16. Value Added (Sales) Tax.
A 24.5% value-added tax is levied on any sale of goods, power, or services with various exceptions including the following:
- All export sales.
- Public health-care services.
- Schools and other educational institutions.
- Domestic and international passenger transportation and cargo transport between Iceland and foreign countries.
- Postal services.
- House rentals and sales and rentals of trade aircraft and vessels.
- Insurance services.
- Banking, the operation of other financial institutions and sales of bonds.
- Services to foreign entities if the services are rendered outside Iceland or if the operations of the non-resident company would be subject to VAT under the Icelandic VAT Act.
A 7% value-added tax is levied on the sale of the following goods and services:
- Groceries
- Hotels and other accommodations.
- License, for television and radio stations.
- Books, magazines and papers.
- Hot water, electricity and fuel oil used for domestic and commercial heating.
- Acess to transportation tunnels.
- CD's and records.
All corporations, individuals, and state and municipal entities that sell or grant any kind of taxable goods or services in Iceland are assessable.
The regular VAT assessment period is two months, and the tax is due within 35 days after the end of each period.
VAT must be paid along with custom duties when goods are imported.
17. Inheritance and Gift Taxes
The receiver is taxed for gifts on the same basis as normal income.
There is a general inheritance tax of 5%.
18. Payroll Taxes (Social Security)
The employer pays a social security fee that is assessed on all salaries and wages on a monthly basis. It is also calculated on taxable fringe benefits in kind, such as a companycar and housing. This tax includes a contribution to the Icelandic National Insurance Scheme as well as a contribution to the unemployment fund. The rate is 5,34%. For fishermen there is an additional insurance fee of 0.65% added to the rate, which makes the total fee 5,99%.
19. Other Taxes
Property Tax. Land and property taxes at nominal rates are paid to the municipal authorities; the rates vary between municipalities and also with respect to use. The principal taxes and rates are those for property, water use, fire insurance and disaster insurance.
