Free Guide: Do you need a VAT representative or agent in Iceland?

VAT in Iceland

As a general rule, those who are selling goods or services in Iceland must declare and pay value added tax (VAT). The rate is normally 24%, sometimes 11%, and must be added to the price of your goods or services before selling.

The rules also apply to all foreign companies and individuals with revenues originating in Iceland, not only to companies domiciled in Iceland.

In this guide we will cover the basics that you need to know before you conduct business in Iceland.

Please do us a little favor and share this guide with others, for there’s a good chance that it will help them as well.

Do you need to collect VAT?

You most likely need to collect, declare and pay VAT if you have any revenues originating in Iceland. For example if you are a tourism operator visiting Iceland for the summer, or if you come to Iceland to sell any kinds of goods or services.

There are several exemptions documented by the Icelandic tax authorities . The ones most likely to apply to foreign companies, tourism operators and similar, are the following:

A foreign company or individual will usually require the services of a VAT representative, sometimes called a VAT agent, in order to be able to declare and pay VAT in Iceland.

Want to see if you need a VAT representative?

What is the process?

When collecting VAT, you must add it to your prices before your customer pays, and your invoices should show the amount of VAT broken down to the 24% VAT rate and the 11% VAT rate, as well as your VAT registration number that will be supplied by your VAT representative.

The standard VAT rate is 24%. There is a reduced rate of 11% for several types of goods and services as documented here in detail . The ones most likely to apply to foreign companies are:

In general, VAT must be declared and paid to the tax authorities six times a year:

Companies with revenues of less than 4,000,000 ISK in the calendar year can apply to declare and pay just once per year, payable no later than February 5th.

There is very steep interest on late payments, therefore a process that ensures VAT is declared and paid on time is very important.

How to find a VAT representative?

Look no further. Along with providing general accounting and financial services to companies, we at Quarter provide a VAT representative service.

We offer two levels of service:


As your VAT agent, we will provide you with:

VAT Rep Plus

Everything included in VAT Rep, plus: