Iceland Company Registration in 2023-24
This country was discovered approximately 1000 years ago during the Viking expedition in the North Atlantic region and is one of the Scandinavian countries. Iceland along with its civilization is one of the oldest democracies of the world. Fish Culture is one of the oldest traditions and is now a well-practiced business of this country and has
influenced the GDP of this country as well. Post WWII the state has only focused on the higher side of the economic growth and depreciated the level of unemployment over the course of time. The population is inclined towards livestock farming and herding of sheeps.
Iceland holds a feasible yet vast hydro energy at 6 gigawatts and geothermal energy at 1.5 million gigawatts hour per year this power generation helps the industries and other manufacturing units to get their amount of industrial steams and helps the commercial vegetation projects as well.
With a tariff reduction agreement, the country is a part of both EU and EEC and has developed a major amount of international relationships with other countries.
This article will briefly describe the Iceland company registration. Further, you will learn about the advantages, taxation system, eligibility, and documents for company registration in Iceland.
Why to register a company in Iceland?
- Iceland is a member of the EFTA and the Schengen area.
- The level of corruption in Iceland is low
- Most business regulations and legislation are straightforward and unambiguous.
- The CIT rate is low at a rate of 20%.
- English is frequently used in society.
- Iceland has access to a skilled workforce.
- Iceland avoids double taxes by having double-tax treaties with over 50 nations.
- Foreign investments are also adequately protected.
- In the Icelandic Court, international entrepreneurs can anticipate fair and equal prosecution.
- Iceland has double tax treatment with more than 50 countries to avoid double taxation.
Procedure to register a company in Iceland
In order to register a company in Iceland, the following steps have to be followed:
1. Decide the legal entity
The first step that must be followed in order for company registration in Iceland is to decide on the legal entity of the business.
2. Choose a business name
Decide on a corporate entity’s name and validate the corporate entity’s name availability. It is essential to choose a name that is unique and original. The chosen name must not be similar to the names of any existing business entity.
3. Create statutory documents
Create statutory documents that the directors must sign in the presence of a notary public.
4. Create a business bank account
Create a business bank account where all transactions related to the business would take place and deposit the required paid-up capital.
5. Apply for a registered address
Apply for a local registered address where all the necessary notices and notifications of the firm would be received.
6. Register with the Director of Internal Revenue(RSK)
File an application with the Director of Internal Revenue(RSK) to register a company in Iceland along with all the essential documents.
7. Pay the required fees
Pay the required fees for Iceland company registration. Once the application and the paperwork are approved, your business will be registered.
8. Acquire the VAT number
Acquire the VAT number from the Tax Departments. Organizations must gather and declare VAT if they intend to sell products or services worth further than ISK 1,000,000 annually.
9. Acquire licenses
Acquire the necessary licenses and permits required to conduct commercial operations in the nation.
Eligibility criteria for Iceland Company Registration
The following are the eligibility criteria for company registration in Iceland:
- The number of directors: At least 3 directors are required to do a Private Limited Company company registration in Iceland.
- The number of shareholders: At least 2 stockholders are required for an Iceland company registration as a Public Limited Company. At least 1 stockholder is needed for a Private Limited Company.
- Required share capital: The required amount of capital to establish a private limited company is ISK 500000. The required amount of capital to establish a public limited company is ISK 4000000.
- Registered address: A local registered address is needed to register a company in Iceland.
Documents required for Company Registration in Iceland
- Certificate of Incorporation
- Articles of Association
- Statutory documents
- Registered office address details
- Information about the owners and stakeholders
- Details of the paid share capital
Business structures for Iceland Company Registration
There are various business structures for Iceland Company Registration:
Private Limited Company
A Private Limited Company is one of the most common forms of corporate companies where the stockholders’ liability is limited to the value of their contributions made. The required capital to incorporate a private limited company is ISK 500000. At least 1 stockholder is required for Iceland Company Registration as a private limited company.
Public Limited Company
Public limited companies are designed to have numerous stockholders and seek funding from the general public, such as on the stock exchange. In public limited corporations, there must be at least 2 founders, 2 stockholders, 3 directors, and a manager.
It is a business entity where stockholders’ liabilities are limited to the sums of their investments. The minimum required capital for public limited company registration in Iceland is ISK 4,000,000.
Co-operative Societies
Co-operative Societies are listed with the Director of Internal Revenue. There must be at least 15 founders to establish a cooperative society in Iceland. Members’ financial responsibility will be restricted to the cost of their membership and their financial stake in the society’s assets.
A co-operative society must pay ISK 256,000 to enroll with the Register of Co-operative Societies, which includes the expense of an identification number and publication in the “Legal Gazette.”
