Company formation in Iceland in 2026

Updated 7 October 2026

A private limited company with capital from $4,100, registration with the tax authority's company register in 3-5 working days for an electronic filing and 20% corporate tax.

Iceland is part of the European Economic Area: an Icelandic company operates in the EU single market, although the country itself is not in the EU. A private limited company is formed with capital of at least $4,100, and all of it must be paid in at formation. The fee of the tax authority's company register is about $1,200. The register processes an electronic application in 3-5 working days and a paper one in 2-3 weeks. Corporate tax is 20% and VAT is 24%.

If you are looking to buy a ready-made company in Iceland, bear in mind that taking over shares in an existing company requires checking its history and debts, while a new company with a clean record is usually faster and more reliable for the bank.

Who an Icelandic company suits

An Icelandic company is opened for business in the country itself: tourism and hotels, data centres on renewable energy, software and game development, film production and research. It operates in the EU single market and settles in krona, euros and dollars.

It does not work as a company with no activity in the country. All documents are filed in Icelandic, management needs an Icelandic ID number, most directors must live in Iceland or the European Economic Area, and a bank will open an account only after checking the owners.

Requirements and documents

One person or one company can form the company. With four or fewer shareholders the board may consist of one or two people; a sole director may also be the managing director, but then at least one alternate is elected.

Managing directors and at least half of the board members must live in Iceland. The condition does not apply to citizens of European Economic Area states and people who live in the area, or to citizens of European Free Trade Association states and residents of the Faroe Islands. Others need an exemption from the minister.

• a notice of establishment on the register's form;
• the memorandum of association, the articles and the minutes of the founding meeting;
• a notification of beneficial owners signed by a majority of the board;
• proof that the capital has been paid, and for a non-cash contribution a statement from a lawyer or an auditor;
• Icelandic ID numbers of the directors, the managing director and procuration holders; for a foreigner the register requests a system ID number;
• documents of a corporate founder, with a translation.

All company documents are drawn up in Icelandic. Electronic filing is available only if every party to the application has an Icelandic electronic ID; otherwise the documents are sent to the register as scans.

How to register a company in Iceland: steps and timelines

Original documents do not have to be filed with the register: scans are accepted. An account with an Icelandic bank is the longest link for a foreign founder, so we prepare the source of funds file in advance.

How much does it cost to open a company in Iceland in 2026

Amounts are converted to dollars at the market rate of 7 October 2026 and rounded up.

A turnkey package with an address, a secretary, first-year fees and apostilled documents is in the price table below; a manager will calculate the total for your structure in the chat.

What taxes a company pays in Iceland

• Corporate tax is 20%.
• VAT is 24%, with a reduced rate of 11%. Registration is compulsory once sales over 12 months exceed $17,000.
• Employer contributions on employees' salaries.
• Dividends to a foreign owner are taxed at source; double tax treaties reduce the rate.

Why registration gets delayed

• The capital is not fully paid, or a non-cash contribution is not confirmed by a lawyer or an auditor.
• A director has no Icelandic ID number, or the board residence condition is not met.
• Beneficial ownership details are missing or do not match the documents.
• The bank will not open an account without a detailed source of funds file.
• Documents are not translated into Icelandic, or the signatory's authority is not proven.

Restrictions for certain nationalities

A national of any country can be the founder of an Icelandic company. The restriction concerns management: a director who is neither a citizen of a European Economic Area state nor lives in the area needs an exemption from the minister. Without it, a director who meets the condition is appointed to the board.

Certain sectors are closed or restricted for foreign investors. Fishing and primary fish processing may be owned only by companies under Icelandic control, rights to hydro and geothermal energy only by residents and companies of the European Economic Area, and in airlines the share of investors from outside the area is capped at 49%.

Iceland has joined the European Union's sanctions against Russia and Belarus, so banks check owners from these countries more strictly and for longer. We check whether such owners can be served before the documents are prepared.

Annual obligations of an Icelandic company

• The annual accounts are filed with the tax authority's register of annual accounts no later than 8 months after the financial year end; for a calendar year that is 31 August.
• For annual accounts that are not filed or are incomplete the tax authority imposes an administrative fine of $5,000.
• The company's tax return is filed with Iceland's tax authority.
• VAT and employer returns follow the tax authority's schedule.
• Changes to the board, address and beneficial owners are reported to the company register.

We keep the books and filings together with registration so that the annual accounts are not late.

What we do

We prepare the founding documents and the articles in Icelandic, obtain ID numbers for management, help with the bank for paying in the capital, file the application with the register, provide a registered address and a secretary and handle VAT registration. Prices for each service are in the table below.

Fees

See also

Business account · Personal account · Investment property · Country taxes · All country programs

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