Copyright Royalties for Subsequent Use

Payments received for the subsequent use of a copyrighted work after it has been made available to the public are taxable as capital income.

Authors and other rights holders (individuals) must pay capital income tax on payments received for the use of their works. This applies where the copyrighted works have been made available to the public and the recipient is subject to unlimited tax liability in Iceland.

Individuals who receive copyright royalties must report them in their annual tax return. Payers that are required to withhold tax must withhold capital income tax from these payments. This applies to payments made to all rights holders, regardless of whether they are the original authors of the works or whether they carry on a business.

Payments to Legal Entities

Where copyright royalties are paid to a legal entity (company or other organisation), the payments are treated as business income. In such cases, no withholding tax is deducted under Act No. 45/1987 or as capital income tax under Act No. 94/1996.