner, a shareholder agreement (hluthafasamkomulag) is one of the best ways to avoid disputes. It sets out how decisions are taken, what happens if an owner wants to sell and how disagreements are resolved.
Contracts and employees
A business enters into many contracts: with staff, suppliers, customers and landlords. When you hire employees, the relevant collective agreement sets minimum wages and terms you must respect.
Questions about running a company fall under corporate and company law, and staff matters under employment law.
Get advice from day one
Getting legal advice at the start lays a solid foundation. A lawyer can help with the choice of company form, registration, contracts and making sure everything is set up correctly.
Find a lawyer under corporate and company law or browse lawyers in your region.