Iceland has a corporate income tax rate of 20% for LLCs and limited partnerships (37.6% for other entities), with a value-added tax rate of 24%. Capital gains for corporations are taxed at 20%, while individual capital gains are taxed at 22%. Prepayments are due on the first of each month (except Jan and Oct). Final returns are due May 31. Non-resident withholding tax is 21% on dividends, 13% on interest, and 22% on royalties. The Composite Effective Average Tax Rate is 18.79% and the Composite Effective Marginal Tax Rate is 14.93%.
Iceland Tax Brief
Time of Update 4/04/2026
Iceland Corporate Income Tax (CIT)
General CIT Rate:
20 (for LLCs and limited partnerships); 37.6 (for other entities)
CIT Return Due Date:
31 May
CIT Payment Due Date:
November 1st and December 1st
CIT Estimated Payment Due Date:
Except for January and October, prepayments should be made on the first day of each month.
Iceland Withholding Tax (WHT)
Resident Withholding Tax (Dividend/Interest/Royalty):
22/22/0
None-Resident Withholding Tax (Dividend/Interest/Royalty):
21/13/22
Iceland Value-Added Tax (VAT)
General VAT Rate:
24
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Iceland Capital Gain Tax (CGT)
General Capital Gain Tax Rate:
20 (for corporations, same as CIT rate for LLCs); 22 (for individuals)
Iceland Effective Tax Rate (ETR)
Composite Effective Average Tax Rate:
18.79%
Composite Effective Marginal Tax Rate:
14.93%
Additional info
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TKEG Expat ™ Iceland Corporate Tax Guide
1.
Iceland Corporate Income Tax (CIT)
The Icelandic Corporate Income Tax (CIT) rate is 20% for limited liability companies and limited partnership companies. Other types of legal entities (e.g. partnerships) are taxed at 37.6%. Companies in Iceland are required to submit their CIT return by May 31 each year. Final CIT payments are due on November 1 and December 1. Companies must also make advance CIT payments on the first day of every month, except for January and October.
2.
Iceland Personal Income Tax (PIT)
In Iceland, the Personal Income Tax (PIT) rate is 31.35%, in addition to a municipal tax. Taxpayers must file their PIT return by March 14. Any tax deficits are collected on five due dates throughout the year, from July to December. PIT payments are made monthly, ensuring that tax obligations are spread evenly across the year.
3.
Iceland Capital Gains Tax (CGT)
Icelandic Capital Gains Tax (CGT) is applicable at a rate of 22% for individual taxpayers. Corporate capital gains are taxed at the normal CIT rate of 20% for limited liability companies and limited partnerships. This tax is levied on the profits realized from the sale of assets.
4.
Iceland Stamp Taxes
Stamp duty in Iceland is levied on documents relating to the change of ownership of real estate and land. The duty rates are 0.8% and 1.6%, depending on whether the owner is an individual or legal entity. However, stamp duty is not applied when ownership changes due to mergers or company divisions. All other documents are exempt from stamp duty, making it a targeted tax primarily affecting real estate transactions.
5.
Iceland Value-added Tax (VAT)
In Iceland, VAT is a consumption tax applied to all stages of domestic business transactions. The general VAT rate is 24%, with a reduced rate of 11% applicable to certain goods and services. These include rental accommodations, passenger transportation services, and subscriptions to radio and television. The VAT ensures that the consumption of goods and services is taxed comprehensively, contributing significantly to the national revenue.
