Incentives and Grants
Incentives to encourage investment, both foreign and domestic, may exist in some municipalities, but primarily outside the tax system.
Exchange Controls
The import and export of goods and services and the related foreign currency transactions are not restricted.
Investment Restrictions on Nonresidents
Non-residents may invest in a business enterprise in Iceland with some limitations, which are stipulated in the Act on Investment by Non-residents in business Enterprise or in a special legislation and upon the fulfillment of other conditions and acquisition of licenses required by law.
The primary restrictions on investment by non-residents are the following:
Only the following may conduct fishing operations within the Icelandic fisheries jurisdiction or own or run enterprises engaged in fish processing:
- Icelandic citizens and other Icelandic entities.
- Icelandic legal entities wholly owned by Icelandic entities or Icelandic legal entities that are:
- Controlled by Icelandic entities;
- Not subject to more than 25% ownership of foreign entities (up to 33% in certain circumstances);
In other respects under the ownership of Icelandic citizens or Icelandic legal entities controlled by Icelandic entities.
Fish processing means any processing that preserves marine products from decay, including production of fish-oil and fish-meal, but does not include further processing designed to render products more suitable for distribution or consumption.
Only Icelandic citizens and other Icelandic entities as well as individuals and legal entities domiciled in another member state of the European Economic Area are permitted to own energy exploitation rights relating to waterfalls and geothermal energy for other than domestic use. The same applies to enterprises, which produce or distribute energy.
Total shares owned by non-residents in Icelandic airline companies may not, at any time, exceed 49%. This does, however, not apply to non-residents who are residents of a country that is a member of the European Economic Area.
Investment in Icelandic enterprises by foreign states, foreign municipalities or other foreign authorities involved in enterprises is prohibited except with a special permission from the Minister of Commerce.
An individual domiciled outside the EEA and outside the OECD is not allowed to run a business or take part in a business enterprise with unlimited liability in Iceland, except with permission from the Minister of Commerce or another appropriate authority. Limited liability companies and other legal entities with domicile outside the EEA and the OECD may operate in Iceland only if this is permitted in an international treaty, which Iceland is a party to, or if permission is granted by the Minister of Commerce.
An individual domiciled outside the EEA and outside the OECD is not allowed to run a business or take part in a business enterprise with unlimited liability in Iceland, except with permission from the Minister of Commerce or another appropriate authority. Limited liability companies and other legal entities with domicile outside the EEA and the OECD may operate in Iceland only if this is permitted in an international treaty, which Iceland is a party to, or if permission is granted by the Minister of Commerce.
