Iceland’s VAT rates have changed since January 1st 2015. There has been a decrease in the standard rate from 25.5% to the rate of 24%, whilst there has been an increase in …
Iceland’s VAT rates have changed since January 1st 2015. There has been a decrease in the standard rate from 25.5% to the rate of 24%, whilst there has been an increase in the reduced rate from 7% to 11%.
- The reduced VAT rate applied to food and other goods for human consumption and the rental of guestrooms, hotels and other accommodations.
- A number of previously exempt or zero rated supplies will now be subject to the reduced VAT rate.
- Minimal VAT exemptions will now be offered, and the reduced VAT rate will apply to recreational transport from May 1st.
The VAT rate was increased to 25.5% in January 2010, as part of a raft of austerity measures at the height of Iceland’s near bankruptcy during the financial crisis.
The 2015 budget also brought an announcement of a proposal to scrap the Commodities Tax. The tax ranges from 15% to 25% of the value of the goods. This tax had applied to white goods and electrical items, motor vehicle spare parts, building supplies, and goods containing sugar or other sweeteners.
The Ministry said the 2015 budget aims to ensure continuing economic stability and fiscal equilibrium.