DOING BUSINESS IN ICELAND IN 2024
Since 2003, Healy Consultants Group assists our Clients with business set up in Iceland. Our services include i) Iceland company incorporation ii) securing government licences iii) business bank account opening iv) employee recruitment v) visa strategies and vi) office rental solutions.
Compare different Iceland entities | Wholly foreign owned LLC | Fast business setup solution | Bitcoin mining | Branch office | Representative office |
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Also known as: | einkahlutafelag | einkahlutafelag | einkahlutafelag | útibú | fulltrúa skrifstofu |
Best use of company? | All products and services | Close a customer deal now | Mine bitcoin with energy cost efficiency | Specific projects | Marketing & research |
How soon can you invoice Clients/sign sales contracts? | 1 month | 1 week | 1 month | 3 months | 3 months |
How soon can you hire staff? | 2 months | 1 week | 2 months | 4 months | 4 months |
How soon can you sign a lease agreement? | 1 week | 1 week | 1 week | 1 week | 1 week |
How long to supply corporate bank a/c nos.? | 2 months | 1 week | 2 months | 4 months | 4 months |
How long to supply co reg/tax numbers? | 1 month | 1 week | 1 month | 3 months | 3 months |
Corporate tax rate on annual net profits? | 20% | 20% | 20% | 20% | None |
Limited liability entity? | Yes | Yes | Yes | No | No |
Government grants available? | Yes | Yes | Yes | Yes | No |
Government approval required for foreign owners? | Yes | Yes | Yes | Yes | No |
EEA director/partner/manager/legal representative required? | Yes | Yes | Yes | Yes | Yes |
Minimum paid-up share capital? (EUR) | 3,500 | 3,500 | 3,500 | None | None |
Can bid for government contracts? | Yes | Yes | No | No | No |
Corporate bank account location? | Arion Bank | Islandsbanki | Arion Bank | Landsbankinn Bank | Arion Bank |
Can secure trade finance? | Yes | Yes | Yes | Yes | No |
VAT payable on sales to local customers? | Yes | Yes | Yes | Yes | No |
Average total business set up engagement costs? (EUR) | 23,860 | Request a proposal | 19,950 | 16,950 | Request a proposal |
Average total engagement period? | 2 months | 5 weeks | 2 months | 4 months | 4 months |
Accounting and tax considerations | Wholly foreign owned LLC | Fast business setup solution | Bitcoin mining | Branch office | Representative office |
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Statutory corporate tax payable? | 20% | 20% | 20% | 20% | None |
Legally tax-exempt if properly structured? | No | No | No | No | Yes |
Group HQ tax incentives? | Yes | Yes | Yes | Yes | No |
Must file annual tax return? | Yes | Yes | Yes | Yes | No |
Must file annual financial statements? | Yes | Yes | Yes | ||
Must appoint an auditor? | Yes | Yes | Yes | No | No |
Access to double taxation treaties? | Yes | Yes | Yes | Yes | No |
Withholding tax on payments to foreign shareholders? | 20% | 20% | 20% | 0/20% | None |
Company registration | Wholly foreign owned LLC | Fast business setup solution | Bitcoin mining | Branch office | Representative office |
EEA director/partner/manager/legal representative required? | Yes | Yes | Yes | Yes | Yes |
Minimum number of shareholders/partners? | 1 | 1 | 1 | Parent company | Parent company |
Minimum number of directors/managers? | 1 | 1 | 1 | 1 | 1 |
Maximum shareholding for foreigners? | 100% | 100% | 100% | 100% | 100% |
Minimum statutory paid-up share capital? (EUR) | 3,500 | 3,500 | 3,500 | None | None |
Security deposit to be kept with government? | No | No | No | No | No |
Shelf companies available? | Yes | Yes | Yes | No | No |
Time to incorporate new entity? | 2 months | 5 weeks | 2 months | 4 months | 4 months |
Can easily convert to a local PLC company? | Yes | Yes | Yes | No | No |
Public register of shareholders and directors? | No | No | No | No | No |
Can have preference shareholders? | Yes | Yes | Yes | No | No |
Business considerations | Wholly foreign owned LLC | Fast business setup solution | Bitcoin mining | Branch office | Representative office |
Good entity for trademark registration? | Yes | Yes | Yes | Yes | No |
Can secure an import and export licence? | Yes | Yes | No | No | No |
Sponsorship by local citizen required? | Yes, or an EEC citizen and resident unless exemption is granted by the Minister of Industry and Commerce |
Our Client must travel to Iceland for business setup? | No |
Temporary physical office solutions available? | No |
You need a local resident as bank signatory? | No |
Can be wholly foreign-owned? | |
Entity will likely be regulated by? | Ministry of Industries and Innovation |
Minimum number of directors/managers | 1 |
Monthly VAT reporting to government? | Yes |
Must sign office lease agreement during incorporation? | No |
Shareholder/director docs to be attested/translated? | Yes |
Each foreign director needs personal income tax number? | No |
Foreign director needs residence visa? | No |
Maximum number of staff allowed? | No limit |
Expatriate-to-local staff ratio? | None |
Can secure residence visa for business owner? | Yes |
Other useful information | |
What will be included in my customer sales invoice? | Click link |
Country has signed free trade agreements? | Yes |
Country is a member of WIPO/TRIPS? | Yes/Yes |
Country is a member of the ICSID? | Yes |
Average custom duties? | 0-30% |
Government foreign investment approval required? | No, but there are restrictions in certain industries |
Average monthly office rental? (EUR per sq m) | 212 |
Minimum statutory monthly salary? (EUR) | 2,250 |
Average monthly EUR salary for skilled employees? (EUR) | 4,300 |
EUR deposit interest rate? (1-year average) | 7% |
Overseas remittance currency controls? | No |
Banking considerations | |
Multi-currency bank accounts available? | Yes |
Corporate visa debit cards available? | Yes |
Quality of e-banking platform? | Excellent |
Crowd funding available in this country? | Yes |
Iceland business setup summary
Press the link headings below to read detailed, relevant, up to date information.
