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 between 1 to 50 shareholders.
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
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?
When setting up a business outside of your home country, you realize that there are so many hurdles to jump through. CompyCo steps in to guide and assist you through this process for smooth sailing.
The first part of setting up a company in Iceland is to get the 10-digit ID numbers for all the shareholders, including the directors. A foreign company can also be a shareholder.
The second part is to assemble the relevant documents for the company registration application: letters of association, type of activity, specimen signatures, name, details about founders and the address.
The Internal Revenue bureau must approve the name of the company after which it can be officially registered in the Register of Limited Companies.
A business bank account will have to be opened, and Icelandic banking protocol requires in-person verification. You will have to travel to Iceland in order to obtain a business account at a local or international bank in Iceland.
The last step is getting registered with the Fiscal agencies.
CompyCo’s incorporation experts are fully equipped to assist you throughout the process and take care of all the semantics of setting up your business 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.
- 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 that you’re not very familiar with can be difficult. Employment laws and workplace expectations are also different everywhere you go. Working with an expert HR team is key when dealing with employment in a place where you don’t even speak the language!
CompyCo provides all kinds of recruitment solutions. By incorporating detailed hiring processes with the local culture and your company’s needs, our team can fit you with efficient and innovative employees. We can help you figure out all kinds of employment agreements, recruiting new talent, ensuring your business is compliant with local regulations, and offering ongoing payroll services.
We can even set you up with an HR-based software that can take care of your day-to-day personnel operations. Take full control of your own employee base so that you can customize production operations based on your expertise and skill.
Have any questions? Take a look at our HR services page for more information about our International HR services!