Iceland VAT Rates and Taxability Reference
Updated 8 days ago
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Look up the Iceland VAT rate that applies to a sale, and how Kintsugi treats discounts, shipping, and price display.
Statutory VAT Rates
Field | Value |
|---|---|
Standard rate | 24% |
Reduced rate | 11% |
Increased rate | None |
Zero rate | 0%, applied to exports of goods and services used outside Iceland, with input VAT recovery available under the Standard scheme |
Exempt supplies | Certain healthcare, social, education, cultural, athletic, financial, insurance, and real-estate supplies, with no input VAT recovery |
Special-rate regions | None. The national rates apply across the whole country |
Currency | Icelandic króna (ISK). The króna floats |
Conversion rate for other currencies | Central Bank of Iceland (Seðlabanki Íslands) official exchange rate on the due date |
What The 11% Reduced Rate Covers
Field | Value |
|---|---|
Accommodation | Hotel and guest room rental, and other commercial accommodation for stays under one month, including campground facilities |
Food and drink | Foodstuffs, and restaurant and catering services |
Passenger transport and tours | Passenger transport, and tour operator and travel agency services for services used in Iceland |
Publications and media | Books, newspapers, periodicals, magazines, musical notation, audio recordings, and radio and television subscriptions |
Energy for heating | Geothermal hot water, and electricity and fuel oils used to heat houses and swimming pools |
Software and digital services | Not covered. Software and digital services carry the 24% standard rate |
The reduced rate is listed here so you can recognise it on Icelandic invoices you receive. It does not apply to the categories Kintsugi calculates for you.
Supported Product Categories
Field | Value |
|---|---|
B2C SaaS, non-resident seller with a VOES registration | 24% |
B2C SaaS, non-resident seller with no Iceland registration | No VAT charged, because you cannot charge VAT before your registration takes effect. Consumers cannot self-assess, which is why the threshold matters |
B2B SaaS, non-resident seller with a VOES registration | No VAT charged by you. Your business customer self-assesses it. VOES does not remove the reverse charge |
B2B SaaS, non-resident seller with no Iceland registration | No VAT charged by you. Your business customer self-assesses it |
B2B SaaS, seller registered under the Standard scheme | 24%. A Standard registration does remove the reverse charge |
B2C SaaS, seller registered under the Standard scheme | 24% |
Categories other than B2B SaaS and B2C SaaS | Not supported. Kintsugi does not calculate Iceland VAT for these |
Excise goods and alcohol levies | Not supported. These sit under a separate regime |
The two B2B rows that differ from each other are the ones to read twice. Iceland is unusual in this respect, and How B2B Reverse Charge Works in Iceland covers it in full.
Discounts and Adjustments
Iceland does not treat a discount as a separate supply. A discount changes the value of the sale it applies to, and VAT is charged on what you actually receive. What matters is whether the discount lands on the original invoice or after it.
Field | Value |
|---|---|
Discount shown on the original invoice | VAT is calculated on the discounted amount |
Discount given after the invoice, including early-payment discounts | Issue a credit invoice referencing the original invoice. The VAT adjustment lands in the period the credit invoice is issued |
Loyalty points redeemed as payment | VAT is calculated on the cash portion only. Issuing points is not a taxable event |
Manufacturer rebate paid to the buyer | Does not reduce the retailer's VAT base. The retailer charges VAT on the full sale price |
Refunds and cancellations | Handled by credit invoice, and deducted from your threshold figure at the credit invoice date |
Shipping, Ancillary Charges, and Rounding
Field | Value |
|---|---|
Shipping, insurance, or gift wrap supplied with the goods | Taxed at the rate of the underlying goods or services, following the principal supply |
Shipping supplied separately | 24% |
Shipment containing items at different rates | No statutory rule. Standard practice is to split the charge across the rate buckets in proportion to value |
International transport leg | 0% where it forms part of international transport. A domestic leg carries 24% |
Rounding direction | No statutory rule. Standard practice is arithmetic rounding to whole ISK |
Rounding granularity | No statutory rule. Standard practice is to round at the invoice total, or per rate subtotal on a multi-rate invoice |
Price Display
Field | Value |
|---|---|
Consumer prices | Shown VAT-inclusive. This is a consumer protection requirement enforced by Neytendastofa, not a VAT rule |
Business invoices | Shown VAT-exclusive, with the VAT amount stated separately |
VAT as a share of a gross total | 19.35% of the gross amount at the standard rate, and 9.91% at the reduced rate |
Why it matters | Your business customer needs the VAT stated separately to recover it |
Import Thresholds for Goods
Field | Value |
|---|---|
Commercial de minimis | None. VAT applies from the first króna of commercial import value |
What is taxed | The customs value of the goods, plus customs duty and other charges applied during customs procedures |
Who pays it | The owner of the goods at the time of importation |
Postponed accounting | Not available. Import VAT is payable at customs |
Distance-selling regime for goods | None. A non-resident seller who is not the importer of record has no Iceland VAT obligation on goods |
Kintsugi's role | None. Kintsugi does not calculate or file for goods sold into Iceland |
This article is general information about how Kintsugi works, not tax advice for your specific situation.
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