Business entities in Iceland

Business entities in Iceland

Healy Consultants will assist our Client in selecting and setting up the optimum Icelandic corporate structure for Iceland business setup. There are several ways of doing business in Iceland and the most common is the limited liability company, known as an einkahlutafélag company. Foreign investors can also establish a public limited company, a branch of their foreign company or a representative office.

The Iceland limited liability company (LLC) – einkahlutafélag company

    Setup LLC in Iceland
  • An Iceland limited company can be set up with only i) 1 shareholder ii) 1 director and iii) a share capital of €3,500 (500,000 ISK). Shares may be paid for in kind, for example with equipment;
  • 100% foreign ownership is allowed in all sectors for OECD and EEA residents, but is closed to outsiders for i) fish processing, ii) fishing, iii) energy production and iv) aviation;
  • The Icelandic name for this type of company is einkahlutafélag, and is abbreviated to “ehf.”
  • Iceland has relatively open regulations regarding residency requirements, as at least i) 1 shareholder and ii) 1 director must be residing in either Iceland, an EEA country or an OECD country. To assist our Clients to comply with these requirements, Healy Consultants will be pleased to offer nominee resident shareholder and/or director services;
  • The Iceland LLC must also inform the local government of its registered address in Iceland to complete incorporation. After incorporation, it will be required to submit annual audited financial statements and must appoint for that purpose either i) one state authorized public accountant or ii) 2 auditors.

The Iceland public limited company (PLC)

  • Incorporation of an Iceland public limited company requires an minimum of i) 2 shareholders ii) 3 directors and iii) a share capital of at least €28,000 (4 million ISK). Half of this capital must be paid up within the company’s first year of existence;
  • The Icelandic word for public company is “hlutafélag”, abbreviated to “hf.”
  • Like an LLC, foreign ownership is only restricted for i) fish processing ii) fishing iii) energy and iv) aviation activities;
  • Residency requirements are however tighter, as at least half of the i) shareholders and ii) Board of Directors must be residing in Iceland, an EEA country or an OECD country. If needed, Healy Consultants will be pleased to offer nominee resident shareholder and/or resident director services;
  • The Iceland PLC must also provide the Icelandic government with a registered address in Iceland to complete incorporation. After incorporation, it will be required to submit annual audited financial statements and must appoint for that purpose either i) one state authorized public accountant or ii) 2 auditors.

The Iceland branch

Foreign companies can register their presence in Iceland through a branch. The branch will require a branch manager resident in Iceland and Healy Consultants can assist our Clients with complying with that requirement either by i) applying on their behalf for a work visa or ii) providing a local branch manager. Branches in Iceland are subject to the same standard audit requirements as for local companies.

The Iceland representative office

Iceland does not have a representative office scheme, so foreign businesses wishing to establish a non-commercial presence in the country must set up a branch or einkahlutafélag.

Table of comparison between Iceland business entities

 LLCPLCBranch
Also known as:Private limited companyPublic limited companyBranch
How long to set the company up?2 weeks4 weeks4 weeks
How long to open company bank account?4 weeks4 weeks4 weeks
Legal liability?LimitedLimitedUnlimited
Wholly foreign owned?YesYesYes
Minimum paid - up share capital?€3,500€28,000€0
File annual tax return?YesYesYes
Tax registration certificate required?YesYesYes
Recommended corporate bank account?Arion BankIslandsbankiLandsbankinn
Does our Client need to travel?NoNoNo
Does our Client need to travel?YesYesYes
Resident shareholder required?YesYesNo
Minimum directors allowed?131
Minimum shareholders?121
Tax identification code needed?YesYesYes
Corporate shareholders allowed?YesYesYes
Corporate director(s) allowed?YesYesYes
Corporate director(s) allowed?YesYesYes
Iceland corporate tax rate?20%20%20%
Annual financial statements required?YesYesYes
Regulated by?Directorate of Internal RevenueDirectorate of Internal RevenueDirectorate of Internal Revenue
Allowed to issue sales invoices?YesYesYes
Allowed to sign contracts?YesYesYes
Allowed to import and export goods?YesYesYes
Can rent an office space in Iceland?YesYesYes
Can buy Iceland property?NoNoNo
Total Iceland business setup costs in yr. 1?€14,950€14,950€16,950
Subsequent annual costs (incl. accounting and tax fee)?€8,150€10,800€8,150
Sample engagement invoice?Iceland PLC invoiceIceland branch invoice

Contact us

For additional information on our business setup services in Iceland, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, , directly:
Government offices of Iceland Iceland Chamber of Commerce Iceland Ministry of Finance and Economic Affairs Iceland Ministry for Foreign Affairs Invest in Iceland The Central Bank of Iceland