Iceland Revenue and Customs has published the key tax figures and percentages for 2025, including updates on Corporate Income Tax, Value Added Tax and Personal Income Tax.
The updated rates are applicable starting 1 January 2025.
Corporate Income Tax
| Tax Category | Rate for 2025
|
| Corporate Income Tax [general level (limited liability companies, private limited companies, etc.)0 | 20% (reduced from 21% in 2024)
|
| Corporate Income Tax [upper level (partnerships, estates, bankruptcies, etc.)] | 37.6% (reduced from 38.4% in 2024) |
| Social Security Contribution | 6.35% (unchanged)
|
Value Added Tax
| Tax Category | Rate for 2025 |
| Standard VAT Rate | 24% |
| Reduced VAT Rate | 11% |
| VAT Refund for New Real Estate, Maintenance, and Improvements | 35% (unchanged) |
Individuals: Withholding tax 2025
| Income from 0 – 472,005 ISK per. month | 31.49% | |
| Income from 472,005 – 1,325,127 ISK per. month | 37.99% | |
| Income exceeding 1,325,127 ISK per month (only on the amount that exceeds the income threshold) |
46.29% | |
| Children (born 2010 or later) on income exceeding 180,000 ISK per year | 6% | |
| Personal tax credit per month | ISK | 68,691 |
| Personal tax credit per year | ISK | 824,288 |
