Quick overview
| Standard Rate | Reduced Rate | Other Rates |
| 24% | 11% |
The local name for VAT in Iceland is ”Virðisaukaskattur”.
There are basically 2 VAT rates in Iceland:
- Standard VAT rate is 24%
- Reduced VAT rate is 11%
Recent developments
For more information about (recent) rate change developments in Iceland, please click here.
Standard rate: 24%
This rate applies for all transactions that take place in Iceland, unless an exception applies (such as a reduced rate, the zero rate or an exemption, or a reason to treat the transaction as outside scope of VAT).
Reduced rate: 11%
- Radio and television licenses
- Rental of hotel rooms, guest rooms and other accommodation
- Sale, including subscription, of newspapers, periodicals, countryside and district newspapers and books, both hard copies and electronic copies
- Geothermal hot water, electricity and fuel oil used for heating
- Most food-related items (including alcoholic beverages)
- CDs, records, magnetic tapes and other similar means of music recordings, other than visual records. Also, electronic versions of music, without visual records
- Access to road facilities
- Condoms
- Reusable diapers and diaper lining
- The services of travel agents
- Transportation of passengers, whether by land, air or sea, including coaches and bus trips. (But transportation of passengers to and from the country is considered granted abroad and such services are exempt.)
- Admission to spas, saunas, etc.
Zero rate (0%)
Examples of goods and services taxable at 0%
- Export of goods and services
- Supplies delivered for use on board vessels on international journeys
- Sale and leasing of aircraft and ships, shipbuilding along with repair and maintenance work on ships and aircraft and their fixed equipment
- The design, planning and other comparable services related to construction and other real property abroad
- Contractual payments from the Treasury related to the production of milk and sheep farming
- Sales of services to foreign fishing vessels landing fish in Iceland
- Sales of services to persons neither domiciled nor having a venue of operation in Iceland, provided that the services are wholly used abroad
- Transportation of goods between countries or within the country when the transport takes place to or from Iceland
Examples of exempt supplies of goods and services (not liable to VAT, no deduction of input VAT)
- Financial services
- Insurance
- Lease of residential property
- Medical services
- Social services
- Educational services
- Real estate transactions
- Specified cultural and sporting events
- Public transport
- Postal services
- Lotteries and betting pools
- Funeral services
A global VAT/GST rate overview can be found here (note this is a work in progress).
This post was last updated on May 26, 2021.
