Capital gains
 
Capital gains tax rate for companies is 20% in the year 2017.
A capital gain is a profit that results from investments into a capital asset, such as shares, which exceeds the purchase price. It is the difference between a higher selling price and a lower purchase price, resulting in a financial gain for the investor which is taxed. Profits from investments into bonds are deemed interests according to Icelandic law.
 
International aspects that might affect tax rate
 
Iceland has concluded several agreements on tax matters with other countries. Parties with a permanent residence, with full and unlimited tax liability in either one of the contracting countries may be entitled to exemption from taxation or reduced tax rate according to provisions of the respective agreement, in absence of which the income would otherwise be subject to double taxation. Each agreement is different, and it is therefore necessary to check the respective agreement to ascertain where the tax liability lies, and which taxes the agreement stipulates. Provisions of tax agreements with other countries may restrict Iceland’s right to tax.
 

 

Income type

Individuals

Corporations

Dividends

20%

 18%*

Interests

10%

10%

Capital gains

20%

  20%*

*Unless reduced by treaty

Foreign investors who verify their obligation to pay taxes in other countries may be exempted from the payment of taxes on interest and capital gains.

The taxes on dividends and capital gains are withholding taxes, applied at source.

For taxation of capital gains, the definition of the buying price is the original non-indexed buying price.

FAQ

Do I need to pay withholding tax on capital income from Icelandic securities?
Interest paid to non-residents is subject to withholding tax. However, non-residents can apply to the local tax commissioner for tax exemption/reduction if covered by treaty. To apply for a withholding tax exemption/redustion is a simple process and can be done through an agent.