Company Set Up In Iceland
The land of ice has so much to offer; from the edgy scenery to the growing economic potential! Iceland is an emerging area of investment from foreign businesspeople because it’s been so separate from the global community.
Iceland’s unique geographical position has helped preserve its beauty and use in the energy sector. Its emerging hydropower and geothermal energy potential make it ideal for investment in those sectors. Not only is business in these areas economical, but it also brings great rewards in an eco-geared world of the 21st century.
Iceland is also one of the best places in the world for aluminum production. The local established expertise in this area makes this business opportunity a safe bet for high profits.
With the travel industry in Iceland starting to grow, franchising is becoming a favored option. The best part is that all EEA citizens have the same regulations as Iceland natives.
Iceland’s calm political scenario and happy population make it an ideal location for foreign investors to expand their horizons while making some serious profits.
Forms Of Companies In Iceland
- Ehf. – “einkahlutafélag” – Private Limited Liability Company
- Hf. – “hlutafélag” – Public Limited Company
- Saf. – “samlagsfélag” – Limited Partnership
- Sf. – “sameignarfélag” – General Partnership
- Sv. – “samvinnufélag” – Cooperative
- “einstaklingsfyrirtæki” – Sole Proprietorship
What is the difference between Ehf. and Hf. in Iceland?
In Iceland, the most common types of companies started by foreign investors are Ehf. and Hf.
In the Icelandic Ehf., the amount of their subscribed shares is the limit of each member’s liability. The minimum share investment is 500 000 ISK, and the company may have only a chairman with another board member. Otherwise a board member with a designated vice
The Icelandic Hf. must have at least 2 shareholders, and the minimum share deposit is 4 000 000 ISK. Management and supervisory boards are mandatory.
Fundamentals Of A Limited Liability Company
Corporate Tax in Iceland | VAT in Iceland |
|---|---|
20% | 24% |
Fundamentals of limited liability companies in Iceland
| Limited liability company | Einkahlutafélag- Ehf |
| Minimum Share capital | ISK 500 000 (approx. 3550 EUR) |
| Registered office required | Yes |
| Physical office required | No |
| Min. number of Shareholders | 1 |
| Min. number of Directors | 1 |
| Local Director required | Yes, at least 1 Iceland citizen |
| Other requirements | Special licences may be necessary for the business operations |
| Bank signatory must travel | Yes |
| Timescale for company formation | 4 weeks |
| Timescale for bank account opening | 14 days |
| Timescale for obtaining VAT number | 2 weeks |
| Statutory audit requirements | Yes |
| Shelf companies available | No |
How can I set up my company in Iceland?
Setting up a business outside your home country can be complex, with several steps to navigate. CompyCo coordinates the process through our trusted local partners to make it as smooth as possible.
The first step in establishing a company in Iceland is obtaining 10-digit ID numbers for all shareholders, including directors. A foreign company can also act as a shareholder.
Next, the relevant documents for company registration must be assembled, including letters of association, type of activity, specimen signatures, company name, founder details, and registered address.
The Internal Revenue Bureau must approve the company name before it can be officially registered in the Register of Limited Companies.
A business bank account must also be opened. Icelandic banking protocol requires in-person verification, so you will need to travel to Iceland to complete this step at a local or international bank.
The final step is registering the company with the relevant fiscal authorities.
CompyCo coordinates with licensed local professionals to ensure that all registration and administrative requirements are managed efficiently, giving you peace of mind while your business is set up in Iceland.
Foreign investors that are looking to break into new markets that have high potential should look toward Iceland. This secluded company provides the perfect stable economy needed for consistent production costs. With a corporation and VAT tax that’s lower than most other European companies, the fiscal conditions aid lucrative business operations.
CompyCo’s team takes a singular approach with every client in order to ensure a detailed setup procedure for your unique business model and values. With our experience in company setup in Iceland and other European countries over the years, we’ve amassed a reliable chain of experts that give us the advantage in offering cost-effective business solutions to you.
Our team is composed of experienced executives from taxation, HR, incorporation and banking. They can assist you in making the right decisions for your business with ease so that your time can be spent doing what you do best for your firm.
Bank Account Opening
Icelandic banking systems operate on tried-and-tested procedures that prioritize safety and security. Rest assured that the banks in the country are reliable and will serve you to the best of your ability. After all, Iceland hospitality extends everywhere.
You’ll have to fly to Iceland for verification in order to open up a bank account in your name. However, the reward is great; as owning an Icelandic account will make all our bank transactions so much easier.
Every bank has its own set of requirements, which may range from the type of business activity you’ll engage in to your country of residence. However, there are certain requirements that are usually common among all financial institutions; these are:
- Proof of business address or registration for your company
- Any identifying documentation, which may include your passport or national identity card
- Your Iceland Identification number
In some circumstances, you could open your bank account remotely, but you’ll have to consult our experts in Iceland to find out more about that before you go ahead.
Need more information about opening a bank account? Head over here.
Accounting & Taxation
Here are a few accounting and taxation obligations to take into consideration:
- In Iceland, the tax year corresponds to the calendar year.
- Financial statements including a profit and loss account, an annex and a balance sheet must be submitted to the company register every year. All Icelandic companies must maintain books of total payments received and expenses incurred, details of debt and credit, and total sales and purchases.
- All companies must have annual audited financial statements and for that purpose they must appoint accountant or auditor.
- There’s a flat corporate income tax rate of 20% on all net income for tax residents in Iceland.
- Aside from that, individuals pay a 22% tax on financial income (dividends and interests) – but if a foreigner, it’s possible to get an exception from witholding that tax.
- The standard VAT rate in Iceland is 24%. A reduced rate of 11% applies to some types of goods while certain goods are exempt from VAT.
