Inheritance tax

Inheritance tax is paid on the net assets of the estate which are assets less liabilities and expenses.

A spouse in a marriage pays no inheritance tax. The same applies to a cohabiting partner who has entered into a cohabiting partnership with a heir and is succeeded by a heir in accordance with a will. The status of cohabiting spouses must be specified in a will.

Inheritance tax shall be paid on the amount exceeding the tax-freedom threshold. Inheritance is granted tax freedom in proportion to its inheritance. Example: The untaxable fraction is ISK 6,203,409. If the heirs' inheritance ratio is 33.33%, the untaxable portion is ISK 2,067,596. If the heirs' inheritance ratio is 22.22%, the untaxable portion is ISK 1.378,397.

The tax freedom limits change on 1 January each year in accordance with the consumer price index and are the following of the estates that were established:

1 January 2024 to 31 December 2024 ISK 6,203,409.

1 January 2023 to 31 December 2023 ISK 5,757,759.

1 January 2022 to 31 December 2022 ISK 5,255,000.

1 January 2021 to 31 December 2021 ISK 5,000,000.

1 January 2011 to 31 December 2020 ISK 1,500,000.

Information on the tax freedom limits before 1 January 2011 can be obtained from the magistrates.

Tax freedom does not apply to prepaid inheritance. In advance payment of inheritance, inheritance tax is paid on the entire value of the assets being delivered.