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Iceland

Taxes, residence and daily life for people moving to Iceland: for a wealthy family, an expat employee and a remote worker. Researched .

Open Iceland in the interactive guide

At a glance

For an EU-citizen family of five living off a €30M portfolio, the guide's default reader. The interactive guide recomputes everything for other passports and situations.

Score for a wealthy family
79 / 100
Tax on a €30M portfolio
€204,540 a year · Investment holding company (einkahlutafélag, ehf.)
Wealth tax
none
Children inherit
taxed
After 60 years
€169,127,000 of €30,000,000 (with no tax at all: €286,928,000)
Living costs, family of five
€260,319 a year
EU member
no
Currency
ISK
Capital
Reykjavik

Tax on investments, inheritance and wealth

Moderate, simple regime: a flat 22% on capital gains and dividends, no wealth tax, and a flat 10% inheritance tax above a small per-estate allowance (ISK 6.79m in 2026). Advance inheritance during life is also 10% with no allowance. EEA member, so EU citizens can move freely; no investor visa.

Income tax for employees and remote workers

Three state brackets (16.55%, 23.05%, 31.35%) plus the 14.94% withholding municipal rate, giving 31.49%, 37.99% and 46.29% (PwC, 2026). The personal tax credit of ISK 72,492 a month (ISK 869,904 a year, Skatturinn) is modelled as a zero bracket of about ISK 2.76 million. Employee pension contribution 4%.

Inheritance law and trusts

Children are guaranteed a share of the estate that a will cannot remove. Iceland has no trust law and is outside the Hague Trusts Convention. Foundations exist as self-owned institutions.

Daily life, scored out of 100

From public indicators (World Bank, UNDP, Transparency International and others); higher is better.

MeasureScore
Safety and personal security76
Political and institutional stability76
Corruption and government integrity81
Legal system and property rights81
Healthcare quality and access90
Education quality47
Human development and quality of life94
Infrastructure and connectivity87
Cost of living and housing66
Business opportunities and economy81

Research notes

Iceland — family-office tax dossier

Last reviewed: 2026-10-16 Tax year: 2026 Reviewer: research agent (Claude), unreviewed by a tax adviser

Summary

Flat 22% capital income tax on gains and dividends, no wealth tax, 10% inheritance tax above ISK 6,789,790 per estate (2026). Advance inheritance during life: 10% with no allowance. EEA member; no investor visa.

Residence and eligibility

Resident after more than 183 days in any 12-month period, from arrival. Former residents stay fully liable for 3 years after leaving unless they prove tax liability elsewhere (PwC). EU/EEA citizens: free movement; others need a permit (not verified in detail).

Capital gains

Capital income tax (fjármagnstekjuskattur) 22% on nominal gains (Skatturinn 2026 figures; PwC). Combined ISK 300,000 per person (600,000 per couple) allowance for interest, dividends and listed-share gains. Residential property owned over 2 years exempt. JSON: 0.22 for all categories. No exit tax found. Business trading income would be taxed at progressive rates (top 46.29% in 2026).

Dividends

22% flat; foreign WHT credited. JSON 0.22 domestic and foreign. Outbound WHT: 22% to all recipients except non-resident legal entities (20%) and resident companies (0%), reduced by treaty (KPMG Icelandic Tax Facts 2026, s. 8.1.1; corrected 2026-10-16, the file said 20% for non-resident individuals); about 45 treaties. 2026 change: leftover personal allowance can no longer offset capital income tax (Government of Iceland, 23 Dec 2025). Rental income allowance fell from 50% to 25%.

Inheritance and gifts to children

Act no. 14/2004 on inheritance tax: 10% of the estate's taxable base above ISK 6,789,790 (deaths in 2026; 2025: ISK 6,498,129), indexed to the consumer price index by law at the start of each year (Act 14/2004 art. 2(2); thresholds_indexed set true; the statutory base is ISK 5,000,000), shared among heirs by inheritance share; tax is charged on all assets passing to heirs when the estate is divided (art. 1(1)), so a foreign portfolio is in scope; spouse exempt (Skatturinn, Government of Iceland, island.is). JSON: basis estate, exemption 6,789,790, 10% bracket. Prepaid (advance) inheritance: 10% of full value, no allowance, debts not deductible (island.is). Treatment of other gifts (possibly taxable income of recipient) unverified. Abolition proposals in Althingi not passed.

Wealth tax

None (PwC). Municipal property tax on real estate is separate.

Special regimes

None for new residents.

Holding structures

Modelled: investment holding company (`ehf_holding`, type `structure`). The parents own an Icelandic ehf. that holds the portfolio. Company income tax is 20% (PwC), but dividends received are deductible (from foreign companies if their profits are taxed abroad at a rate not below the general rate in any OECD/EEA/EFTA state, UK or Faroe Islands) and gains on shares are deductible in full with 0% effect (KPMG Icelandic Tax Facts 2026, s. 3.5.1, 3.7.2; Income Tax Act No. 90/2003 art. 31, article not opened). Foreign withholding is not creditable. Losses on shares are not deductible except against share gains in the same year. Distributions to resident individuals bear 22% final withholding (s. 8.1.1); liquidation surplus over the purchase price is dividend. CFC rules apply to low-tax companies (CIT below two-thirds of 20%). No running cost is recorded (not sourced). Not modelled: private foundation (Icelandic foundations, sjálfseignarstofnun, are for stated purposes, not family wealth) and trusts (not an Icelandic form).

Company taxation (kept separate from personal tax)

CIT 20%, unchanged for 2026. Dividend WHT 20% to non-residents.

Cost of living notes

City: Reykjavik.

Open questions

Sources

Change log

Residence and succession sources

Tax sources are cited in the research notes above.