Iceland: all programs

Individuals pay income tax on a progressive scale of 31.49-46.29% (including the municipal part), 22% on capital income and 4% in pension contributions. Companies pay corporate income tax of 20% (the 2026 rate), and VAT is 24% with a reduced rate of 11%. There is also a municipal property tax and a 10% inheritance tax.

There are three brackets: 31.49% on income up to 472,005 ISK per month, 37.99% from 472,006 to 1,325,127 ISK, and 46.29% above that. The personal tax credit of 72,492 ISK per month effectively exempts roughly the first 230,000 ISK of monthly income.

Yes. Icelandic tax residents pay tax on all income worldwide, including foreign salaries, dividends and rent. Double taxation is relieved by tax treaties or a foreign tax credit, but the credit has to be claimed in the return.

Only tax on Icelandic sources: salary for work in Iceland on the standard scale, dividends at 22% withheld at source, interest at 10%, and income from local property at 22%. Withholding rates can be reduced by tax treaties.

Residency arises if you spend more than 183 days in the country within any 12 months, or if you register a permanent home there. After you leave, full tax liability can continue for up to three years until you confirm residency in another country.

Yes, the foreign expert regime: for the first three years of employment only 75% of the salary is taxed and 25% is exempt. The conditions are no Icelandic residency in the previous 60 months, a specialization that is rare on the local market, and an application filed within three months of starting work.