Icelandic VAT Rates and Compliance

In the labyrinth of international taxation, navigating the intricacies of the Value Added Tax (VAT) system in Iceland is a challenge that many businesses face. With a standard rate of 24%, and a reduced rate of 11% on certain goods and services, understanding these Icelandic VAT rates is of paramount importance.

Moreover, the compliance with these regulations forms a crucial part of the financial operations in this Nordic Iceland country. This article aims to shed light on these complexities, providing an effective guide to businesses for efficient tax management.

However, the question remains: can businesses truly stay abreast of the ever-evolving VAT regulations and maintain compliance in Iceland? The ensuing discussion might hold the answer.

Key Takeaways

  • The standard VAT rate in Iceland is 24%, with a reduced rate of 11% for certain goods and services.
  • VAT compliance is important, and businesses must register for VAT once they surpass the registration threshold.
  • Non-compliance with VAT regulations can result in penalties, and it is crucial to adhere to due dates for VAT payments.
  • Understanding VAT legislation, particularly the time of supply rules, is essential for accurate and efficient tax management.


In the context of Icelandic VAT Rates and Compliance, an overview provides a comprehensive summary of the issue.

It encompasses key details such as the general and reduced VAT rates, the threshold for VAT registration, and the penalties for non-compliance.

Moreover, it provides essential guidance on VAT compliance, including the due dates for VAT, the necessity of researching Icelandic VAT legislation, and the available platforms for assistance.

Key Icelandic VAT Details

Understanding the intricacies of Icelandic VAT is paramount to effective business operations. It’s crucial to note:

  • VAT on taxable goods is due at the earliest of delivery, invoice, or cash advance payment.
  • VAT for taxable services in Iceland is due at the time of supply or shortly after, as per the invoice date.
  • Late payment of VAT may result in penalties.

For VAT compliance, understanding the VAT legislation and obtaining a VAT registration number are essential.

Essential VAT Guidance

Navigating the labyrinth of Value Added Tax (VAT) regulations in Iceland necessitates a comprehensive grasp of the time of supply rules, compliance assistance, and staying updated with the latest VAT news.

This entails understanding when the 24% consumption tax on taxable goods and services is due, researching Icelandic VAT legislation for compliance needs, and monitoring the constantly evolving VAT landscape in this jurisdiction.

Quick VAT Calculations for Iceland

Effortlessly compute VAT in Iceland using our straightforward calculator. Ideal for fast and precise tax assessments.

Click here to Calculate VAT in Iceland.

Frequently Asked Questions

How Do I Get a VAT Refund in Iceland?

To obtain a VAT refund in Iceland, non-residential businesses must submit a claim with relevant documents, including VAT registration number, invoices, receipts, and proof of exported goods/services, to the Icelandic tax authorities.

What Is the VAT Rate in Iceland 2023?

The standard Value Added Tax (VAT) rate in Iceland for the year 2023 is 24%. There is a reduced rate of 11% applied to specific goods and services. This information is pertinent in financial planning and compliance.

Is There a Reverse Charge for VAT in Iceland?

Yes, a reverse charge for VAT applies in Iceland for certain business-to-business services such as consultancy, advertising, and telecoms. This mechanism is particularly relevant for foreign companies providing taxable services within the country.

Is There VAT on Digital Services in Iceland?

Yes, digital services in Iceland are subject to Value Added Tax (VAT). Sellers are mandated to charge a 24% VAT on sales to Icelandic residents and comply with specific invoicing requirements.


In conclusion, understanding Icelandic VAT rates and compliance is crucial for efficient business operations within the country. The nuances of when VAT is due, import VAT, and VAT compliance are essential aspects that businesses must comprehend.

Avalara provides solutions tailored to businesses’ trading location and methods, simplifying VAT compliance. Keeping abreast with the latest VAT-related news is also a critical component for business success in Iceland.

Barry Caldwell

Barry Caldwell

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