Iceland

Business Environment

Business practices

Closed hours and days: Banks open Monday to Friday from 9.15 to 16.00, the Lansbanki's branch, in Keflavik's airport, is open every day from 6.30 to 18.30.

Public holidays

Compensation day

Periods when companies usually close

Legal framework

Independence of justice: The country’s judiciary is independent.
Equal treatment of nationals and foreigners: The country’s judicial system guarantees equal treatment to foreign nationals.
The language of justice: Icelandic is the judicial language used in Iceland.
Sources of the law and legal similarities: Iceland is a Republic state based on parliamentary democracy. Iceland (official name: Republic of Iceland) remains outside the European Union; and though the country has no armed forces it is a member of NATO.
President is the chief of the state and is elected by popular vote for a four-year term. President’s role is largely ceremonial. Following legislative elections, the leader of the majority party or the leader of the majority coalition is usually appointed as the Prime Minister by the President for a four year term. Prime Minister is the head of the government and holds the executive powers which include implementation of the law in the country and running the day-to-day affairs. Prime Minister also appoints the Cabinet.
The legislature in Iceland is unicameral. The Parliament consists of 63 seats, its members are elected by popular vote to serve four-year terms. The executive branch of government is directly or indirectly dependent on the support of the parliament, often expressed through a vote of confidence. Prime Minister cannot dissolve the parliament directly but can recommend the same to the President. Legislative power is vested in both the government and the parliament.The people of Iceland enjoy considerable political rights.
The country’s judiciary is independent. The main source of the law is the constitution of 1944 which has been amended many times. The legal system is based on system civil law system originating from Danish law. Iceland has not accepted compulsory ICJ jurisdiction. Icelandic is the judicial language used in Iceland.
Iceland is ruled by law. The country’s judicial system guarantees equal treatment to foreign nationals. Iceland is one of the least corrupt nations in the world.
Consulting national laws online

Intellectual Property

National organizations: The organisation in charge of the protection of intellectual property in Iceland is the Patent office of Iceland (Einkaleyfastofan)
Iceland signed the Agreement of Paris regarding the protection of industrial property and the agreement which establishes the World Intellectual property Organization (WIPO). As for patents, the country adhered to the Agreement of Munich for European patents, as well as to the Treaty of co-operation in Patents ( TCP).
Iceland did not sign the Agreement of Madrid concerning the international register of trademarks but adhered to the 1989 protocol , which came into force in Iceland on January 1st, 1997.

National regulation and international agreements

Type of property	Law	Validity	International agreements signed
Patent	Patent Law	Initial period of validity of 15 years
Trademark			Trademark law treaty Nice agreement concerning the International classification of goods and Services for the Purposes of the registration of Marks Protocol relating to the Madrid Agreement concerning the International Registration of Marks
Design	Design Law Period of validity of 15 years
Copyright
Industrial Models

Tax rates

Consumption taxes

Tax rate: 24,5% for most of the products and some services.
Reduced tax rate: 14% for books, hotels, hot water, electricity and fuel oil used for domestic and commercial heating. No VAT for exports, public health-care services, schools and other educational institutions, domestic and international passenger transportation and cargo transport between Iceland and foreign countries, postal services, house rentals and sales and rentals of trade aircraft and vessels, insurance services and banking and the operation of other financial institutions and sales of bonds.

Corporate taxes

Tax rate

Capital gains taxation

Capital gains are currently subject to the normal corporate income tax rate.

Other corporate taxes

Double taxation treaties

Countries with whom a double taxation treaty have been signed: See the list of the convention signed on the website of the Ministry of Finance.
Whithholding taxes
Bilateral agreement

Accounting rules

Tax year: The fiscal year begins on January 1-st and ends on December 31 of the same year.
Accounting regulation bodies
Accounting reports: Intangible assets can be booked in the balance sheet or in expenses in the profit and loss account (choice of the company).
Physical fixed assets must be estimated at the original or production cost.
Current assets have to appear at the lower cost and value of the market.
Stocks are estimated at the weighed average cost or by the FIFO method.
Publication: Law refers to the notion of "good accounting method" as regards the methods of companies for the elaboration of financial status.
All the companies of capital have to send a copy of their annual report to the legal authorities of the country. This annual report must contain a profit and loss account, a balance sheet and an annual report.
Professional accountancy bodies
Certification and auditing: The audit is compulsory.
Accounting news