For EU/EEA citizens
If you are a citizen of an EU/EEA country, you do not need to apply for a work permit. However, depending on the time you spend in Iceland, you may need to register your stay with the Immigration Service and obtain a national identification number, which is also done at the time of registration.
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For non-EU/EEA nationals
Non-EU/EEA nationals must apply for a work and residence permit in order to work in Iceland. For most individuals, it is best to apply for a permit based on professional qualifications. To obtain this permit, you must have specialized skills and an employment contract for the position. Once this permit is approved, you can apply for a work visa.
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What are the conditions for obtaining a work permit?
The following conditions must always be met in order for the Office of the Polish Labor Office to issue a work permit:
- An application for a work permit signed by the employer and the foreigner
- An employment contract between the employer and the foreigner signed by the employer and the foreigner
- An opinion of the relevant trade union.
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What documents do I need to submit to obtain a work permit?
- Your application for a work permit, which requires expert knowledge. Please make sure that the application form is filled out completely and that the relevant Icelandic trade union has confirmed that the terms and conditions of employment are in accordance with Icelandic collective bargaining agreements.
- An employment contract between you and your employer, which contains information about your position, job description, and the pension fund to which you will contribute. Your working conditions should be similar to those of other experts in your field.
- A certified copy of your diploma(s) in Icelandic or English.
- If your expert knowledge is based on extensive experience, you should include evidence of previous work regarding your positions, responsibilities, and duration of work.
- Information about your employer's attempts to hire a citizen of Iceland, the EEA, EFTA or the Faroe Islands before hiring you must be provided by your employer.
- Confirmation that your employer will pay for your return to a specific country if your contract is terminated for reasons beyond your control or if you become unable to work due to illness or accident.
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What is the process of applying for a work permit?
Applications for a work permit must be submitted by the prospective employer to the Office of the Immigration Officer together with the required supporting documentation. If the Office of Immigration finds that the conditions for issuing a residence permit are met, the application is forwarded to the Office of Labor for issuing a work permit.
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Is it possible to obtain an extension of a work permit?
An application for an extension of a temporary work permit must be submitted to the Office of Immigration four weeks before the expiration date. After the extension, all the conditions of the temporary work permit must be fulfilled, and the employer must pay tax and social security contributions in accordance with the legislation on the foreigner's work.
The EU Blue Card allows third-country nationals with higher education to be employed in Iceland according to their qualifications.
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What documents do I need to provide to obtain an EU Blue Card?
1. Application form.
Completely filled in in English or Icelandic with the applicant's signature and date
2. Passport.
- Valid for at least six months after the date of your departure from Iceland and not older than 10 years.
3. Three photos
4. A copy of the identity card
- Valid for at least three months after the date of your departure from Iceland.
5. Copy of residence permit/visa (if your country of residence and citizenship are different)
6. Photocopies of
- Copy of the main page of your passport
- Copies of previous Schengen visa/residence permit in Iceland
7. Proof of employment in Iceland
- Employment Agreement or Contract/Binding Job Offer - contains the terms and conditions of employment with detailed information on the gross annual salary
- Deputation order - confirmation of the assignment, including basic information and reason for the assignment
8. Job description
- Format provided by the Employment Office or the company itself
9. Proof of qualifications
- General employment - all higher degrees and a certificate of vocational training are required
- Candidate for an EU Blue Card - Icelandic university degree or a recognized foreign university and a foreign degree comparable to the Icelandic one.
10. Curriculum vitae (CV) of your professional career, indicating the certificates, diplomas and qualifications you have obtained
11. Proof of residence
- Accommodation (if not specified in the invitation or contract) - a confirmed reservation of accommodation (hotel, hostel, apartment) with the applicant's name, date and address of residence.
12. Police report
A document not older than six months, which confirms that you have not committed any criminal activity in the last 5 years.
13. Proof of financial capabilities (if the company is not sponsoring the trip)
- A personal bank statement for at least the last 6 months prior to application, personal property, assets, etc.
14. Health insurance
- You must purchase health insurance with an insurance company authorized to operate in Iceland with a validity period of one year. Travel insurance is not accepted.
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What is the processing time for the EU Blue Card?
The average processing time for an EU Blue Card is 10-60 calendar days.
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Where do I apply for the EU Blue Card?
You should apply for your EU Blue Card at an Icelandic visa application center, embassy or consulate, depending on which one accepts visa applications in your country of residence. If your country does not have one, you should contact the nearest embassy or consulate to your place of residence.
Types of business entities available for company registration in Iceland
Before you start registering a company in Iceland, it is important to understand what types of companies exist in this country.
The business structure you choose affects everything from day-to-day operations to taxes, as well as how much of your personal assets are at risk. You should choose a business structure that provides you with the right balance of legal protection and benefits. Your business structure affects how much you pay in taxes, your ability to raise money, the number of documents you need to file, and your personal liability.
