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Finances & Taxes

Taxes on goods and services

Various levies and taxes are imposed on goods and services. The principle ones are VAT (value added tax) and commodity tax.


VAT is a general consumer tax and is imposed on all domestic transactions. VAT is also imposed on imported goods and services.

There are two levels of VAT, i.e. 11% and 24%.

In general, VAT is 24%.

All foodstuffs carry 7% VAT, as do subscription fees, the sale of magazines, music CDs and books, the sale of hot water, electricity and fuel for heating houses and swimming pools. Moreover, restaurant and hotel services carry 11% VAT.

Some items are exempt from VAT:

  • Health services and social services

  • Operation of schools and various types of education

  • Sports activities and various forms of cultural activities

  • Passenger services and postal services

  • Property leasing and the renting of parking spaces

  • Insurance activities and the services of lending institutions and securities trading

  • Lotteries and betting pools

  • Various artistic activities and the services of travel agencies

  • Funeral services and any services provided by priests

Commodity taxes

A general cargo due is a fee that is imposed on goods on importation or domestic manufacture. Cargo dues on foodstuffs have been discontinued, except for sugar and sweets.

An alcohol tax on consumable alcohol imported to Iceland or manufactured in Iceland, whether for sale or private consumption.

When importing vehicles, the amount of the cargo dues depends on the weight of the vehicle.

Laws and regulations