COMPANY FORMATION IN ICELAND

  • Overview

    Iceland’s operating environment is competitive with leading countries in the industrial world. With its low tax structure, high education levels and competitive costs for skilled labour, land and electricity. Iceland is a strong candidate for businesses to short-list when seeking new locations for their international operations.

  • Advantages

    Getting electricity is easiest in Iceland.

    The long-established links between UK and Iceland are traditionally and economically strong. UK businesses are therefore often preferred business partners for Icelandic businesses.

    With economic growth of 2.6% in 2011, Iceland offers vast opportunities for consumer products.

    Efficient direct shipping lines.

    Iceland also has a limited local production and is therefore heavily dependent on imports of consumer goods, apparel and clothing accessories, food & drink products and specialised industrial machinery.

  • Tax Regime

    Corporate income tax rate of 18% on net income only levied by the state.

    Dividends received by corporations are not taxable.

    Bilateral taxation agreements available.

    Foreign tax credit available to avoid double taxation in the absence of tax agreements.

    Individuals resident in Iceland are liable to income tax at the rate of 38.58%, on all earned yearly income above ISK 855,240.

    An additional tax of 4% is levied on all earned income in excess of ISK 4,191,686 in 2004 for an individual, and on double that amount for a couple.

    A non-resident individual is taxed on Icelandic-sourced income.

  • Types of Entities

    Public Limited Liability Company: An Icelandic public limited liability company may be set up by two or more persons, or legal entities providing a minimum capital of 4 million ISK (the currency of Iceland). This business entity must have at least two shareholders who provide a part of the capital, receiving shares with a nominal value and at least three members in the Board of Directors. The member’s liability for the company’s debts and obligations is limited to the amount invested in the company. The Icelandic public limited liability company has the possibility of offering its shares publicly and enlisting on the stock market.

    Private Limited Liability Company:
    A private limited liability cannot sell its shares to the public and full consent of other members is needed in case one shareholder wishes to back out from the business. Apart from that the private limited liability companies are the most common form of business used in Iceland. They can be formed by one or more persons and the minimum requested capital is of 500.000 ISK. The liability of the members of an Icelandic private limited liability company relies in the amount invested by each one in the company.

    General Partnerships: They function as any other common partnership, being established by at least two persons. The founders become general partners, meaning they are in charge with managing the company and ensuring its legal functioning. In exchange the general partners bear unlimited liability for the company’s debts and obligations, risking their own personal assets. Unlike usual partnerships, the Icelandic general partnerships have to be registered with the Trade Register and are considered legal entities in their own right.

    Limited Partnership: Icelandic limited partnerships are also created through association of two or more members, or legal entities. However, unlike general partnerships, there is at least one general partner and at least one limited partner. The general partner plays an important role in the management of the company, being liable for the partnership’s debts and obligations to the extent of his or her personal assets. The limited partner, however, does not have the right to interfere in management decisions, but receives a profit proportionally with his or her contribution, risking just that. A limited partnership also has to be registered and is considered a legal entity in its own right.

  • Time Period

    It usually takes 5 days to set up a business in Iceland

Here's some interesting facts about SK Patodia.

30+ Years of Experience
19 Partners
14 Cities in India
500+ Professionals working together

Get in Touch

    Contact for any Kind of Information


    022 67079444