Child benefits
Child benefits
Child benefits are paid with every child under the age of 18 years, domiciled in Iceland and dependent on a person or persons who have an unlimited tax liability in Iceland. The child benefits are paid to the child's supporter, i.e. the person that the child is living with and is dependent upon at the end of the previous income year. The person that pays child support is not regarded the child's supporter in this context.
Married couples that file joint tax returns are both regarded as supporters and the child benefits are split equally between them. The same applies to persons in cohabitation that at the end of the income year meet the conditions of joint taxation, even if they have asked to be taxed separately.
Persons that share a household with their child are both considered the child's supporters even if they have not registered their cohabitation.
Child benefits in Iceland are income related and calculations are based on both parents / supporters' total income for the previous year. In the case of a single parent, only the income of that parent is used in the calculations.
Full benefits are paid for the year of birth of a child, but none is paid for the year in which a child reaches 18 years of age. The amount of child benefits is calculated in the tax assessment at the end of June each year and the calculated amount is split into two payments, the first on 1st of June and the second on 1st of October. It is possible to apply for advance payments which are then paid on 1st of February and 1st of May.
A special supplement, which also is income related, is paid with children under 7 years of age.
EEA Child benefits
Child benefits can be paid with children that are not domiciled in Iceland, but are dependent on a citizen of the European Economic Area (EEA), member state of the EFTA or the Faroe Islands, provided that the child's supporter is tax liable in Iceland in accordance with Article 1 of the Icelandic Income Act no. 90/2003 or is insured on the basis of Articles 12., 13. of Act. no 100/2007, on Social Security.
Conditions for paying child benefits with children who are not domiciled in Iceland are that the children are resident in a member state of EEA, member state of EFTA or the Faeroe Islands and that sufficient documentation is submitted from a competent administrative authority in the country where the children are domiciled.
Child benefits in Iceland, both regular child benefits and EEA child benefits, are income related and are decided in the tax assessment every year, based on both parents / supporters' total income for the previous year. In the case of a single parent, only the income of that parent is used in the calculations.
The same criteria applies for the EEA child benefits, regarding the amounts of the child benefits, the reduction rates and the income limits, as for the regular Icelandic child benefits.
Applications for EEA child benefits must be sent to the Internal Revenue Directorate using the form RSK 3.20 Application for child benefit in Iceland for children who do not have a permanent residence in Iceland.
Below are lists of the supporting documents that applicants need to send in with their applications. It depends on the applicant's marital status and family situation which supporting documents need to be submitted to support the applicant's application.
Supporting documents for a married applicant:
- A certificate stating the applicant's marital status at the end of the income year the application pertains to.
- Verified information about the spouse's total income for the income year the application pertains to. Either a verified copy of the spouse's foreign tax return or an income certificate issued by the tax authorities in the country where the spouse and children are domiciled.
- Birth certificates for the child / children.
- A certificate stating the amount of received child benefits in the country the children are domiciled for the year the application pertains to.
Supporting documents for an applicant that is a single parent:
- If the applicant was married he or she must provide a copy of the divorce papers where information about the custody of the children is stated.
- A certificate that states who is responsible for the upbringing of the child / children in the applicant's absence.
- A certificate that states the amounts of child benefits received by the child's / children's supporter.
- Documentation of regular transfers of funds to the child's / children's guardian to cover the costs related to the upbringing of the child / children to prove that the applicant is the child's / children's supporter.
Both parents live in Iceland and the child / children lives abroad with extended family
- A certificate that states who is responsible for the upbringing of the child / children when both parents are absent.
- A certificate that states the amounts of child benefits received by the child's / children's supporter.
- Documentation for regular transfers of funds to the child's / children's supporter to cover the costs related to the upbringing of the child / children to prove that the applicant is the child's / children's supporter.
It should be noted that it is possible to apply for child benefits in Iceland for the six years immediately preceding the year of application.
Amounts
Maximum amounts 2021
| Married and cohabiting couples | ||
| First child | 234.500 ISK | |
| Each additional child | 279.200 ISK | |
| Single parents | ||
| First child | 390.700 ISK | |
| Each additional child | 400.800 ISK | |
| Special supplement * | ||
| For children under the age of 7 | 140.000 ISK |
For married and cohabiting couples child benefits decrease when the couple's combined annual income base exceeds 8.424.000 ISK and 4.212.000 ISK for single parents. The number of children in a household also affects the decrease percentage.
| Decrease percentage for married and cohabiting couples | |||
|---|---|---|---|
| Number of children | One child | Two children | Three or more |
| Income base from 8.424.000 ISK to 11.000.000 ISK | 4% | 6% | 8% |
| Income base exceeding 11.000.000 kr. | 5,5% | 7,5% | 9,5% |
| Decrease percentage for single parents | |||
|---|---|---|---|
| Number of children | One child | Two children | Three or more |
| Income base from 4.212.000 ISK to 5.500.000 ISK | 4% | 6% | 8% |
| Income base exceeding 5.500.000 ISK | 5,5% | 7,5% | 9,5% |
* The reduction of the special supplement for children under the age of 7 is calculated separately. The reduction rate for the special supplement is 4% of the income that exceeds the income limit for each child.
