# Iceland VAT (VSK) Guide for 2026: Rates, Registration & Filing

Canonical: https://trykintsugi.com/sales-tax-guides/europe/iceland
Published: July 15, 2026

Iceland's standard VAT (VSK) is 24%, with a reduced 11% band. Covers registration, the rules for foreign digital suppliers, and filing obligations.

- **SaaS:** Taxable
- **Digital Goods:** Taxable

## 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

## 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].

#### 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

- [1] [Iceland Revenue and Customs (Skatturinn) — Value Added Tax (24% standard, 11% reduced; registration, filing, VOES)](https://www.skatturinn.is/english/companies/value-added-tax/)

- [2] [Iceland Revenue and Customs (Skatturinn) — VAT overview](https://www.skatturinn.is/english/)

Verified July 2026 against Iceland Revenue and Customs guidance.

#### Frequently asked questions

### What is the VAT rate in Iceland in 2026?

Iceland's standard VAT rate is 24%. Reduced or special rates of 11% and 0% apply to categories such as food, books, medicines, and accommodation.

### Do I need to register for VAT in Iceland as a foreign business?

Yes, once you meet the local registration rule. Foreign providers of digital services to Icelandic consumers must register and charge 24% VAT under the rules described above.

### Is SaaS taxable in Iceland?

Yes. SaaS and other electronically supplied services are taxed at the 24% standard rate. B2C sales are taxed where the customer is located, so foreign sellers register locally to collect the tax.

### How often are Iceland VAT returns filed?

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.

### What is the VAT registration threshold in Iceland?

Icelandic-established businesses register once taxable turnover exceeds ISK 2,000,000 (about EUR 13,000) in any 12-month period, with registration required within 8 days of crossing it.

### What are the penalties for late VAT in Iceland?

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.