Overview of VAT in Iceland supported in Kintsugi
Updated 8 days ago
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How Iceland VAT works in Kintsugi
If you sell software or digital services to customers in Iceland, you may need to register for VAT there, charge it on your consumer sales, and file a return every two months. Kintsugi tracks that exposure for you, calculates the tax, and handles the registration and the filings once Iceland is enabled on your account.
Iceland VAT is charged at one national standard rate of 24%, with a reduced rate of 11% for a defined list of goods and services, and no regional rates
Registration becomes mandatory once your taxable sales into Iceland pass ISK 2,000,000 in any rolling 12-month period
A non-resident business selling digital services to consumers registers through VOES, a simplified scheme that needs no local representative and no Icelandic bank account
Registering under VOES does not change how your business sales are treated, because VOES covers consumer sales only and business sales stay under the reverse charge
Returns are bi-monthly, due one month and five days after the period ends
Iceland support currently covers the B2B SaaS and B2C SaaS product categories
What Iceland VAT Is
Iceland applies value added tax, known locally as virðisaukaskattur and abbreviated VSK, to goods and services supplied in the country. The tax is administered by Skatturinn, Iceland Revenue and Customs, at skatturinn.is. Registered businesses file through the Skatturinn portal at skattur.is, and businesses on the simplified scheme file through the VOES portal at voes.rsk.is.
The local currency is the Icelandic króna (ISK). It floats, so the equivalent of ISK 2,000,000 in your own currency moves over time. Kintsugi tracks your position in ISK.
Iceland is in the European Economic Area but not in the European Union, so EU schemes such as One Stop Shop (OSS) do not cover it, and Icelandic VAT numbers do not appear in VIES. An Iceland registration stands on its own.
Which Registration Scheme Applies To You
Iceland runs two schemes, and which one you land in depends on whether you have a fixed presence in the country. Most Kintsugi customers selling into Iceland fall in the first column.
Non-resident seller, no presence in Iceland | Business established in Iceland, or with a permanent establishment there | |
|---|---|---|
Who it applies to | Businesses selling digital services into Iceland with no office, branch, staff, warehouse, or server there | Icelandic companies, and foreign businesses with a permanent establishment in Iceland |
Scheme name | VOES, VAT on Electronic Services | Standard VAT registration |
What it covers | Consumer sales of electronic services, telecommunications, broadcasting, paper and magazine subscriptions, and taxable tourist services | All taxable supplies, business and consumer, goods and services |
What triggers it | Consumer sales into Iceland above ISK 2,000,000 in a rolling 12 months | Taxable supplies above ISK 2,000,000 in a rolling 12 months |
Local representative | Not required | Required for a non-resident without a permanent establishment |
Local bank account | Not required. International transfer is accepted | Required |
Filing frequency | Bi-monthly, with no other option | Bi-monthly by default |
Input VAT recovery | Not available. VOES is a pay-only registration | Available |
Effect on business sales | None. Business sales stay under the reverse charge | Reverse charge stops. You charge Iceland VAT on business sales too |
How Kintsugi handles it | Kintsugi monitors exposure, calculates the VAT, submits the registration, and files your returns | Kintsugi monitors exposure. Registration and filing for a business with a presence in Iceland are not currently in scope |
Kintsugi's Iceland registration and filing support covers businesses without a physical presence in Iceland, which is the VOES route. If you have or are planning a presence in Iceland, contact us before you register, because the Standard scheme brings a local representative requirement and an Icelandic bank account requirement that sit outside Kintsugi's current Iceland workflow.
What Kintsugi Does Automatically vs. What You Do
Kintsugi handles:
Monitoring economic, physical, and collected-tax exposure in Iceland
Tracking your taxable sales against the ISK 2,000,000 threshold and alerting you as you approach it
Calculating 24% VAT on B2C SaaS sales once your registration is effective
Applying reverse charge treatment to your B2B SaaS sales, which is the correct treatment before and after a VOES registration
Submitting your VOES registration
Preparing and filing your bi-monthly VOES declarations, including nil declarations
Converting foreign-currency amounts to ISK using the Central Bank of Iceland official rate on the due date
You handle:
Providing the registration details and documents Kintsugi requests
Confirming which of your customers are businesses, by supplying a valid Icelandic VAT number where one applies
Remitting the VAT payment by the deadline
Keeping your own invoices and records for the periods Icelandic law requires
Telling us if you establish a presence in Iceland, because that changes which scheme applies to you
Input VAT is not on either list for Iceland. VOES is a pay-only registration, so there is no input recovery to claim under it. See Iceland VAT Rates and Taxability Reference.
Which Integrations Feed Iceland Data
All read-only integrations except Walmart, and all tax-engine integrations except Chargebee, sync transaction data that Kintsugi uses for Iceland exposure and calculation.
How To Get Iceland Enabled
Nexus monitoring for Iceland runs for every organization, so you can see your exposure before you commit to anything. To register, calculate, and file there, your account needs a plan that includes international VAT support and Iceland enabled by our team.
Select Register on the Iceland jurisdiction. If the country is not yet enabled for you, the app shows Talk to Sales and connects you with someone who can turn it on. If your current plan does not include it, you keep full visibility into your Iceland exposure in the meantime.
FAQs
Q: Do I have to register in Iceland if I only sell to businesses there?
A: No. A non-resident business selling only to Icelandic business customers is not required to register, whatever the sales volume, because those customers account for the VAT themselves. See How B2B Reverse Charge Works in Iceland.
Q: If I register under VOES, do I start charging VAT on business sales?
A: No, and Iceland differs from most countries here. VOES covers consumer sales only, so your business sales stay under the reverse charge even after your VOES registration takes effect. Charging Iceland VAT on business sales would be incorrect.
Q: Does Iceland require a local agent or fiscal representative?
A: Not under VOES, which is the route Kintsugi uses. The Standard scheme does require an Iceland-resident representative for a non-resident without a permanent establishment, and that route is outside Kintsugi's current Iceland scope.
Q: Is Iceland part of EU OSS?
A: No. Iceland is in the European Economic Area but not the European Union, so an OSS registration does not cover it. It needs its own registration.
Q: Can I recover Icelandic input VAT through my VOES registration?
A: No. VOES is pay-only, with no input deduction. Foreign businesses can apply to Skatturinn for a separate refund of Icelandic VAT paid on business purchases, which is a process outside Kintsugi.
Q: Which currency do I file and pay in?
A: ISK only, for both the declaration and the payment. Amounts in other currencies are converted at the Central Bank of Iceland official rate on the due date.
Q: How often do I file?
A: Every two months under VOES, with no other option, and you file even in periods with no sales.
This article is general information about how Kintsugi works, not tax advice for your specific situation.
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