Iceland at a glance
Iceland is one of the EU jurisdictions founders most often use today, especially while the EU-wide 28th Regime (EU Inc) is still a proposal. Below are the verified essentials: company types, tax, capital, timing and whether you can set up remotely.
Company types in Iceland
- ehf. (einkahlutafelag), private limited The standard vehicle for founders. Limited liability, at least one shareholder and one director, ISK 500,000 minimum capital, taxed at 20%.
- hf. (hlutafelag), public limited For larger ventures or public capital. At least two founders, a three-member board and a manager, plus ISK 4 million minimum capital.
| Corporate tax | A flat 20% corporate income tax applies to private (ehf.) and public (hf.) limited companies. A temporary surcharge briefly lifted it to 21% in 2024 but it reverted to 20% for 2025 and 2026. |
|---|---|
| VAT rate | Standard VAT (VSK) is 24%, with a reduced 11% rate (accommodation, food, books) and 0% on exports. Registration is mandatory above ISK 2,000,000 of turnover, one of the lowest thresholds in the OECD. |
| Minimum share capital | ISK 500,000 (about EUR 3,400) for an ehf., paid in full before the company is recorded in the Register of Limited Companies. A hf. requires ISK 4 million. |
| Setup time | Roughly 1 to 3 weeks. An electronic ehf. application is processed in about 3 to 5 business days; non-residents should add time to obtain an Icelandic ID number (kennitala) for each founder and director. |
| Remote setup | Possible but rarely fully self-service. Online registration needs Icelandic electronic ID, which foreigners usually lack, so remote formation runs through a local agent under power of attorney, with paper filing after each person obtains a kennitala. |
| Director / residency | At least half the board and the managing director must reside in Iceland or another EEA or EFTA state, but a general exemption covers citizens of any OECD country who also reside in an OECD country, which fits most founders from the EU, US and UK. |
| Banking options | Main banks are Landsbankinn, Islandsbanki and Arion Bank; opening a business account needs the registration number, kennitala and KYC, and can be slow for non-residents. Wise is used as an interim account. |
| Our formation service | from around €100 to €200 (estimated). You get a fixed quote in your free plan before you commit. |
Iceland is not an EU member; it is in the EEA and EFTA (with Norway and Liechtenstein), giving full single-market access without EU membership, so an Icelandic ehf. sits just outside the EU Inc / 28th Regime while still accessing the single market. The currency is the Icelandic krona.
How to register a company in Iceland
The process is straightforward and, in Iceland, largely digital. In outline:
- Choose your company type and name. Most founders pick the ehf. (private limited); we confirm the name is available.
- Verify your identity. Possible but rarely fully self-service. Online registration needs Icelandic electronic ID, which foreigners usually lack, so remote formation runs through a local agent under power of attorney, with paper filing after each person obtains a kennitala.
- File the incorporation. Once documents are signed, registration usually completes in around 1-3 weeks.
- Open a business account and register for tax/VAT. Main banks are Landsbankinn, Islandsbanki and Arion Bank; opening a business account needs the registration number, kennitala and KYC, and can be slow for non-residents. Wise is used as an interim account.
We handle each step with licensed local counsel, so the paperwork, registered address and filings are done correctly the first time.
Form your Icelandic company in days
Tell us where you live and what you are building. Our formation service starts from around €100 to €200 (estimated); we confirm the right structure for Iceland, give you a fixed quote, and form the company with licensed counsel.
Get your free planWho can form a company in Iceland
Founders from outside the EU can own and run an Icelandic company, with the cross-border requirements handled for you. We flag any residency or local-agent rule for Iceland up front, so there are no surprises.
Iceland and the 28th Regime (EU Inc)
EU Inc, the proposed 28th Regime, would let you register one company valid across all 27 EU member states. It is not law yet (expected around 2027-2028), so an Icelandic company is one of the ready options you can use today. Forming an EU company now also positions you to adopt EU Inc later, as we cover in how to prepare an EU Inc company. To weigh Iceland against other countries, see company formation in Europe.