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Economy and Banking Sector of Iceland

Withholding Tax

Withholding taxes are imposed at source of income and are often applied to dividends, interest, royalties, rent and similar payments. The rates of withholding tax are often reduced by double taxation agreements.

Withholding Tax Rates in Iceland: 0.0 - 22.0%

Withholding tax rates applied on payments of interest and dividends in Iceland are shown in Table 1.

Dividends Interest
Natural Persons (residents) 22.0 %22.0 %
Natural Persons (non-residents) 20.0 %12.0 %
Table 1. Withholding tax rates in Iceland.

Double Taxation Agreements

Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.

DTAs of Iceland: 36 Signed Agreements

Iceland signed DTAs which already came info force with the following jurisdictions:

BB Barbados
BE Belgium
CA Canada
CN China
HR Croatia
CZ Czech Republic
EE Estonia
FR France
DE Germany
GR Greece
HU Hungary
IN India
IE Ireland
IT Italy
KR Korea, Republic of
LV Latvia
LT Lithuania
LU Luxembourg
MT Malta
MX Mexico
NL Netherlands
NO Norway
PL Poland
PT Portugal
RO Romania
RU Russian Federation
SK Slovakia
SI Slovenia
ES Spain
CH Switzerland
UA Ukraine
GB United Kingdom
US United States
VN Vietnam

There are also several agreements between Iceland and other jurisdictions which were signed but haven't yet come into force:

MT Malta
GB United Kingdom

Information Exchange

There are 3 ways for jusrisdictions to exchange information on tax matters:

  • spontaneously;
  • on request;
  • automatically.

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.

Exchange on Request: 48 Signed Agreements

Iceland signed TIEAs which already came info force with the following jurisdictions :

AD Andorra
AW Aruba
BS Bahamas
BH Bahrain
BZ Belize
BM Bermuda
VG British Virgin Islands
KY Cayman Islands
CK Cook Islands
CW Curacao
DK Denmark
DM Dominica
FO Faroe Islands
FI Finland
GI Gibraltar
GL Greenland
GG Guernsey
IM Isle of Man
JE Jersey
LR Liberia
LI Liechtenstein
MO Macau
MC Monaco
MS Montserrat
PA Panama
LC Saint Lucia
WS Samoa
SM San Marino
SX Sint Maarten (Dutch part)
SE Sweden
TC Turks and Caicos Islands
UY Uruguay

There are also several agreements between Iceland and other jurisdictions which was signed but haven't yet come into force:

AI Anguilla
AG Antigua and Barbuda
BW Botswana
BN Brunei Darussalam
CR Costa Rica
GD Grenada
GT Guatemala
JM Jamaica
MH Marshall Islands
MU Mauritius
NU Niue
QA Qatar
KN Saint Kitts and Nevis
VC Saint Vincent and The Grenadines
SC Seychelles
VU Vanuatu

Automatic Exchange: Starts in September 2017

Iceland signed the automatic information exchange agreement on 29 October 2014 and committed to start the automatic information exchange in September 2017.

Automatic Excnange: 54 Bilateral Agreements to Receive Information

Iceland has signed bilateral agreements with 54 jurisdictions to automatically receive information:

AR Argentina
AU Australia
AT Austria
BE Belgium
BR Brazil
BG Bulgaria
CA Canada
CN China
CO Colombia
HR Croatia
CZ Czech Republic
DK Denmark
EE Estonia
FO Faroe Islands
FI Finland
FR France
DE Germany
GI Gibraltar
GR Greece
GL Greenland
GG Guernsey
HU Hungary
IN India
IE Ireland
IM Isle of Man
IT Italy
JP Japan
JE Jersey
KR Korea, Republic of
LV Latvia
LI Liechtenstein
LT Lithuania
LU Luxembourg
MY Malaysia
MT Malta
MU Mauritius
MX Mexico
MC Monaco
NL Netherlands
NZ New Zealand
NO Norway
PL Poland
PT Portugal
SM San Marino
SC Seychelles
SG Singapore
SK Slovakia
SI Slovenia
ZA South Africa
ES Spain
SE Sweden
CH Switzerland
GB United Kingdom
UY Uruguay

Automatic Excnange: 68 Bilateral Agreements to Send Information

Iceland has signed bilateral agreements with 68 jurisdictions to automatically send information:

AI Anguilla
AR Argentina
AU Australia
AT Austria
BE Belgium
BZ Belize
BM Bermuda
BR Brazil
VG British Virgin Islands
BG Bulgaria
CA Canada
KY Cayman Islands
CN China
CO Colombia
CR Costa Rica
HR Croatia
CY Cyprus
CZ Czech Republic
DK Denmark
EE Estonia
FO Faroe Islands
FI Finland
FR France
DE Germany
GI Gibraltar
GR Greece
GL Greenland
GG Guernsey
HU Hungary
IN India
ID Indonesia
IE Ireland
IM Isle of Man
IT Italy
JP Japan
JE Jersey
KR Korea, Republic of
LV Latvia
LI Liechtenstein
LT Lithuania
LU Luxembourg
MY Malaysia
MT Malta
MU Mauritius
MX Mexico
MC Monaco
MS Montserrat
NL Netherlands
NZ New Zealand
NO Norway
PL Poland
PT Portugal
RO Romania
LC Saint Lucia
VC Saint Vincent and The Grenadines
WS Samoa
SM San Marino
SC Seychelles
SG Singapore
SK Slovakia
SI Slovenia
ZA South Africa
ES Spain
SE Sweden
CH Switzerland
TC Turks and Caicos Islands
GB United Kingdom
UY Uruguay

Further Information

FATCA

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.

Further Information