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Advantages of Iceland company registration
- Iceland is a straightforward country in which to set up a business. For example:
- An Iceland LLC can be 100% foreign-owned and operated by residents of OECD and European Economic Area (EEA) countries.
- An Iceland LLC requires a minimum share capital of only 500,000 ISK (€3,500).
- Company registration is normally completed in just five days.
- Iceland is a straightforward country in which to do business. For example:
- An Iceland company suffers a corporate tax of just 20%.
- Annual financial reporting is simple.
- It has very low levels of corruption;
- Business laws and procedures are normally clear and simple;
- Government departments are typically efficient.
- English is widely spoken in government departments, banks and throughout the business community.
- Foreign investments are well protected, including intellectual property, and contacts are enforced. Foreign investors can expect fair treatment in Icelandic courts.
- Iceland is one of the world’s most competitive economies. For example:
- The country’s wide double tax treaty network of more than 50 countries, including France, Greece, Cayman Islands, Isle of Man, Switzerland, and the USA, helps reduce tax exposure of Iceland LLCs conducting global trade;
- Iceland is a member of the European Free Trade Association (EFTA) (part of the European Single Market) and the Schengen area. Companies in Iceland therefore have tariff-free access to these massive trading blocs, with a collective consumer market of almost half a billion people.
- Iceland has a skilled labour force. Almost half of the country’s population has completed tertiary education.
- Recruitment procedures are clear, and labour laws are fair to both employer and employee. To assist Icelandic companies to attract foreign talent, the government offers personal income tax breaks.
- The employment rate is far above the OECD average. Unemployment is one of the lowest in the OECD.
- Almost every Icelander can speak some English. In the working population, and among young people, English is spoken fluently.
- The country is located almost mid-way between North America and Europe. The capital city, Reykjavik, is five hours from New York, and three hours from London. The time zone is convenient for businesspeople working with Clients in North America and Europe.
- Iceland has a vibrant, close-knit start up culture perfect for collaboration and for testing new products before they go to a bigger market. For example:
- Iceland now has four private venture capital funds;
- The government’s Technology Development Fund (TDF) provides up to US$500,000 early-stage funding for tech start-ups.
- Iceland has some of Europe’s fastest internet speeds.
- While small, the domestic consumer market is powerful. Per capita income is high and Icelanders have a reputation for spending on consumer goods.
- Iceland is a straightforward country in which to set up a business. For example:
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Disadvantages of Iceland company registration
- The 2008 crash of Iceland’s economy, stock market and financial system destroyed the country’s global image as a stable, profitable place to do business. The country continues to work hard to restore credibility in the eyes of the global investment community. Iceland’s sovereign credit ratings are stable, though the kroner currency continues to weaken against the euro.
- Iceland’s economy and domestic market is small and lacks diversity. The main sectors are i) aluminium smelting ii) fisheries iii) power generation (geothermal and hydroelectric) iv) medical and pharma and v) tourism and vi) cryptocurrency.
- There are skills shortages in sectors such as healthcare, construction, IT and tourism. Recruitment can be difficult for companies looking to fill specialist roles, particularly foreign talent.
- 100% foreign ownership is banned for non-resident entrepreneurs using an Iceland company to conduct i) fishing ii) fish processing iii) energy production and iv) aviation activities.
- Because the country is geographically remote, start-ups can feel isolated from global trends. Entrepreneurs may have to spend significant time travelling.
- Iceland is a very expensive place in which to do business. For example:
- Most raw materials and goods must be imported;
- The average monthly salary is US$3,100, one of the highest in Europe. Specialist positions command salaries many times this amount. The minimum monthly wage is US$2,700.
- The country has Europe’s second-highest living costs, after Switzerland.
- Grade A office space in central Reykjavik
- Opening a global corporate bank account for an Icelandic company is challenging.
- Iceland is prone to natural disasters such as earthquakes and volcanic eruptions which can disrupt business, including transport and logistics networks.
- Reclaiming the 18% dividend withholding tax is complex, as it requires the completion of an Iceland tax return. This delays the receipt of the withheld funds by a year.
Useful links for Iceland
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