--- canonical: "https://euincnow.com/company-formation-iceland" dateModified: "2026-10-11" --- # Company Formation in Iceland: Types, Taxes and Costs Forming a company in Iceland takes about 1 to 3 weeks, with the electronic ehf. (private limited) registration processed in roughly 3 to 5 business days once documents are complete. The standard vehicle is the ehf., which needs ISK 500,000 (around EUR 3,400) of share capital paid in full before registration. Corporate income tax on an ehf. is a flat 20%, and standard VAT is 24%. ## Iceland at a glance - Iceland is outside the European Union. Its companies follow the jurisdiction's own incorporation rules. Compare company types, capital, tax, timing and signing requirements before you choose. The proposed 28th Regime (EU Inc) is a separate option that is not available yet. ### 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. * Company formation in Iceland: key facts (last reviewed July 2026) - 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. - Dividends & payroll taxes Dividends carry the 22% capital income tax. Personal income tax runs roughly 31% to 46% by bracket, and the employer contribution is a comparatively light 6.35%. - 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. * 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 - Step by step, this is how a Iceland formation actually runs: 1. **Engage a local agent.** Online registration needs Icelandic electronic ID, so foreign founders act through an agent under power of attorney. 2. **Draft the ehf. documents.** Articles and founding documents for the private limited company, with ISK 500,000 minimum capital. 3. **Register with Skatturinn.** The tax authority runs the company register; processing typically takes 1 to 3 weeks including the kennitala (ID number). 4. **Residency condition check.** Managers and the majority of the board must reside in the EEA, Switzerland or the Faroes, or apply for an exemption. 5. **Banking and VAT.** Open the corporate account with the registration number and kennitala; VAT registration applies past ISK 2,000,000 of turnover. ## What company formation in Iceland costs - The official tariff checked on 11 October 2026 lists ISK 140,500 for registering an ehf., plus the ISK 500,000 (about EUR 3,400) capital. Agent and translation costs add several hundred euros for non-residents. Accounting typically costs the equivalent of EUR 150 to 300 a month. ## Who can form a company in Iceland - Check ownership eligibility separately from director, local-address and licensing requirements. Permission to own shares does not automatically give you permission to live or work in Iceland. The director and residency information above identifies the main formation conditions to review. - Iceland fits ventures tied to its energy, data-centre or tourism economy and founders with EEA residence. Purely remote founders face e-ID, capital and cost hurdles without an offsetting tax advantage, so Iceland is chosen for presence, not paperwork. ## After registration: what Iceland expects each year - Annual financial statements are filed with the Directorate of Internal Revenue's company registry, and the corporate tax return follows the standard autumn cycle. VAT settles bi-monthly. Small companies below thresholds avoid audit, and the EEA residency condition for management is ongoing. ## Iceland and the 28th Regime (EU Inc) - EU Inc, the proposed 28th Regime, would add a harmonised company form in EU member states. Registration is not open and no launch date is confirmed. Iceland is outside the EU, so forming a company there does not make it an EU company or guarantee access to the proposed regime. Read how to prepare an EU Inc company, or compare current options in company formation in Europe. ## Sources and review scope - Use the linked registries, authorities and specialist references to check the requirements for your company. A review of formation costs and filings does not replace a review of your tax position. ### Topics checked - These dates apply to the named topics. Other figures and indicative service prices have separate review needs. * **Current ehf. registration tariff** Checked 11 October 2026. [Source 1][1] ### Reference links - [taxsummaries.pwc.com][2] - [skatturinn.is][3] - [skatturinn.is][1] ## Frequently asked questions ### Can a foreigner open a company in Iceland? - 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. ### How long does company formation in Iceland take? - 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. ### What corporate tax does a company in Iceland pay? - The headline summary is 20%, with standard VAT of 24%. Company form, activity, size and where the business operates can change the treatment. Read the detailed tax information and confirm the rules for your case. ### Can I form a company in Iceland remotely? - 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. ## Source URLs [1]: https://www.skatturinn.is/fyrirtaekjaskra/gjaldskra/ [2]: https://taxsummaries.pwc.com/iceland/corporate/taxes-on-corporate-income [3]: https://www.skatturinn.is/english/company-registration/register-a-company/private-limited-companies/