On 6 May 2020, the Icelandic Parliament passed a Bill No.1329 amending income, withholding, excise, and VAT laws. The bill includes the amendments for corporate taxpayers in relation to the ISK 100 million safe harbor threshold for Iceland’s interest deduction restriction (30% of EBITDA).
Before amendments, the restriction was not applicable for taxpayers who have below threshold (ISK 100 million), and for taxpayers above the threshold, the restriction applies to all interest expense. The amendment changes that the 30% deduction limitation applies to the interest expense in excess of ISK 100 million. The general exemption where interest expense is below ISK 100 million is omitted, under the amendments.
