How do I start a business in Iceland?

To start a business in Iceland, follow 6 steps: Obtain kennitala (national ID), Draft and sign articles of association, Deposit share capital, Register with the Registry of Enterprises, Register for VAT and tax, Register employer with the Directorate of Internal Revenue. The process takes approximately 41 days and costs around $800 USD.

What types of business entities can I register in Iceland?

Iceland offers 4 entity types: Private Limited Company (min capital: $500000, foreign ownership: 100%); Public Limited Company (min capital: $4000000, foreign ownership: 100%); Branch of Foreign Company (min capital: $0, foreign ownership: 100%); Sole Proprietorship (min capital: $0, foreign ownership: 100%).

Can foreigners own a business in Iceland?

Yes, foreigners can own businesses in Iceland. Private Limited Company allows up to 100% foreign ownership. Public Limited Company allows up to 100% foreign ownership. Branch of Foreign Company allows up to 100% foreign ownership. Sole Proprietorship allows up to 100% foreign ownership.

What is the minimum wage in Iceland?

The minimum wage in Iceland is $3100/month (USD). Average monthly wage is approximately $5400. Standard work week is 40 hours with 24 paid leave days per year.

How much does it cost to run a business in Iceland?

Estimated monthly overhead for a small business (5-10 employees) in Iceland is approximately $25000. Office rent averages $32/sqm/month. Skilled workers average $6500/month. Typical break-even: Tech 16 months, Services 12 months, Retail 18 months.

Countries IcelandBusiness Guide

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Start a Business in Iceland

Complete guide: entity types, registration, costs, taxes, labor laws, and break-even analysis

~41 days

Setup Time

~$800

Setup Cost

20%

Corporate Tax

100%

Foreign Ownership

#26

Ease of Business

Entity Types

Entity	Min Capital	Foreign %	Liability	Min Shareholders	Best For
Private Limited Company Einkahlutafelag (ehf)	500,000 ISK	100%	Limited	1	Most common entity for foreign investors - ISK 500,000 (~USD 3,600) minimum capital, full foreign ownership, simple governance
Public Limited Company Hlutafelag (hf)	4,000,000 ISK	100%	Limited	2	Larger enterprises and Nasdaq Iceland-listed companies
Branch of Foreign Company	None	100%	Unlimited	0	Foreign companies extending operations - parent retains liability but no separate capital required
Sole Proprietorship Einstaklingsfyrirtaeki	None	100%	Unlimited	1	Solo operators - limited to those with Icelandic personal ID number (kennitala)

Registration Steps

Obtain kennitala (national ID)

Foreign founders apply for a kennitala (Icelandic national ID number) through Registers Iceland; required for all official filings

5-14 days

Free

Registers Iceland (Thjodskra Islands)

Draft and sign articles of association

Prepare articles in Icelandic or English with Icelandic translation; signatures must be witnessed by two adults or a notary

1-5 days

~$200

Private legal counsel

Deposit share capital

Open a temporary capital account with an Icelandic bank and deposit at least ISK 500,000 for an ehf or ISK 4,000,000 for an hf

1-7 days

Free

Commercial Bank

File articles, capital confirmation, and director appointments with the Registry of Enterprises (Fyrirtaekjaskra)

3-7 days

~$600

Registry of Enterprises (Skatturinn)

1-5 days

Free

Iceland Revenue and Customs (Skatturinn)

1-3 days

Free

Directorate of Internal Revenue

Total Estimated

41 days max$800

Tax Framework

Corporate Income Tax20%

Standard 20% on private limited companies (ehf and hf). Partnerships and sole proprietors taxed at 37.6%. Reduced 5% rate on innovation R&D investments through the Icelandic Innovation Centre incentive scheme. Tonnage tax for shipping.

VSK24%

Personal Income Tax31.45-46.25%

Capital Gains Tax22%

Dividend Withholding22%

Tax Treaties47 countries

Tax Incentive Zones

Iceland Tax Investment Incentive Scheme provides cash grants up to 13% of investment plus reduced corporate tax of 15% (down from 20%) for qualifying projects. Film and audiovisual production benefits from a 35% cash rebate on Icelandic spend. Data centres benefit from low-cost renewable electricity (90%+ geothermal and hydroelectric). R&D tax credit of 35% on qualifying expenditure.

Labor Laws & Costs

$3100/mo

Minimum Wage

$5400/mo

Average Wage

40 hrs/week

Work Hours

24 days/year

Paid Leave

1 weeks/year

Severance

6.35% of salary

Employer Social Security

0% of salary

Employee Social Security

Required

Foreign Worker Permit

Foreign Worker Quota: EU/EEA citizens have free movement under the EEA agreement. Non-EEA workers need a work permit; specialised expert and athlete tracks are available with simplified processing.

Visa & Immigration

Schengen Business Visa (Type C)

Iceland is a Schengen member; short-stay business visa for non-EU citizens up to 90 days in any 180-day period. EU/EEA citizens enter freely.

