The tax-system in Iceland is very simple. Income tax is withheld by the employer. The amount withheld is calculated on the basis of employment income, including pensions and benefits in kind, after deducing pension premiums. The tax-system in Iceland is very simple:
- Income tax rate
There is a 35.72% tax on wages and salaries .
- Dividends and interests
There is a 10% tax on dividends and interests.
- Personal tax credits
All individual taxpayers are entitled to a personal tax credit against the computed income taxes on income. This credit amounts to ISK 385,800 for the year 2007 or ISK 32,150 for each month.
Corporations
Income tax rate
The corporate income tax rate for income year 2007 is 18% for companies and 26% for partnerships registered as taxable entities.
Dividends and interests
Dividends and interests paid to resident companies are subject to withholding tax of 10%. Taxes withheld are credited against the assessed income tax.
Yeah, sounds real bad for business and investments there!