Capital gains
General Information
Capital gains tax rate for companies is 22%. See tax rates on capital gains based on DTA here.
A capital gain is a profit that results from investments into a capital asset, such as shares, which exceeds the purchase price. It is the difference between a higher selling price and a lower purchase price, resulting in a financial gain for the investor which is taxed. Profits from investments into bonds are deemed interests according to Icelandic law.
International aspects that might affect tax rate
Iceland has concluded several agreements on tax matters with other countries. Parties with a permanent residence, with full and unlimited tax liability in either one of the contracting countries may be entitled to exemption from taxation or reduced tax rate according to provisions of the respective agreement, in absence of which the income would otherwise be subject to double taxation. Each agreement is different, and it is therefore necessary to check the respective agreement to ascertain where the tax liability lies, and which taxes the agreement stipulates. Provisions of tax agreements with other countries may restrict Iceland's right to tax.
Effective Double Taxation Agreements (DTA) can be viewed here.
Tax benefits under DTA for payments can take place in two ways. On the one hand, there can be an exemption from tax payments or a reduced tax rate on respective payments. On the other hand, there can be a refund of deducted withholding payments.
NOTE: Exemption or reduction from taxation in Iceland according to agreements in force can only been achieved by filing an application for exemption or reduction on form RSK 5.42 to the Director of Internal Revenue. Until the application has been approved and confirmed one has to pay taxes in Iceland, based on national legislation.
Tax rates
Tax rates on capital gains based on DTA
| 730 Capital gains of other companies than real estate companies | |||||
| 731 Capital gains received by companies and individuals in business | 732 Capital gains received by companies and individuals in business and the ownership is at least 25% | 733 Capital gains of Individuals outside business from shares and he has been resident for previous 3 years in (MT, GE), 5 years in (AL, CY, GB, GL, GR, HU, IR, IT, KR, NL), 6 years (CA) or 2 of last 7 years (BE) in Iceland or 10 years (DK, FI, FO, NO, SE). | 734 Capital gains of individuals outside business of shares and conditions of 733 are not met | Agreement date | |
| Albania (AL) | 0 | 0 | 20 | 0 | 1.1.2017 |
| Austurríki (AT) | 0 | 0 | 20 | 0 | 1.1.2017 |
| Barbados (BB) | 0 | 0 | 0 | 0 | 1.1.2013 |
| Belgium (BE) | 0 | 0 | 20 | 0 | 1.1.2004 |
| Canada (CA) | 0 | 0 | 20 | 0 | 1.1.1998 |
| China (CN) | 0 | 0 | 0 | 0 | 1.1.1998 |
| Croatia (HR) | 0 | 0 | 0 | 0 | 1.12.2012 |
| Cyprus (CY) | 0 | 0 | 20 | 0 | 1.1.2015 |
| Czech Republic (CZ) | 0 | 0 | 0 | 0 | 1.1.2001 |
| Denmark (DK) | 0 | 0 | 20 | 0 | 1.1.1998 |
| Estonia (EE) | 0 | 0 | 0 | 0 | 1.1.1996 |
| Faroe Islands (FO) | 0 | 0 | 20 | 0 | 1.1.1998 |
| Finland (FI) | 0 | 0 | 20 | 0 | 1.1.1998 |
| France (FR) | 0 | 18 | 0 | 0 | 1.1.1003 |
| Georgia (GE) | 0 | 0 | 20 | 0 | 1.1.2016 |
| Germany (DE) | 0 | 0 | 0 | 0 | 1.1.1974 |
| Greece (GR) | 0 | 0 | 20 | 0 | 1.1.2009 |
| Greenland (GL) | 0 | 0 | 20 | 0 | 1.1.2003 |
| Hungary (HU) | 0 | 0 | 20 | 0 | 1.1.2007 |
| India (IN) | 18 | 0 | 0 | 0 | 1.1.2008 |
| Ireland (IE) | 0 | 0 | 20 | 0 | 1.1.2005 |
| Italy (IT) | 0 | 0 | 20 | 0 | 1.1.2009 |
| Latvia (LV) | 0 | 0 | 0 | 0 | 1.1.1996 |
| Liechtenstein (LI) | 0 | 0 | 0 | 0 | 1.1.2017 |
| Lithuania (LT) | 0 | 0 | 0 | 0 | 1.1.2000 |
| Luxembourg (LU) | 0 | 0 | 0 | 0 | 1.1.2002 |
| Malta (MT) | 0 | 0 | 20 | 0 | 1.1.2007 |
| Mexico (MX) | 0 | 0 | 0 | 0 | 1.1.2009 |
| Netherlands (NL) | 0 | 0 | 20 | 0 | 1.1.1999 |
| Norway (NO) | 0 | 0 | 20 | 0 | 1.1.1998 |
| Poland (PL) | 0 | 0 | 0 | 0 | 1.1.2000 |
| Portugal (PT) | 0 | 0 | 0 | 0 | 1.1.2003 |
| Romania (RO) | 0 | 0 | 20 | 0 | 1.1.2009 |
| Russia (RU) | 0 | 0 | 0 | 0 | 1.1.2004 |
| Slovakia (SK) | 0 | 0 | 0 | 0 | 1.1.2004 |
| Slovenia (SI) | 0 | 0 | 0 | 0 | 1.1.2013 |
| South Korea (KR) | 0 | 0 | 20 | 0 | 1.1.2009 |
| Spain (ES) | 0 | 18 | 0 | 0 | 1.1.2003 |
| Sweden (SE) | 0 | 0 | 20 | 0 | 1.1.1998 |
| Switzerland (CH) | 0 | 0 | 20 | 0 | 1.1.1990 |
| Ukraine (UA) | 0 | 0 | 20 | 0 | 1.1.2009 |
| United Kingdom (GB) | 0 | 0 | 20 | 0 | 1.1.1992 |
| United States (US) | 0 | 0 | 20 | 0 | 1.1.2009 |
| Vietnam (VN) | 18 | 0 | 0 | 0 | 1.1.2003 |
| Taxes according to Icelandic legislation for the year 2017 | 18 | 18 | 20 | 20 | |
