Key rates and amounts 2020
Individuals: Withholding tax
| Income from 0 – 336.916 ISK per. month |
|
35,04% |
| Income from 336.917 - 945.873 ISK per. month | 37,19% | |
|
Income exceeding 945.873 ISK per month (only on the amount that exceeds the income threshold) | 46,24% | |
| Children (born 2005 or later) on income exceeding 180.000 ISK per year |
|
6% |
| Personal tax credit per month | ISK | 54.628 |
| Personal tax credit per year | ISK | 655.538 |
A list of municipal tax rates is available on the website of Icelandic Association of Local Authorities (only available in Icelandic).
More information regarding tax liability
More information on personal tax credit
Value added tax (VAT)
|
|
Standard rate | Reduced rate |
| VAT rates | 24% | 11% |
|
VAT calculated from total price (price includes VAT) |
19,35% | 9,91% |
Payroll tax
Employers pay the payroll tax based on the employee's wages.
| General payroll tax |
|
| 2020 | 6,35% |
| 2019 | 6,60% |
| 2018 | 6,85% |
| 2017 | 6,85% |
Capital gains tax
Capital gains tax for individuals is 22%
This applies to all capital gains such as sales profits, dividends and interests. However, interests have a tax-free limit. The first 150.000 ISK of interest bear no tax, after which the 22% taxation rate applies.
Rental income of residential properties are considered to be capital gains, that is if you rent out no more than two properties which fall under the Icelandic residential rental law. If those conditions are met 50% of the rental, income is tax free and without any deductions.
Icelandic National Broadcasting Service fee (útvarpsgjald)
| Year |
|
Amount | Annual income threshold |
| Tax assessment 2020 | ISK | 17.900 | 1.833.671 |
| Tax assessment 2019 | ISK | 17.500 | 1.750.783 |
| Tax assessment 2018 | ISK | 17.100 | 1.718.678 |
| Tax assessment 2017 | ISK | 16.800 | 1.678.001 |
| Tax assessment 2016 | ISK | 16.400 | 1.637.600 |
More information about the Icelandic National Broadcast Service fee
The Senior Citizen's Construction Fund fee
| Year |
|
Amount | Annual income threshold |
| Tax assessment 2020 | ISK | 11.740 | 1.833.671 |
| Tax assessment 2019 | ISK | 11.454 | 1.750.783 |
| Tax assessment 2018 | ISK | 11.175 | 1.718.678 |
| Tax assessment 2017 | ISK | 10.956 | 1.678.001 |
| Tax assessment 2016 | ISK | 10.464 | 1.637.600 |
More information about the Senior Citizen‘s Construction Fund fee
Per diem payments for domestic travel
|
|
|
Jan. - May | June - Sept. | Oct - Dec |
| Accommodation and transportation (24 hours) | ISK | 22.700 | 29.400 | 25.700 |
| Accommodation (24 hours) | ISK | 10.700 | 17.000 | 13.100 |
| Transportation - whole day trip (minimum10 hours) | ISK | 12.000 | 12.400 | 12.600 |
| Transportation - half a day trip (minimum 6 hours) | ISK | 6.000 | 6.200 | 6.300 |
Per diem payments for international travel
|
|
|
General per diem payments | ||
| Jan- |
|
Accommodation | Other |
|
| Category 1 | SDR | 208 | 125 | Moscow, Singapore, New York City, Tokyo, Washington DC. |
| Category 2 | SDR | 177 | 106 | Dublin, Istanbul, Japan (except Tokyo), London, Luxemburg, Mexico City, Seoul |
| Category 3 | SDR | 156 | 94 | Amsterdam, Athens, United States (except New York City and Washington DC), Helsinki, Barcelona, Geneva, Hong Kong, Canada, Copenhagen, Madrid, Oslo, Paris, Rome, Stockholm, Vienna |
| Category 4 | SDR | 139 | 83 | Other destinations |
Car allowance
For driving one's personal vehicle for the employer
| 0-1.000 km. | ISK 111 |
| 1.001-2.000 km. | ISK 109 |
| 2.001-3.000 km. | ISK 107 |
| 3.001-4.000 km. | ISK 94 |
| 4.001-5.000 km. | ISK 92 |
Lodging tax
Lodging tax (Is. gistináttaskattur) for each taxable unit is ISK 300 per night.
The invoice or sales receipt must contain amount of lodging tax paid. Lodging tax is added to the VAT tax base and is in the same VAT rate as the lodging.