Sole proprietorship or private company
A self-employed business is run by an individual. The requirements are quite simple, and the independence of the owner is an advantage of this type of business. The owner's liability is direct and unlimited, which means that this form of company is not suitable for large, high-risk businesses.
Private Limited Company (Einkahlutafélög (ehf.))
- A limited liability company is one of the most common legal forms for foreign investors planning to register a company in Iceland. In a limited liability company, the directors are not personally liable for any debts or obligations incurred by the business. They are only liable up to a certain amount of declared liability insurance. These companies provide for different classes of members who have certain rights, powers, and obligations.
- The requirements for registering a private limited liability company include the presence of at least one or more members and managers. The residency requirements in Iceland for the establishment of an LLC are strict, so there is a requirement to have at least one shareholder and one director or a majority of the board members, as well as the managing director, who must be domiciled or resident in Iceland or within the EU under the European Economic Area agreement or within an OECD country. In addition, when establishing an LLC, each corporation must have a registered office and a registered agent.
- Establishing a limited liability company in Iceland has many inherent advantages, such as low start-up costs, minimal establishment requirements, and enhanced privacy protection.
- You may consider it a simple and inexpensive option for structuring your small business. By choosing a limited liability company structure, you can protect your personal assets while avoiding the costs and complexities that can be associated with corporations. While the structural differences between a limited liability company and a corporation may be minimal, there are still several factors you should consider. The profits and losses of a limited liability company are passed through to the individual owners and are taxed independently of the corporation. This scheme is different from how a corporation is taxed.
- Accordingly, a private limited liability company may have one or more shareholders, and upon its establishment, the required minimum share capital, including the registration fee, is paid to the RSK (Internal Revenue Authority/Unit of the Companies Register).
- The share capital requirement for a private limited company is ISK 500,000.
- A private limited company can be incorporated with at least one shareholder. When establishing a private limited liability company with one shareholder, the memorandum of association, as well as the VAT certificate/payroll, articles of association (stofnskrá), board resolution (samþykktir), and the notice of establishment of a public limited liability company (PLC) must be submitted to RSK.
- If a private limited liability company has two or more shareholders, a board of directors must be established. The process is basically the same, there is a slight difference in the documentation that must be submitted regarding the approval of the board of directors and signatures.
Hlutafélög limited liability company (Icelandic)
- A limited liability company is used by large companies that seek capital from multiple investors. The laws and regulations governing public limited companies are similar to those governing private limited companies, but in some respects are stricter.
- The procedure for establishing a public limited company in Iceland is very similar to the procedure for establishing a private limited company. However, there are some important differences.
- The authorized capital requirement for a public limited company is 4 million ISK.
- A public limited company must have two or more shareholders and a Board of Directors consisting of at least three directors. At least one shareholder and one director of the limited liability company or a majority of the board of directors, as well as the managing director, must be residents or residents of Iceland or EU countries within the European Economic Area agreement or OECD countries. The Ministry of Culture and Business may grant an exception to the residency requirement.
Partnership companies - Sameignarfélög (sf.)
- To establish a partnership company, the founders must be two or more partners, both natural and legal persons. The liability of all partners is direct and unlimited. Direct liability means that the creditors are positioned in such a way that they can enforce their claims directly against the personal property of the owners. Undivided ownership of the owners effectively means that each owner of the company guarantees all of its debts, and in the case of an unlimited guarantee, it means that the owners do so with all of their assets.
- The main advantages of these forms of incorporation are that the start-up costs are not high and the legal environment is fairly simple, the company is easy to liquidate, there are sufficient resources for withdrawal of funds, and taxation is somewhat favorable if profits are generated. Requires owner's liability, but it is very comprehensive, as it covers the obligations that the co-owners assume on behalf of the company.
Limited partnership
This form of company is a combination of a partnership and a private limited liability company, requiring at least one owner to have unlimited liability. The liabilities of the other owners may be limited. The Fellowship form has become quite popular due to legislative changes in the taxation of dividends and distribution of company funds.
Private funds
These funds are not owned by the participants. They are created with certain obligations and are used to achieve a specific goal. This type of fund is common when establishing non-profit organizations or charitable foundations.
Branch office
A type of commercial presence of foreign companies in Iceland that is subject to the same conditions as local companies. A branch can carry out the same activities as a foreign company. In this case, registration and a resident director are required.
Representative office
A type of non-commercial presence in Iceland for carrying out mainly advertising activities.
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How to register a company in Iceland?
In order to register your business in Iceland, you must follow these steps:
Step 1: Choosing the optimal business structure
Step 2: Fulfill the registration requirements
Depending on the structure of your business, you will need to fulfill certain pre-registration requirements. Some of them include the following:
- One director and shareholder who is a local resident
- A registered local office address
You will also need to prepare certain documents, including the following:
- Articles of association
- Business plan
- Company constitution
- Personal information of directors and shareholders
Step 3: Reserving the company name
To proceed with the incorporation process, you need to reserve a company name in the Business Register, which is maintained by the Icelandic Tax Administration.
