Iceland is a well-developed northwestern state of Europe (with the smallest population in Europe – about 350.7 thousand people), that occupies the same name island in the North Atlantic, with an area of 103 125 km². The main island is the largest volcanic island on Earth that is located south of the Arctic Circle. The capital of the country is Reykjavik.
The state’s water area is 2750 km², which explains the developed fishery sphere, including deep-sea fishery: 10% of Icelanders are fishermen, fish products make up 76% of exports and are imported into the European Union duty free.
Economic situation
If you would like to register a company in Iceland, note that more than almost 50% of the population is engaged in the service sector.
In recent decades, tourism has become an increasingly important source of foreign exchange earnings for Iceland. As of 2015, the share of export revenue in this industry was 31%, surpassing the Icelandic fish and aluminum industries. In 2010, it was another 18.8%. Along with tourism, the income of entrepreneurs who have decided to set up a company in Iceland in the services sector, hotel services, and also on farms in rural areas is increasing.
Owing to its geographically isolated location in the North Atlantic, transport companies and Keflavik airport benefit from growing tourism, as Iceland can only be reached by plane or boat (Norröna car ferry).
If you are planning to register an Icelandic company, we recommend you to consider the most profitable business spheres:
- IT;
- Banking*;
- Real estate audit;
- Construction;
- Insurance;
- Outsourcing;
- Marketing;
- Trade;
- Biotechnology
- Aluminum processing;
- Generation of electricity using alternative sources;
- Shipping;
- Pharmaceuticals;
- Food industry;
- Gambling.
* The entire banking sector of the country is nationalized, therefore the Icelandic krona is not subject to devaluation (1 € = 137.11 ISK). The three largest banks of the country are Glitnir, Kaupthing and Landsbanki.
Iceland is a member of the EFTA, the European Economic Area, the Schengen Agreement, the Nordic Council and a founding member of NATO. In 2013, Iceland was the first European country to sign a free trade agreement with China. China is particularly interested in an island nation because of its advantageous location on the Northern Sea Route.
Those, who are interested in registering a company in Iceland should know, that the country has concluded DTAA agreements with 42 countries and TIEA with 50 countries.
According to 2016 studies, Iceland ranked 9th in the Human Development Index. In modern Iceland, the unemployment rate is one of the lowest in the world: 2.8%. According to the index of economic freedom, the country ranks 22nd out of 180 countries in 2017. Iceland is one of the 13 least corrupt countries in the world.
We propose support services in setting up an Icelandic company, as Iceland is one of the leading countries in the world in terms of standards of living and per capita income, and also one of the 30 most competitive countries (out of 137).
Tax rates
|
Tax |
Interest rate |
|
Corporate tax |
20% |
|
Corporate tax for ITC companies |
5% |
|
VAT |
25,5% |
|
Reduced rate of VAT |
7% |
|
Dividends for a resident company |
20% |
|
Dividends for a non-resident company |
18% |
|
Dividends for a non-resident company upon filing a tax return |
0% |
|
Interest for a resident company |
20% |
|
Interest for a non-resident company |
10% |
|
Royalty for a non-resident company |
20% |
|
Stamp duty |
2% |
Legal forms
You can open a company in Iceland remotely by choosing one of the following business entity types:
- Private (Еhf) or open (Нf) joint-stock company is an analogue of the joint-stock company PLC: these forms are preferred by those investors who want to register a company in Iceland promptly. The management of such companies is simple;
- Limited Liability Company (license required);
- PLC (license required);
- International Trading Company (ITC);
- Individual Enterprise (SP);
- Partnership;
- Branch.
Registration requirements
When planning to set up a company in Iceland remotely, it is necessary to know that the official language of the state is Icelandic. Documents must be submitted with a notarized translation into Icelandic, and they must contain the following information:
- Company name in Latin characters, including the legal form;
- Information about the founders: the minimum number of directors and shareholders is required to register an Ehf in Iceland – 1 person each (there may be legal entities). The number of founders for Hf (including the manager) is at least 2-3 persons;
- Data on share capital for Ehf and ITC: from 500 thousand ISK, Hf – at least 4 million ISK;
- Documents for obtaining a business license in Iceland for ITC (the cost of obtaining an Icelandic license is 100 thousand ISK).
Mandatory business conditions in Iceland are:
- An audit;
- Financial and tax reporting based on the company's accounting.
In order to register an Icelandic company remotely, please refer to our specialists. YB Case expert will consult you about what documents you need to prepare.
Also, we will provide you with a legal support in the process of opening an account for a company in Iceland, obtaining a license and, if necessary, choosing of your field of activity.
