1. Rates
The income tax rate for corporations for 2008 is 18% on net income and 26% for partnerships with independent tax liability.
2. Local Income Taxes
None.
3. Capital Gains Taxes
Capital gains are added to other taxable income and taxed at the regular corporate rate.
4. Branch Profit Taxes
Branches of foreign corporations are taxed at the regular corporate rate of 18% on Icelandic sourced income.
5. Foreign Tax Relief
Double taxation relief is given for taxes paid by a resident of Iceland in those countries with which Iceland has double taxation treaties (see item 15). If a treaty does not exist a relief is given on the basis of domestic credit rules. No credit is granted for underlying corporate taxes paid in another country.
6. Classification of Corporations
There is no difference in tax rates based on classification of corporations, except for the difference in rates between corporations and partnerships described in item 1.
There are however two types of partnerships, one with independent tax liability, which pays the 26% income tax mentioned above, and the other, while not subject to tax liability, where income and assets are split between the partners and taxes are levied on them.
7. Payment of Taxes
All taxes are paid in the assessment year, which is the year after the operational year. The taxes are remitted in ten payments, due on the first day of each month, but no payments are made in January and in the month the assessment takes place.
Until the assessment takes place, which in recent years has been in October, a corporation must pay a proportion of the taxes levied in the previous year. In 2008, corporations must pay each month an amount equal to 10% of the tax levied for 2007 until assessment
