Iceland VAT Calculator
How Much Is VAT in Iceland?
The standard VAT rate in Iceland is 24% in 2026. Other rates: 11% — Food and catering, alcoholic beverages, hotel and guesthouse stays under one month, campsites, tour operator and guide services, non-exempt passenger transport, books, newspapers, music recordings, radio/TV subscriptions, road tunnels, spas and saunas, condoms and reusable diapers; 0% — Exports of goods and certain services supplied abroad. Locally the tax is called Virdisaukaskattur (VSK). Standard VAT/GST rates worldwide range from around 5% to 27%.
How to calculate Iceland VAT
To add 24% VAT to a net (tax-exclusive) price, multiply it by 1.24. To remove VAT from a gross (tax-inclusive) price, divide it by 1.24.
- Add VAT: ISK 100 net × 1.24 = ISK 124 gross (that is ISK 24 of VAT)
- Remove VAT: ISK 124 gross ÷ 1.24 = ISK 100 net (that is ISK 24 of VAT)
Use the Iceland VAT calculator above for any amount, or compare Iceland with every other country in our VAT rates by country table.
Iceland VAT Rates Overview
Every VAT rate currently in force in Iceland
Current VAT Rates (2026)
| Rate type | Rate | Applies to |
|---|---|---|
| Standard rate | 24% | Most goods and services |
| Reduced rate | 11% | Food and catering, alcoholic beverages, hotel and guesthouse stays under one month, campsites, tour operator and guide services, non-exempt passenger transport, books, newspapers, music recordings, radio/TV subscriptions, road tunnels, spas and saunas, condoms and reusable diapers |
| Zero rate | 0% | Exports of goods and certain services supplied abroad |
VAT History and Local Rules in Iceland
How the rates got here, and country-specific points to watch
Key VAT milestones
- 2016: Many tourism services, such as tours and excursions, brought into the VAT system at 11%
- 2015: Standard rate cut from 25.5% to 24%; reduced rate raised from 7% to 11%
- 1990: VAT introduced, replacing the sales tax
Is the VAT rate the same everywhere in Iceland?
Yes, the same VAT rates apply throughout Iceland; there are no territories with special VAT treatment.
Good to know
Iceland is not in the EU, so EU OSS rules do not apply; it runs its own VOES scheme for foreign digital service providers.
Unusually, alcoholic beverages sold in restaurants and shops are taxed at the 11% reduced rate, although they also carry heavy alcohol excise duties.
Short-term accommodation hosts, including private home rentals, must charge 11% VAT once rental income exceeds ISK 2,000,000 a year.
Zero-Rated and Exempt Supplies in Iceland
The difference matters: zero-rating keeps input-VAT recovery, exemption does not
Zero-rated supplies (0%)
VAT is charged at 0%, but the seller can still recover input VAT on related costs:
- Exports of goods
- Services used abroad
- International passenger and goods transport
VAT-exempt supplies
No VAT is charged, and the seller generally cannot recover input VAT on related costs:
- Healthcare, hospital and dental services
- Education
- Banking and insurance services
- Letting of real property for more than one month
- Public transport and postal services
- Libraries, museums, sports activities and funeral services
Iceland VAT Registration & Compliance
Key facts for businesses registering for and reporting VAT in Iceland.
| Local name | Virdisaukaskattur (VSK) |
|---|---|
| VAT number format | VAT (VSK) registration number issued by Skatturinn; businesses also hold a 10-digit kennitala |
| Registration threshold | ISK 2,000,000 taxable turnover in a 12-month period |
| Non-resident businesses | Foreign businesses making taxable supplies in Iceland register above the same threshold, generally through a local representative; foreign e-service providers use the simplified VOES system |
| Filing frequency | Bi-monthly (Jan-Feb, Mar-Apr, etc.); annual for turnover under ISK 4,000,000; monthly in some cases |
| Filing and payment deadline | 5th day of the second month after the end of the period (one month and five days) |
| E-invoicing / reporting | No general B2B e-invoicing mandate in 2026 |
| Tax authority | Skatturinn (Iceland Revenue and Customs) |
Thresholds, deadlines and e-invoicing rules are revised regularly. Always confirm current requirements with Skatturinn (Iceland Revenue and Customs) before relying on them.
Cross-Border Sales and Refunds in Iceland
Selling into the country from abroad, and getting VAT back
Cross-border rules
Digital services and e-commerce: Foreign providers of electronically supplied services to Icelandic consumers must register in the simplified VOES scheme once sales exceed ISK 2,000,000 in 12 months and charge Icelandic VAT.
Tourist VAT refunds: Non-residents can reclaim VAT on goods exported within three months when a single receipt totals at least ISK 12,000 including VAT.
For the general rules, see the reverse charge mechanism, VAT on digital services, VAT invoice requirements and VAT refunds for tourists and businesses.
Compare VAT Rates
VAT rates in neighboring and similar economies
Nearby Countries
🇬🇧 United Kingdom
Standard Rate: 20%
🇨🇭 Switzerland
Standard Rate: 8.1%
🇳🇴 Norway
Standard Rate: 25%
🇷🇸 Serbia
Standard Rate: 20%
Frequently Asked Questions
Common questions about VAT in Iceland
What is the current VAT rate in Iceland?
The standard VAT rate in Iceland is 24% in 2026. Other rates in force: 11% (reduced rate), 0% (zero rate). See the rates table above for exactly what each rate covers.
How do I calculate VAT in Iceland?
To add 24% VAT, multiply the net price by 1.24. To remove it from a VAT-inclusive price, divide by 1.24; the difference is the VAT. The calculator at the top of this page does both.
Can tourists get a VAT refund in Iceland?
Yes. Visitors resident abroad can reclaim VAT on goods taken out of Iceland if a single receipt totals at least ISK 12,000 including VAT.
What is the VAT registration threshold in Iceland?
Businesses must register once taxable sales exceed ISK 2,000,000 in a 12-month period. The same threshold applies to foreign digital service providers under VOES.
Sources
Official and professional references used for this page
Where these figures come from
Last reviewed on 27 September 2026.