The income base for the calculation of child benefits is different from the income tax base to the extent that all capital gains are included in the income base when calculating child benefits. Similarly, tax free salaries from international institutions are also included.
Child benefits are split equally between married couples and cohabitant couples.
Maximum amounts 2020
| Married and cohabiting couples | ||
| First child | 234.500 ISK | |
| Each additional child | 279.200 ISK | |
| Single parents | ||
| First child | 390.700 ISK | |
| Each additional child | 400.800 ISK | |
| Special supplement * | ||
| For children under the age of 7 | 140.000 ISK |
For married and cohabiting couples child benefits decrease when the couple's combined annual income base exceeds 7.800.000 ISK and 3.900.000 ISK for single parents. The number of children in a household also affects the decrease percentage.
| Decrease percentage for married and cohabiting couples | |||
|---|---|---|---|
| Number of children | One child | Two children | Three or more |
| Income base from 7.800.000 ISK to 11.000.000 ISK | 4% | 6% | 8% |
| Income base exceeding 11.000.000 kr. | 5,5% | 7,5% | 9,5% |
| Decrease percentage for single parents | |||
|---|---|---|---|
| Number of children | One child | Two children | Three or more |
| Income base from 3.900.000 ISK to 5.500.000 ISK | 4% | 6% | 8% |
| Income base exceeding 5.500.000 ISK | 5,5% | 7,5% | 9,5% |
* The reduction of the special supplement for children under the age of 7 is calculated separately. The reduction rate for the special supplement is 4% of the income that exceeds the income limit for each child
The income base for the calculation of child benefits is different from the income tax base to the extent that all capital gains are included in the income base when calculating child benefits. Similarly, tax free salaries from international institutions are also included.
Child benefits are split equally between married couples and cohabitant couples.
Maximum amounts 2019
| Married and cohabiting couples | ||
| First child | 234.500 ISK | |
| Each additional child | 279.200 ISK | |
| Single parents | ||
| First child | 390.700 ISK | |
| Each additional child | 400.800 ISK | |
| Special supplement * | ||
| For children under the age of 7 | 140.000 ISK |
For married and cohabiting couples child benefits decrease when the couple's combined annual income base exceeds 7.200.000 ISK and 3.600.000 ISK for single parents. The number of children in a household also affects the decrease percentage.
| Decrease percentage for married and cohabiting couples | |||
|---|---|---|---|
| Number of children | One child | Two children | Three or more |
| Income base from 7.200.000 ISK to 11.000.000 ISK | 4% | 6% | 8% |
| Income base exceeding 11.000.000 kr. | 5,5% | 7,5% | 9,5% |
| Decrease percentage for single parents | |||
|---|---|---|---|
| Number of children | One child | Two children | Three or more |
| Income base from 3.600.000 ISK to 5.500.000 ISK | 4% | 6% | 8% |
| Income base exceeding 5.500.000 ISK | 5,5% | 7,5% | 9,5% |
* The reduction of the special supplement for children under the age of 7 is calculated separately. The reduction rate for the special supplement is 4% of the income that exceeds the income limit for each child
The income base for the calculation of child benefits is different from the income tax base to the extent that all capital gains are included in the income base when calculating child benefits. Similarly, tax free salaries from international institutions are also included.
Child benefits are split equally between married couples and cohabitant couples.
Amounts 2018
| Married and cohabiting couples | ||
| First child | 223.300 ISK | |
| Each additional child | 265.900 ISK | |
| Single parents | ||
| First child | 372.100 ISK | |
| Each additional child | 381.700 ISK | |
| Special supplement * | ||
| For children under the age of 7 | 133.300 ISK |
For married and cohabiting couples child benefits decrease when the couple's combined annual income exceeds 5.800.000 ISK. For a single parent the annual income limit is 2.900.000 ISK. In the case of a single child the benefits will be reduced by 4% of the income that exceeds the income limit, by 6% if the children are two and by 8% if the children are three or more.
* The reduction of the special supplement for children under the age of 7 is calculated separately. The reduction rate for the special supplement is 4% of the income that exceeds the income limit for each child
The income base for the calculation of child benefits is different from the income tax base to the extent that all capital gains are included in the income base when calculating child benefits. Similarly, tax free salaries from international institutions are also included.
Child benefits are split equally between married couples and cohabitant couples.
Amounts 2017
Maximum amounts 2017
| Married and cohabiting couples | ||
| First child | 205.834 ISK | |
| Each additional child | 245.087 ISK | |
| Single parents | ||
| First child | 342.939 ISK | |
| Each additional child | 351.787 ISK | |
| Special supplement * | ||
| For children under the age of 7 | 122.879 ISK |
For married and cohabiting couples child benefits decrease when the couple's combined income exceeds 5.400.000 ISK. For a single parent the income limit is 2.700.000 ISK. In the case of a single child the benefits will be reduced by 4% of the income that exceeds the income limit, by 6% if the children are two and by 8% if the children are three or more.
* The reduction of the special supplement for children under the age of 7 is calculated separately. The reduction rate for the special supplement is 4% of the income that exceeds the income limit for each child
The income base for the calculation of child benefits is different from the income tax base to the extent that all capital gains are included in the income base when calculating child benefits. Similarly, tax free salaries from international institutions are also included.
Child benefits are split equally between married couples and cohabitant couples.