Step 4: Preparing and submitting the relevant documents for company registration in Iceland
Once your company name is reserved, you need to start preparing the relevant corporate documents, such as the appropriate forms and articles of association required for company incorporation in Iceland.
Once the relevant documents are prepared, register your company with the Icelandic Companies Registry.
Upon successful registration of your company, you will be sent a Certificate of Incorporation and a certified copy of the Articles of Association.
Step 5: Open a corporate bank account
Simultaneously with the company registration, you need to open a corporate bank account to deposit the minimum capital.
You need to collect the necessary documents and open a corporate bank account in a reputable bank of your choice.
After successfully opening a bank account, you will be sent an internet banking token and access codes.
Step 6: Apply for a business license
For certain types of business, such as manufacturing, you need to obtain a business license if you are carrying out such activities in Iceland or are registered in Iceland.
Step 7: Tax registration
When you establish a business entity in Iceland, you are required to apply for a VAT identification number from the Icelandic Revenue and Customs Authority (Inland Revenue).
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Annual reporting and tax requirements
Corporate income tax returns are due on May 31 of each year, regardless of whether the company chooses an individual tax year.
Iceland has rules on controlled foreign companies and transfer pricing with country-specific reporting requirements. Your company must comply with these rules.
Iceland allows corporations to carry forward net operating losses for up to 10 years. However, loss carryforwards are not allowed
Tax incentives are available for companies engaged in research and development.
Corporate tax
Companies in Iceland are required to pay income tax at a rate of 20% of annual profits. A non-resident company is taxed only on income earned in Iceland. A resident company is taxed on income earned anywhere in the world. However, an Icelandic company can apply for an exemption from income tax if Iceland has signed a double taxation treaty with the country of residence of the business owner.
A company that has net operating losses can carry them forward for up to 10 years
VAT.
In Iceland, VAT on goods is 24% and must be paid every two months. This does not apply to export goods, which are 100% exempt from VAT
Personal income tax
Withholding tax is levied at a flat rate of 20% on dividends, interest and royalties.
Other tax aspects
- Capital gains from non-business property and alienation of shares are taxed as investment income at a progressive rate of 22.9% to 31.8%;
- Social security contributions are withheld from all employee wages and salaries at a rate of 7.6%.
- Personal income tax rates range from 37% to 46%.
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What documents are required to register a company in Iceland?
The following documents are required to register a company in Iceland, including but not limited to:
- Company name
- Details of the company's registered address
- Articles of association and other corporate documents
- Information and identity documents of all potential managing directors, supervisory directors and any existing trustees
- Description of the company (purpose)
- Minutes of the company's board of directors deciding to register the company in Iceland
- Board of Directors' decision to open a corporate bank account.
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An Icelandic business visa is a short-term residence permit that allows a person to enter Iceland and engage in business. It is a type of Schengen visa for Iceland. It allows its holder to stay in Iceland and the rest of the Schengen countries for a maximum of 90 days within a six-month period.
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What documents do I need to provide to obtain a business visa?
1. Application form for a business visa to Iceland
2. Two passport size photos
3. Your valid passport
- With at least two blank pages, valid for another three months after the date of departure from Iceland and issued within the last 10 years.
4. A copy of the passport pages
5. Full itinerary of your trip to Iceland
- This document must include the name of your flight, departure/arrival time, as well as dates, your flight code and flight reservation numbers
6. Travel medical insurance covering your entire stay in Iceland
- For any medical incidents in Iceland and the entire Schengen area with a minimum coverage of 30,000 euros.
7. Proof of employment status
- Such as an employment contract, bank statements, etc.
8. Proof of financial means
- Bank statements confirming that you have about 29 euros for each day you plan to spend in Iceland.
9. A cover letter from the sending organization/company containing the following information:
- Your name and position
- A description of your itinerary, purpose of the visit, names and addresses of the companies you are going to visit, period and place of your expected stay
- A signed letter of invitation from the company in Iceland containing your name, purpose of the visit, dates of your intended stay, nature of the expenses to be covered.
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How much does a business visa to Iceland cost?
The fee for a business visa to Iceland is 90 euros.
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How long can I stay in Iceland with a business visa?
The maximum period of stay in Iceland with a business visa is 90 days within six months.
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How do I get a multiple entry business visa for Iceland?
If you plan to travel to Iceland more often and do not want to apply for a visa every time, you can apply for a multiple entry visa. Usually, this visa is issued to businessmen who have frequently visited Iceland or other Schengen countries in the last two or three years. However, you can try to get such a visa even if you have started traveling to Iceland quite recently.
If you already have business activities planned for the coming months, you can provide proof of these activities in the form of:
- Invitations to each activity
- A booked ticket for each trip to Iceland
- Hotel reservations for each trip
If you do this, the embassy may issue you a multiple entry visa with a longer validity period.
Iceland