Child benefits

The right to child support in Iceland is granted to those who have dependent children and are domiciled or stay in Iceland for longer than a total of 183 days over a 12-month period.

Calculation

Child benefits are income-related and calculated from income on a tax return. Income abroad affect the calculation of child benefit. This also applies to wages from international organisations which are not taxed.

Child benefit calculator on Skatturinn's website (Icelandic language only)

Payments

Child benefits are calculated for the first time in the year following the birth of a child and for the last time in the year when the child turns 18 years old. Children must be registered as living with a support person at the end of the year.

Child benefits are paid out four times a year. The first two payments of the year are advance payments and deducted from calculated child benefit determined at tax assessment. The balance is then divided into two payments.

• 1 February - advance payment

• 1 May - advance payment

• 1 June - determined child benefit

• 1 October - determined child benefit

With children under the age of seven in the income year, an additional special child benefit is paid, which is also income-related.

Advance payment of child benefits

The advance amounts to half of the estimated child benefit for the year and is paid in two equal instalments, on 1 February and 1 May.

Family status is based on the listing in the National Registry on 31 December of the previous year.

In calculating income reduction, income in withholding is taken into account, in addition to information on income outside withholding on the tax return for the previous year. The reference period for income at source is November to November.

Advance payments are cancelled if sufficient information is not available to determine child benefit, e.g. when a tax return has not been submitted the year before. In such cases, an application must be made specifically for an advance payment.

Adjustments and changes to prepayment

If the circumstances of an individual differ from the assumptions made in the calculation, an adjustment may be requested to the child benefit payments made in advance.

Common changes in circumstances that may give rise to a correction in the amount of child benefit in advance are, for example:

• Revenue

• Divorce/dissolution of a partnership

• Unregistered cohabitation

• New cohabitation

• Spouse resident and/or working abroad

There are also a group of people who do not automatically receive a payment of child benefit in advance but can apply for a debt relief. The reasons why may include:

• Students abroad

• Tax return of the previous year not submitted

• Moving to or from Iceland

• Marital status unknown, based on National Registration

Childs supporter and the effect of marital status

Child supporter

Only child supporters are entitled to payment of child benefit. To be considered a child's supporter, the child must be registered in the same home at the end of the year in the National Registry or an agreement is available on the division of the child's residence with the district commissioner. It does not matter if the child has not been supported by the same individual all year.

Those who pay child support are not considered to be the child's supporter in this context.

Married couples and cohabiting partners

Child benefit is equally divided between spouses.

Child benefits of cohabiting couples who meet the conditions for joint taxation at the end of the income year are divided among them, as in married couples. In determining the amount of the compensation, the total income according to the tax returns of both parties is taken into account.

Those who maintain a home together with their child are considered to be supportive, even if the conditions for registration of cohabitation are not met. In such circumstances, child benefits shall be determined as if they were married couples.

Children with a split residence

Parents who agree on registering the child's split residence with the district commissioner may each be entitled to child support.

The child benefit shall be automatically paid to both parents for as long as a contract on the division of the residence of the child is available from the district commissioner at the end of the year. The child benefit does not need to be applied for.

The child benefit for children with a different residence is calculated in such a way that the child is included in the calculation for each of the two parents. They calculate a certain amount of child benefit based on income and family status. Of the amount determined by each parent, half shall be cancelled and the other half shall be paid.

A situation may arise where there is a difference between the amount of child benefit due to differences in income and the family status of the parents. One parent may even receive child benefits, but the other may not.

A contract on the division of the residence of a child expires upon the transfer of one of the parents.

Moving to and from Iceland

Those who move to or from Iceland during the year from child benefit proportionally to the length of stay in Iceland.

That does however not apply to students living temporarily abroad who have applied to keep their domicile in Iceland even though they live abroad. They are entitled to child benefits from Iceland, but child benefits from the country of residence are subtracted.