Tax obligations for foreign artists

Foreign artists who perform professionally in Iceland are subject to Icelandic income tax on income earned from those activities. Income includes all payments and benefits, except accommodation and travel expenses to and from Iceland, provided that the artist does not pay those expenses themselves.

Withholding Tax

Income paid to foreign artists for performances in Iceland is subject to withholding tax in Iceland. Those who pay artists for performances in Iceland are required to withhold tax from this income and remit it to the Treasury. Payers must report the income and tax payments of foreign artists electronically to Iceland Revenue and Customs using the return for limited tax liability.

Income Tax and Tax Rates

The applicable tax rate depends on whether wages and other benefits are paid to a company or an individual. It also depends on whether a fixed amount or a share of income is paid. Tax is calculated on gross income without deductions. Individuals are not entitled to a personal tax credit.

Fixed Amount

• Individual: 34.94% (20% income tax + 14.94% average municipal income tax)

• Company: 20% income tax

Share of Income

• Individual: 29.94% (15% income tax + 14.94% average municipal income tax)

• Company: 15% income tax

Exemptions and Applications

Artists from the United States may apply for an exemption if their total income is less than USD 10,000 per year. Some agreements also provide that artists who perform at the expense of the country in which they are resident are exempt from tax in the country where they perform.

To apply for an exemption, complete form RSK 5.42. The application must include:

• confirmation that the artist is performing at the expense of their country of residence

• confirmation of tax liability — either by means of a stamp in Box 21 of the form or a certificate of tax liability issued by the tax authorities in the artist's country of residence

The original stamped application or certificate of tax liability must be sent by post. If the certificate is electronic and can be verified, an electronic version is sufficient.

Refund of Overpaid Tax

If tax has been withheld but the artist was entitled to an exemption, a refund may be requested using form RSK 5.43. Supporting documentation must be submitted with the application.

A refund application will not be processed unless the exemption application has already been approved or is submitted at the same time.

Confirmation of Tax Paid in Iceland

If an artist needs to provide foreign tax authorities with confirmation that tax has been paid in Iceland, they can apply to Iceland Revenue and Customs for an income certificate using form RSK 14.10.