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Iceland VAT on digital services by non-residents

Iceland introduced Value Added Tax collections obligations on foreign providers of digital or electronic services in November 2011. The standard VAT rate is 24%, although e-books and music enjoy the reduced rate of 11%. There is a VAT registration threshold of ISK 2 million for resident and foreign providers.

B2B sales should be recorded through the reverse charge, meaning the Icelandic customer takes on the VAT reporting duties. The non-resident is not required to VAT registrar – unless also providing B2C services. You may review VAT Calc’s global VAT and GST on digital services tracker to see which other countries have introduced indirect taxes on electronic services to consumers. For regular free updates register for our global VAT and GST news.

VAT registration in Iceland for digital services

For B2C services, non-residents are required to VAT register if they have the annual registration threshold of ISK 2million. There are two types of registration for non-resident providers of digital services:

  1. Simplified online registration, made online with the Directorate of Internal Revenue. It is not possible to recover input VAT suffered through this registration.
  2. General registration, with full VAT deductibility.

What services are subject to Icelandic VAT

The following digital services are liable to VAT:

  • Online news and journals
  • Website hosting and webpage hosting
  • Remote systems administration
  • Data warehousing and disc space
  • Broadcast and telecoms services
  • Downloads or streaming movies or music
  • Apps
  • Automated databased services
  • Automated e-learning without human intervention
  • Voice-over IP services

Preparing Icelandic or global VAT or GST returns is complex, time consuming and fraught with tax liability risks.  VAT Calc’s single platform VAT Filer can accurately complete any country filings with verified transactional data from our VAT Calculator or VAT Auditor integrated tools.

Europe VAT on digital services

Country (click for details) Rate Date Threshold Comments
EU 27 member states 17% to 27% Jan 2015 €10k EU residents; Nil for non-EU
Albania 20% Jan 2015 Nil
Andorra 4.5% Jan 2015 Nil
Belarus 20% Jan 2018 Nil
Georgia 18% Oct 2021 Nil
Iceland 24% Nov 2011 ISK 2 million
Kosovo 18 Sep 2015 Nil
Moldova 20% Apr 2020 Nil
Norway 25% Jul 2011 NOK 50,000
Russia 16.67% Jan 2017 Nil B2C & B2B
Serbia 20% Apr 2017
Switzerland 7.7% Jan 2010 CHF 100,000 on global income
Turkey 18% Jan 2018 Nil
Ukraine 20% Jan 2022 UAH 1m
UK 20% Jan 2015 Nil

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