Iceland is a Nordic island country in the North Atlantic Ocean.
Historically based on fishing industry, Iceland's economy is currenctly getting diversified into manufacturing and service industries, particularly within the fields of tourism, software production, and biotechnology.
Icelald was particularly hard affected by the global recession, because of the failure of its banking system and a subsequent economic crisis. The Icelandic financial crisis involved the failure of all three of the country's major privately owned commercial banks, multiplied in size during the previous decade. The transformation and recovery of the Icelandic banking sector was mostly completed in 2012. The banking sector is now dominated by four universal banks. Along with those four major banks the Icelandic banking sector is made of several small regional saving banks operating in the rural areas.
|Nominal GDP (2016)||Nominal GDP per Capita (2016)||Real GDP Growth (2016)|
|18.1 bln EUR (+0.17%)||53 900 EUR (+0.16%)||7.2 % (2015: 4.0 %)|
According to Eurostat, nominal GDP of Iceland in 2016 was 18.1 bln EUR.
Iceland outperforms the European Union in terms of real GDP growth with the average annual differential coming to 1.8% over the past 10 years (2006 - 2016). In 2016 real GDP growth was 7.2% which was above the Euro Area average (1.8%) and above the European Union average (1.9%). Real GDP growth in 2017 - 2022 are IMF's estimates.
Chart 1. Real GDP Growth in Iceland. Source: Eurostat, International Monetary Fund.
In 2016, nominal GDP per capita in Iceland was 53 900 EUR.
Iceland has an above-average level of wealth in terms of per-capita GDP at purchasing power parity (PPP); this economic welfare indicator has, on average, exceeded that of the European Union by 23.6% over the past 10 years (2006 - 2016). GDP per capita at PPP in 2017 - 2022 are IMF's estimates.
Chart 2. GDP Per Capita at Purchasing Power Parity in Iceland; European Union = 100.
|CPI, MoM (Sep 2017)||CPI, YoY (Sep 2017)||CPI, Year Average (2016)|
|-1.5 % (Aug 2017: -0.8 %)||-2.7 % (Aug 2017: -2.6 %)||0.8 % (2015: 0.3 %)|
According to Eurostat, inflation rate in Iceland in 2016 expressed as annual percentages of average consumer prices was 0.8% which was above the Euro Area average (0.2%) and above the European Union average (0.3%). Inflation rates in 2017 - 2022 are IMF's estimates.
Chart 3. Inflation Rate in Iceland. Source: Eurostat, International Monetary Fund.
|Unemployment Rate (2016)|
|3.0 % (2015: 4.0 %)|
|BBB+ (good credit quality), outlook stable||A3 (upper medium grade), outlook stable|
Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.
Iceland signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 1 January 2013 the date of coming into force is given in brackets):
There are also several agreements between Iceland and other jurisdictions which were signed but haven't yet come into force (for agreements signed after after 1 January 2013 of signing the agreement is given in brackets):
There are 3 ways for jusrisdictions to exchange information on tax matters:
Spontaneous exchange of information is provision of information that is forseeably relevant to another party without a request being previously sent.
Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.
Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.
Iceland signed TIEAs which already came info force with the following jurisdictions (for agreements which came into force after 1 January 2013 the date of coming into force is given in brackets):
There are also several agreements between Iceland and other jurisdictions which was signed but haven't yet come into force (for agreements signed after 1 January 2013 of signing the agreement is given in brackets):
Iceland signed the automatic information exchange agreement on 29 October 2014 and committed to start the automatic information exchange in September 2017.
Iceland has signed bilateral agreements with 54 jurisdictions to automatically receive information:
Iceland has signed bilateral agreements with 68 jurisdictions to automatically send information:
Foreign Account Tax Compliance Act (FATCA) which became law in the United States in March 2010, focuses on reporting made by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The FATCA-reporting is facilitated by Intergovernmental Agreements (IGAs).
|FATCA Status in Iceland|
|IGA in effect since 26 May 2015, Model 1|
Iceland has FATCA agreement with the U.S. in effect since 26 May 2015 (Intergovernmental Agreement Model 1). Financial institutions operating in Iceland are required to identify U.S. taxpayers by January 1, 2017 and to report the information for 2017 and the subsequent years. The agreement is reciprocal: Icelandic financial accounts hold in U.S. financial institutions will be reported to Icelandic authorities.
|Financial Market Development|
|4.2 (max 7.0), 49th out of 138 countries|
|4.9 (max 7.0), 67th out of 138 countries|
According to World Economic Forum's Global Competitiveness Report 2017-2018, financial market development in Iceland is scored 4.2 out of maximum 7.0 and ranked 49th out of 138 analysed economies, trustworthiness and confidence of financial market is scored 4.3 (66th place).
Chart 4. Financial Market Development in Iceland. Source: WEF.
Soundness of banks is scored 4.9 bringing Iceland into the 67th place.
Chart 5. Soundness of Banks in Iceland. Source: WEF.
|Maximum Protected Amount|
|1 700 000 ISK|
Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.
From a depositor's point of view it is important to know:
All these details about deposit guarantee scheme in Iceland are summarised in Table 1.
|Scheme Participants||all credit institutions operating in Iceland, branches of non-EEA banks, branches of Icelandic banks abroad|
|Scheme Exemptions||branches of EEA-banks (covered by their home countries)|
|Covered Accounts||any credit balance resulting from financial deposits or transfers in normal banking transactions|
|Maximum Protected Amount||1 700 000 ISK|
|Paid In Currency||ISK|
Table 1. Deposit guarantee scheme in Iceland.
EEA stands for European Economic Area and consists of all EU member states plus Liechtenstein, Norway and Iceland.
Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.
|Local Currency (Icelandic króna)||Foreign Currency|
|A1 (upper medium grade)||A3 (upper medium grade)|
Local currency (Icelandic króna) deposit ceiling for Iceland is set to A1 (upper medium grade), foreign currency deposit ceiling is A3 (upper medium grade).
|Number of Banks|
|Recent Changes (2016)|
|new banks: 0, closed banks: 0|
Currently there are 9 credit institutions operating in Iceland.
Recent structural changes (2013 - 2016) of the banking sector of Iceland are summarised in Table 2.
|Number of Opened Banks||0||0||1||0|
|Number of Closed Banks||1||1||4||0|
Table 2. Recent structural changes in the banking sector of Iceland.
The list of the most recently opened banks in Iceland is provided in Table 3.
|Sparisjóður Austurlands hf (new)||January 2015|
Table 3. The most recently opened banks in Iceland.
All the credit institutions operating in Iceland can be classified into several categories. Table 4 summarises the number of banks in each category.
|Category||Number of Banks|