The Icelandic parliament is considering a draft bill that aims to introduce change in its taxation policy. If passed, this legislation will grant an exemption on capital gains derived from the sale of shares in Icelandic companies to non-residents.
The exemption will apply to both legal entities and natural persons who meet specific criteria:
- Tax residence requirement: Non-residents seeking the exemption must not have had tax residence in Iceland during the five years preceding the share sale.
- Ownership threshold: To qualify, non-residents must directly or indirectly own less than 25% of the capital of the Icelandic company.
Additionally, the draft proposes the repeal of the 10-year loss carry forward limit. If enacted, this change will allow losses to be carried forward indefinitely for offset in future years.
It is important to note that losses generated in operating years ending in 2024, or earlier, will still be subject to the existing 10-year limit.
The proposal aims to attract foreign investment and enhance Iceland’s business climate.