8 weeks

Processing time

$600

Estimated cost

Specialist Residence Permit

Investor

Available to foreign nationals contributing scarce specialist skills to an Icelandic company; not a pure capital-based investor visa

Long-Term Visa for Remote Workers

Remote Work

180-day visa for non-EEA remote workers earning at least ISK 1,000,000 per month; introduced in 2020 and oriented toward high-income tech professionals

Work Permit Process: Employer applies for a work permit through the Directorate of Labour; intra-corporate transferee, specialist, and athlete tracks have streamlined processing

Business Environment

#26/190

Ease of Business Rank

9 days

Starting a Business

4 days

Registering Property

410 days

Enforcing Contracts

72/100

Corruption Perception

99%

Internet Penetration

ISK

Currency

UTC+0

Time Zone

GoodCould be betterHover a dot for the threshold and source. Sources: World Bank, Transparency International, ITU.

Icelandic

Investment Zones & Provinces

Reykjavik Tech and Creative Hub

Tech Hub

Reykjavik (capital region)

Incentives

Highest internet penetration in Europe (99%)35% cash rebate on film and audiovisual productionStrong gaming, music, and creative industries cluster

Key Sectors

Software and GamingFilm ProductionMusic and Creative MediaTourism Tech

35% film rebate plus R&D tax credits make Reykjavik competitive for creative and software production despite high wages

Keflavik / Reykjanes Data Centre Cluster

Industrial Park

Reykjanes peninsula (south-west Iceland)

Incentives

Among the cheapest electricity in OECD at USD 0.04-0.07 per kWh100% renewable energy (geothermal and hydroelectric)Cool climate reduces cooling costs by 40-60%Adjacent to Keflavik International Airport and submarine cables to Europe and North America

Key Sectors

Data CentresBitcoin MiningAI ComputeAluminium Smelting

Cheap renewable power and free natural cooling reduce data centre operating costs by 40-60% versus continental Europe

East Iceland Industrial and Renewable Cluster

Industrial Park

Reydarfjordur and Akureyri

Incentives

Iceland Tax Investment Incentive Scheme: cash grants up to 13% plus 15% corporate taxHydroelectric power supplyExisting aluminium smelter ecosystem

Key Sectors

Aluminium and MetalsRenewable EnergyAquacultureFish Processing

Combined cash grants and reduced 15% corporate tax can lower the effective tax burden by 30-40% for qualifying capital-intensive projects

Break-Even Analysis

Retail (months)

F&B (months)

Tech (months)

Manufacturing (months)

Services (months)

Typical Operating Costs in Iceland

Per-person or per-unit costs. Multiply by your team size for total estimates.

Office Rent	$32	per sqm/month
Skilled Worker Salary	$6,500	per 1 worker/month
Unskilled Worker Salary	$3,200	per 1 worker/month
Electricity	$0.07	per kWh
Business Internet	$50	per 1 connection/month
Est. Monthly Overhead (5-10 staff)	$25,000	total/month

Sources: World Bank Open Data, ILO, Numbeo Cost of Living Index, local government publications. Salaries reflect market averages and may vary by city, industry, and experience level. Last updated 2025.

Break-Even Calculator

Total Investment (USD)

Monthly Revenue (USD)

Monthly Costs (USD)

Tax rate applied: 20% (corporate rate)

Never

negative cash flow

-$8,000

monthly net profit

annual ROI

total cost to break even

Next Steps

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Key Considerations for Foreign Investors

Cheapest electricity in OECD at USD 0.04-0.07 per kWh from 100% renewable sources (geothermal and hydroelectric), making Iceland a global hub for data centres, Bitcoin mining, and aluminium smelting

Cool climate provides free natural cooling for data centres, reducing operating costs by 40-60% versus continental Europe

Tax Investment Incentive Scheme offers cash grants up to 13% plus reduced 15% corporate tax for qualifying capital-intensive projects

35% cash rebate on film and audiovisual production has attracted major Hollywood and streaming productions to Iceland

EEA membership provides full access to the EU single market without being an EU member, with passporting for financial services

Very high wages (skilled USD 6,500 per month average) make Iceland uncompetitive for labour-intensive operations; the model fits IP, capital, and energy-intensive businesses

Banking sector recovered fully after the 2008 collapse and capital controls were lifted in 2017; cross-border flows are now unrestricted

Last updated: 2025-Q4

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Start a Business in Iceland

Entity Types

Registration Steps

Tax Framework

Labor Laws & Costs

Visa & Immigration

Business Environment

Investment Zones & Provinces

Break-Even Analysis

Next Steps

Legal & Registration

Financial & Tax

Operational

Immigration & Visas

Key Considerations for Foreign Investors

Start a Business in Iceland

Entity Types

Registration Steps

Tax Framework

Labor Laws & Costs

Visa & Immigration

Business Environment

Investment Zones & Provinces

Break-Even Analysis

Next Steps

Legal & Registration

Financial & Tax

Operational

Immigration & Visas

Key Considerations for Foreign Investors