Europe
Iceland tax rates 2026
Three-band progressive income tax to ~46.3%, a flat 22% capital-income tax, a 21% corporate rate, and 24% VAT.
Worldwide (residence-based)
Last verified
The taxes
| Personal income (top) | 46.28%Progressive three bands; top ~46.28% (national 31.35% + municipal ~14.93%) on monthly income above ISK 1.25m. |
|---|---|
| Corporate income | 21% |
| Capital gains | 22% |
| VAT / VSK (VAT) | 24% |
| Dividends (WHT) | 22% (non-resident individuals); 20% for companies |
| Interest (WHT) | 12% |
| Royalties (WHT) | 22% |
| Social security (employee) | 4% (mandatory pension) |
| Social security (employer) | 6.35% social security charge plus about 11.5% pension |
| Wealth tax | None. A temporary levy expired in 2014. |
| Inheritance / estate | 10%, above an exemption of about ISK 6.79m |
| Property tax | Municipal property tax of about 0.18-1.65% of assessed value |
How the system works
- Tax system
- Worldwide (residence-based)
- Foreign income
- Taxed (worldwide)
- Taxes by citizenship
- No
- Exit tax
- No
- CFC rules
- Yes
- CRS
- Participating
A special regime for new arrivals
Foreign expert incentive: only 75% of income is taxed for the first 3 years.
Rates checked July 2026: the top marginal income tax rate, the standard VAT rate and the main corporate rate.
Ways to relocate to Iceland
The residency and citizenship routes that lead here, weighed against the tax picture above.