Tax lawyers in Iceland

Tax law covers the taxes paid by individuals and businesses in Iceland: income tax, VAT, capital gains and corporate tax, as well as tax returns, audits by the tax authorities and appeals against tax assessments. It also covers the tax questions that arise when people move to or from Iceland.

The legal framework

• Income Tax Act No. 90/2003 (lög um tekjuskatt): income tax for individuals and companies, capital income and deductions.
• VAT Act No. 50/1988 (lög um virðisaukaskatt): the standard VAT rate is 24%, with a reduced rate of 11% for items such as food, books and accommodation.
• Double taxation agreements between Iceland and other countries, which decide where income is taxed.

Taxes are administered by Iceland Revenue and Customs (Skatturinn), which also runs the Register of Enterprises. Individuals pay a combined state and municipal income tax, withheld at source by the employer.

Moving to or from Iceland

As a general rule, a person who stays in Iceland for more than 183 days in a twelve-month period becomes fully liable to tax on worldwide income. People arriving to work need an ID number (kennitala) and a tax card, and should file a tax return each spring. Leaving the country also has tax consequences, for example for property or pension rights you keep in Iceland.

Audits and appeals

If Skatturinn questions your return, it will normally ask for explanations before changing the assessment. You have the right to respond before a decision is taken and to receive the reasons. A new assessment can be appealed to the State Internal Revenue Board (Yfirskattanefnd), an independent appeals body, and afterwards to the courts.

Deadlines in tax cases are short, and the burden of documenting income and deductions lies largely on the taxpayer.

When to contact a tax lawyer

Consider a tax lawyer when you move to or leave Iceland with income or assets in several countries, when you set up or sell a business, if Skatturinn opens an audit or proposes a reassessment, or if you need to appeal. For company structures, see also corporate and company law.