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:
- Simplified online registration, made online with the Directorate of Internal Revenue. It is not possible to recover input VAT suffered through this registration.
- 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
- 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|
|Bosnia Herzegovina||17%||Jan 2023||BAM 50.000|
|Iceland||24%||Nov 2011||ISK 2 million|
|Norway||25%||Jul 2011||NOK 50,000|
|Russia||16.67%||Jan 2017||Nil||B2C & B2B|
|Switzerland||7.7%||Jan 2010||CHF 100,000 on global income|
|Ukraine||20%||Jan 2022||UAH 1m|