Iceland Corporate Tax Guide 2026
Iceland applies a flat corporate income tax (CIT) rate of 20% on resident companies' worldwide income. Non-resident companies are taxed only on Iceland-source income.
Corporate Income Tax Rate
20% flat on taxable profits. This applies to both private and public limited companies (ehf. and hf.). There are no progressive brackets for corporations.
Tax Incentives
Research & Development
Companies can claim a tax credit for R&D expenses of up to 20% of qualifying costs (with a cap). Unused credits can be carried forward for up to 6 years.
Regional Investment Incentives
Certain regions may offer reduced municipal rates or investment allowances. The government also provides targeted incentives for renewable energy, tourism infrastructure, and technology startups.
Depreciation
- Tangible assets: 8–30% per annum using declining balance method
- Intangible assets: Straight-line over useful life (typically 5–10 years)
- Goodwill: Amortized over 5–10 years
Loss Carryforward
Tax losses can be carried forward for 10 years. There is no carryback provision. Ownership changes may restrict loss utilization.
Taxable Income Calculation
All income from business activities is taxable. Deductions include operating expenses, depreciation, interest (subject to thin capitalization rules), and certain reserves.
Transfer Pricing
Iceland follows OECD transfer pricing guidelines. Transactions with related parties must be at arm's length. Documentation requirements apply for transactions exceeding thresholds.
Filing Deadline
Corporate tax returns must be filed by May 31 of the following year. Extensions are available in limited circumstances.