DoubleTaxationTaxes on salary: Iceland preliminary data
How much income tax and social contributions are paid on a salary in Iceland, what a sole proprietor and a company pay, and which special regimes exist. Preliminary data.
Preliminary data: headline rates from official sources and bulletins of international organisations, without reliefs or special rules; being refined.
Calculation for a gross salary of €60,000 per year
| Gross salary | ISK 8,844,198 ≈ €60,000 |
|---|---|
| Income tax | ISK 1,967,075 ≈ €13,345 |
| Employee contributions | ISK 353,768 ≈ €2,400 |
| Take-home pay | ISK 6,523,355 ≈ €44,255 |
| Employer contributions and payroll taxes | ISK 561,607 ≈ €3,810 |
| Employer's labour cost | ISK 9,405,804 ≈ €63,810 |
Only some of the country's direct taxes and levies are counted: income tax on wages and compulsory contributions. Not counted: property and real-estate taxes; taxes on dividends, interest and other investment income; inheritance and gift taxes; indirect taxes such as VAT, excise and customs duties.
Taxes for sole proprietors and companies
Tax and contributions on the profit for a year; expenses are 10% of revenue, the company pays its profit out to the owner. Reliefs and local taxes are not included.
| Annual revenue | €30,000 ISK 4,422,099 | €60,000 ISK 8,844,198 | €120,000 ISK 17,688,396 |
|---|---|---|---|
| Sole proprietor | ISK 636,086 16.0 % | ISK 2,270,926 28.5 % | ISK 5,800,292 36.4 % |
| Company | ISK 1,496,438 37.6 % | ISK 2,992,877 37.6 % | ISK 5,985,753 37.6 % |
Special tax regimes
Foreign experts — 25% reduction of taxable income
For people relocating
Who: Foreign specialists hired for expertise scarce in Iceland (R&D, teaching, specialised or key management roles), not domiciled in Iceland in the previous 60 months; approved by a committee within 3 months of starting.
Only 75% of employment income is taxed for the first 3 years; social security tax and pension still on full pay.
Legal basis: Income Tax Act No. 90/2003 art. 30(1)(A)(6); Regulation No. 1202/2016
Tax residence
The tax residence check does not cover Iceland yet.
Assumptions
- Calculated with the OECD Taxing Wages methodology: income tax including local taxes plus employee social security; single person without children, tax year 2026, ECB rate of 2 January 2026.
- Exchange rate: 1 EUR = 147.403296 ISK (Central Bank of Iceland — official reference rate (mid), USD, 02/01/2026) ↗
Sources
- Iceland Revenue and Customs (Skatturinn) — Tax brackets 2026
- Skatturinn — Personal tax credit 2026
- Skatturinn — Tryggingagjald 2026
- Skatturinn — Foreign experts
- Skatturinn — Dividends (22% capital income tax)
- OECD Tax Database — Corporate income tax rates (CIT), 2026
- Central Bank of Iceland — official exchange rate USD
- Skatturinn — Allowances, deductions and credits (pension premium subtracted from salary; personal tax credit 2026)
- Ísland.is (Government of Iceland portal) — Pension fund contribution (individuals' contributions to a mandatory fund tax-deductible up to 4%)
Data checked: 08/11/2026. An indicative calculation for a typical case. Not tax advice.