- Companies are issued unique 6-digit VAT numbers.
How can you employ staff in Iceland?
Setting up a company in a country you’re not familiar with can be challenging. Employment laws and workplace expectations vary widely, and language barriers can make compliance even more difficult. Working with an experienced HR team is essential in these situations.
CompyCo coordinates recruitment and HR solutions through trusted local partners. By combining detailed hiring processes with local knowledge and your company’s needs, we help ensure your business is compliant with local regulations while facilitating recruitment, employment agreements, and ongoing payroll services.
We can also provide access to HR software that streamlines day-to-day personnel management, giving you oversight of your workforce while allowing you to focus on core business operations.
Have questions? Visit our HR services page to learn more about how CompyCo coordinates international HR solutions for your business.
Have any questions? Take a look at our HR services page for more information about our International HR services!
Company Formation in Iceland
How To Start A Company In Iceland
With a population of just over 300,000 people and an area of only 323 square miles, Iceland is one of the most sparsely populated countries in the world. Combine this small population with a high rate of entrepreneurship and you have the perfect environment for starting your own company. This is why starting your own company in Iceland can be a very rewarding experience. Not only will you have the satisfaction of seeing your project come to fruition, but you’ll also have access to some of the best resources and support in the world. Ready to take the plunge? Here are five steps to help you get started:
What is needed to start a company in Iceland
The first step to starting a company in Iceland is to determine what you need. There are a few different pieces of paperwork that are necessary for starting a company, but the most important document is the Business Registration Certificate (BRC). The BRC is required to register your business with the Icelandic government and can be obtained from any local government office. Other documents that may be required depending on your business include an Income Tax Return and a Social Security Number for your employees.
In addition to the basic documentation, there are various other resources that you will need when starting your company in Iceland. One of the most important is a good internet connection because setting up your company online is one of the easiest ways to do so. Additionally, you will need access to printer ink and paper, business licenses, and other specialist services.
Once you have gathered all of the necessary information and materials, it’s time to get started setting up your business in Iceland. The process of registering your company with the government can take between two and four weeks, so make sure you have all of the necessary documents ready before heading over to the office. In addition to registering with the government, it’s also important to contact various insurance companies and financial institutions in order to protect yourself and your company from potential legal issues.
Costs and Funding Options
There are a few things to consider when starting a company in Iceland. The first is the cost of doing business. According to the Icelandic Central Bank, starting a company costs around $10,000 USD. This includes paying for legal fees and other necessary paperwork.
The second thing to consider is funding options. Many companies opt to use external capital in order to get started. The most common way to obtain this funding is through venture capitalists or angel investors. Other funding options include issuing debt or equity certificates. Equity financing is typically more expensive than debt financing, but it provides investors with a greater share of the company’s future profits.
Finally, there are tax implications when starting a company in Iceland. The country has a progressive corporate tax system that charges different rates based on an entity’s income level and type of business activity.
Setting Up a Company
Setting up a company in Iceland can be a relatively easy process, especially if you’re using an online platform like Startup Iceland. In this article, we’ll show you how to set up your business on Startup Iceland, complete the regulatory paperwork required, and register with the authorities. Once everything is set up, you’ll be ready to start trading!
Taxation in Iceland
As one of the world’s most popular destinations for business and tax exile, Iceland offers a unique opportunity for entrepreneurs. Here are seven tips for starting a company in Iceland:
1. Learn about the tax system. The taxation system in Iceland is unique and complex, so it’s important to understand it before starting a company. There are several taxes that need to be paid by companies, including income tax, value-added tax (VAT), corporate tax, and estate duties. To minimize your tax burden, consult with an accountant or tax specialist before starting your business in Iceland.
2. Register your company with the authorities. You’ll need to register your company with the Icelandic authorities (the Ministry of Finance) before you can commence operations. The registration process is straightforward and will only take a few days to complete. Make sure to include all relevant information when registering your company, such as your company name, contact information, and authorized representative(s).
3. Obtain commercial insurance policies. Before starting a business in Iceland, make sure to obtain commercial insurance policies that cover all eventualities – from property damage to claims made by employees or customers. Policies such as general liability insurance cover businesses of all sizes and can significantly reduce the risk of financial losses should something go wrong on site.
4. Acquire local licenses and permits . Before you can commence operations in Iceland, you’ll need to obtain various licenses and permits from local authorities – such as fire safety certificates and
Business Expenses in Iceland
One of the most important things to consider when starting a business in Iceland is how much money you will need to get started. There are several costs associated with starting a business in Iceland, including business licenses, taxes, and other startup costs. Here is a breakdown of the most common expenses:
1. Business licenses:
To start a business in Iceland, you will need to obtain a business license from the municipality where your company will be located. Business licenses can cost between $500 and $5,000 depending on the size of your company.
2. Taxes:
In addition to paying for your business license, you will also need to pay taxes on profits generated by your company. The tax rate for businesses in Iceland is 20%. However, this rate can change depending on how much money your company makes.
3. Other startup costs:
There are other costs associated with starting a business in Iceland, such as legal fees and website development costs. These expenses can range from $1,000 to $10,000, so it is important to consult with an accountant or lawyer before beginning your venture into entrepreneurship in Iceland.
Conclusion
Starting your own company can be a daunting task, but it doesn’t have to be. With the help of this guide, you’ll learn everything you need to know about starting a business in Iceland – from where to find funding and how to structure your business, to legal requirements and what type of environment is best for growth. By following our tips, you’ll be well on your way to building your dream company in one of the world’s most enchanting countries. Thanks for reading!
Next: Find out how can CompyCo help you set up a company in Switzerland, Liechtenstein, UK and Luxembourg