Partnership
A Partnership is a form of business structure that is based on an agreement between two or more people to engage in joint economic operations, with each member taking full accountability for the company’s debts. To do a Partnership company registration in Iceland, at least two or more individuals are required (whether people or legal organizations).
The primary benefits of these business structures include low startup costs, a straightforward legal framework, ease of business liquidation, the availability of adequate assets for cash withdrawals, and moderately attractive taxation policies if revenues are produced.
Branch Office
A branch office is a representative of a foreign company in Iceland. It is a kind of business organization in Iceland that involves international businesses and performs the exact kinds of operations as the foreign corporation it represents. Additionally, the parent company’s name should appear in the name of the branch office’s business name.
Advantages of company registration in Iceland
The following are the advantages of Iceland company registration:
- Tax advantages: Iceland has signed double tax treaties with over 50 nations to prevent being taxed twice.
- The efficiency of conducting business: it is incredibly simple to conduct trade and commerce in Iceland in comparison to several other nations. Because of its small size and open government, Iceland offers businesses a fair and competitive atmosphere. As a result, foreign investors find investing in Iceland’s economy to be appealing.
- Government incentives: The government of Iceland prioritizes business and works to foster hospitable corporate settings. Low corporate taxes, land, renewable energy, and strong legislation are just a few of the many advantages available. Iceland’s Technology Development Fund offers initial phase funding for digital start-ups of up to US$500,000.
- Competent labor: Highly trained and competent labor is available in Iceland.
- Cheaper electricity prices: Iceland has the most affordable electricity rates in Europe, which lowers costs for companies that use a lot of electricity. For enterprises that use steam, affordable steam also keeps operational expenses down.
- Infrastructural facilities: Iceland has great infrastructural facilities and has also received the highest ranking for infrastructure out of 144 nations.
Taxation in Iceland
The PAYE (Pay-As-You-Earn) mechanism is used for taxes in Iceland. Taxes, which are made up of personal income tax and governmental levies that are often collected on a regular basis, are subtracted from all taxable incomes.
Employers are responsible for covering the costs of withholding taxes, and union dues, in addition to various wage-related fees.
1. Corporate Income Tax (CIT): Corporate Income Tax is a charge levied by the government on earnings produced by the company. The basis for calculating CIT is the net income. Net income is revenue after operational costs have been subtracted. Different rates of CIT is applicable to the various kinds of business structure:
- Limited Company- 20%
- Partnership Firm- 36%
2. Capital income tax: A person’s capital income is subject to a tax percentage of 22%.
3. Personal Income Tax: The personal income tax rate in Iceland is 20%. Additionally, the municipal tax rate is 14.45%.
4. Value-Added Tax(VAT): VAT, which is a tax incurred by consumers of goods and services, in Iceland is 24%. However, in specific cases, the VAT is 11%.
Conclusion
Due to the many advantages that entrepreneurs can get if they register a company in Iceland, Iceland is a fantastic destination that is always preferred by business owners. Iceland’s thriving economy offers lower rates of taxation, less expensive electricity, access to trained labor, and helps prevent being taxed twice due to its double tax treaties with various nations. Moreover, It is easy and straightforward to do an Iceland company registration.
This article describes the various steps, documents and eligibility for company registration in Iceland. If you wish to register a company in Iceland, you can consult our experts at Odint Consulting. Our company formation specialist will guide you through the steps and will aid you in establishing a corporation in Iceland.
FAQ’s
- It is easy to register a company in Iceland.
- Iceland is a member of the EFTA and the Schengen area.
- There is very little corruption in Iceland.
- Most business regulations and legislation are straightforward and unambiguous.
- The CIT rate is low at a rate of 20%.
- English is frequently used in society.
- Iceland has access to a skilled workforce.
- Iceland avoids double taxes by having double-tax treaties with over 50 nations.
- Corporate Income Tax is assessed at a rate of 20% for Limited companies and at a rate of 36% for partnership firms.
- The VAT in Iceland is 24%.
- The Capital income tax in Iceland is 22%.
- The Personal Income Tax is assessed at a rate of 20%. However, additional municipality charges of 14.45% are applicable.
You can register a company in Iceland by submitting an application with the Director of Internal Revenue(RSK) along with the required documentation.
- Private Limited Company
- Public Limited Company
- Co-operatives
- Partnership firms
- Branch office
- Tax advantages: Iceland has signed double tax treaties with over 50 nations to prevent being taxed twice.
- Government incentives: Iceland’s Technology Development Fund offers initial phase funding for digital start-ups of up to US$500,000.
- Competent labour: Highly trained and competent labour is available in Iceland.
- Cheaper electricity prices: Iceland has the most affordable electricity rates in all of Europe, which lowers costs for companies that use a lot of electricity. For enterprises that use steam, affordable steam also keeps operational expenses down.
