Iceland VAT (VSK) Guide for 2026: Rates, Registration & Filing
Iceland's standard VAT (VSK) is 24%, with a reduced 11% band. Covers registration, the rules for foreign digital suppliers, and filing obligations.
Last updated
Key Takeaways
Iceland applies a standard VAT (VSK) rate of 24% to most goods and services, including SaaS and digital products, with an 11% reduced rate for food, hotel accommodation, books, and newspapers. As a non-EU country, the EU's EUR 10,000 threshold does not apply — a business registers once taxable sales reach ISK 2,000,000 over any 12-month period, and foreign suppliers of electronic services to Icelandic consumers register at the same threshold, optionally through the simplified VOES scheme. Most financial and insurance services, healthcare, and education are exempt; exports are zero-rated.
Taxability Snapshot
SaaS
Taxable
Digital Goods
Taxable
Sales Tax Rates
Iceland applies a standard VAT (VSK) rate of 24% to most goods and services, including SaaS and digital products sold to consumers [1]. A reduced rate and zero-rating apply to specific categories:
Rate | Applies to |
|---|---|
24% (standard) | most goods and services, SaaS, and digital services |
11% (reduced) | food, hotel accommodation, books, newspapers, magazines, electricity and heating, passenger transport |
0% (zero) | exports |
Electronically supplied services are taxed where the customer is located, so foreign SaaS sellers charge Icelandic VAT on sales to local consumers [1][2].
Iceland VAT Calculator
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Iceland · VSKRates as of September 2026. Source: Skatturinn: VAT rates (opens in a new tab).
Iceland · Standard rate
24%
VSK rate
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This is an estimate. Whether a sale is taxable, and at which rate, depends on what you sell, who you sell to and where it's supplied. If you intend to rely on these rates, please use the Kintsugi platform.
Registration & nexus threshold
Iceland is outside the EU, so the EU One Stop Shop and the EUR 10,000 threshold do not apply. A business registers once taxable sales reach ISK 2,000,000 over any 12-month period [1]. Foreign suppliers of electronically supplied services to Icelandic consumers register once sales exceed that threshold, and may use the simplified VOES scheme [1]. Registration steps are in the How to Register section.
Filing frequency & deadlines
Icelandic VAT returns are filed bi-monthly across six periods a year, with the return and payment due one month and five days after the two-month period ends [1].
Exemptions
Exempt supplies include most financial and insurance services, healthcare, education, social services, and the letting or sale of real property. Exports are zero-rated [1].
Penalties
Late filing or payment triggers a surcharge on the VAT due plus penalty interest, with the initial late-payment surcharge accruing daily up to a capped percentage before statutory penalty interest applies [2].
Sources
Verified July 2026 against Iceland Revenue and Customs guidance.
Frequently asked questions
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