Tax in Iceland: VAT, income tax, company tax, capital gains
24%
Iceland charges 24% VAT on most goods and services. The rate is verified against Skatturinn (Iceland Revenue and Customs) on 22 September 2026; the top personal income-tax rate is 31.35% (2026 tax year, Skatturinn (Iceland Revenue and Customs)), and the headline company tax rate is 20% (OECD Corporate Tax Statistics).
VAT in Iceland
Value-added: VAT is charged on sales and reclaimed on purchases, so only the added value is taxed.
- Standard rate
- 24%
- Local name
- VAT — Value Added Tax
- Type
- VAT
- Reduced rates
- 11%
- Filing
- Quarterly / Monthly / Annual
- Authority
- Skatturinn (Iceland Revenue and Customs)
- Current rate since
- 1 January 2000
Income tax in Iceland
The top personal income-tax band is 31.35% for the 2026 tax year (shown as ~46.3% (state + average municipal) in the rates table, which includes levies).
Company tax in Iceland
The headline corporate income tax rate is 20%. In effect since 1 January 2026.
Indicative only: confirm with Iceland's national tax authority. OECD 2026: central statutory CIT 20%, combined (central+sub-central) 20%
Capital gains tax in Iceland
- Shares
- Capital income tax (fjármagnstekjuskattur) at a flat 22% (since 1 Jan 2018). Capital income is not subject to municipal tax (útsvar) and does not affect the progressive income tax brackets.
- Property
- Taxable gains are capital income taxed at a flat 22%.
- Holding period
- None for shares acquired after 1996 (gain = sale price less unindexed purchase price; average cost). Legacy relief for certain shares bought 1990-1996 held 4 full years (capped at ISK 367,625 per person).
Ask your AI assistant about tax in Iceland
The figures on this page are callable by any MCP-compatible assistant through the free Tax MCP. Add https://taxmcp.ai2fin.com as a custom connector in Claude, ChatGPT, Cursor or your own agent — no login, no API key — then ask:
- “What is the VAT rate in Iceland, and what is the source?”
- “Estimate income tax in Iceland on ISK 60,000 for 2026.”
- “What is the company tax rate in Iceland and how is it sourced?”
Connect in three steps, and what a connected answer looks like: Tax MCP.
Iceland, answered
Questions about tax in Iceland
- What is the VAT rate in Iceland?
- The standard VAT (Value Added Tax) rate in Iceland is 24%, verified against Skatturinn (Iceland Revenue and Customs) on 22 September 2026. A reduced rate of 11% applies to some categories. Value-added: VAT is charged on sales and reclaimed on purchases, so only the added value is taxed.
- What is the top income tax rate in Iceland?
- The top personal income-tax band in Iceland is 31.35% for the 2026 tax year, verified against Skatturinn (Iceland Revenue and Customs) on 6 October 2026. The free income-tax calculator on this site works through the bands below it, and shows the rate table it used.
- What is the company tax rate in Iceland?
- The headline corporate income tax rate in Iceland is 20%, as published by OECD Corporate Tax Statistics (checked 6 October 2026, verification pending). Indicative only: confirm with Iceland's national tax authority. OECD 2026: central statutory CIT 20%, combined (central+sub-central) 20%
- How is capital gains tax charged in Iceland?
- In Iceland, gains are taxed at their own rate, separate from income, verified against Skatturinn (Iceland Revenue and Customs) - Fjármagnstekjuskattur on 6 October 2026. On shares: Capital income tax (fjármagnstekjuskattur) at a flat 22% (since 1 Jan 2018). Capital income is not subject to municipal tax (útsvar) and does not affect the progressive income tax brackets. Holding period: None for shares acquired after 1996 (gain = sale price less unindexed purchase price; average cost). Legacy relief for certain shares bought 1990-1996 held 4 full years (capped at ISK 367,625 per person).
- Can an AI assistant look up tax rates for Iceland?
- Yes. The free Tax MCP at https://taxmcp.ai2fin.com gives Claude, ChatGPT, Cursor or any MCP-compatible agent the same sourced figures as this page: the VAT rate, an income-tax estimate, the company tax rate, the capital gains rule and a side-by-side comparison with other countries, each answer citing the authority and the date it was checked. Add the endpoint as a custom connector; there is no login or API key.
Sources
- Skatturinn (Iceland Revenue and Customs)
- Skatturinn (Iceland Revenue and Customs)
- OECD Corporate Tax Statistics
- Skatturinn (Iceland Revenue and Customs) - Fjármagnstekjuskattur
Last checked 6 October 2026. General information computed from published government rates, not tax advice. Check the linked authority or a registered adviser before relying on a figure.
See every rate side by side in the tax rates table, put Iceland next to another country in the comparison tool, or read the tax facts.
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