Q: What penalties apply for late VAT payments in Iceland?

Under Value Added Tax Act No. 50/1988, Article 27 , late VAT payments incur a surcharge of 1% per commenced day, capped at a maximum of 10% (reached in ten commenced days). Unpaid tax past one month incurs statutory default interest under Article 28 and Act No. 38/2001 .

Q: How long must invoices and accounting records be retained in Iceland?

Under Accounting Act No. 145/1994, Article 20 , ordinary accounting records and invoices are generally retained for seven years from the end of the financial year. Cash-register internal tapes may qualify for three-year retention where the statutory conditions are satisfied. Annual financial statements must be retained for 25 years. Records must be stored in Iceland, with temporary overseas storage limited to six months.

Question 1

Is electronic invoicing mandatory between private B2B companies in Iceland?

Accepted Answer

No. B2B electronic invoicing remains voluntary in Iceland. Private enterprises are not mandated by general statute to issue or receive structured e-invoices. Under Regulation No. 505/2013, Article 20, the transmission of electronic invoices requires recipient consent, which may be established by contract or published purchasing specifications.

Question 2

What is the legal consequence of sending an invoice in an unaccepted format?

Accepted Answer

If a public buyer has declared that PDF email invoices are not accepted, delivery through that channel may be ineffective under Regulation No. 505/2013. Whether a payment period starts depends on the contract and applicable civil law; the underlying debt is not automatically cancelled.

Question 3

Do EU VAT directives or the ViDA reforms apply to Iceland?

Accepted Answer

No. EU VAT directives, including the enacted ViDA reforms under Directive (EU) 2025/516, do not apply to Iceland through the EEA Agreement, as confirmed by official EFTA Secretariat guidance.

Question 4

How often must businesses submit VAT returns in Iceland?

Accepted Answer

Standard VAT-registered businesses file bimonthly returns six times per year under Value Added Tax Act No. 50/1988, Article 24. Qualifying agricultural taxpayers generally file six-monthly, due 1 September and 1 March. Eligible previously registered small businesses may apply for annual filing, due 5 February, where prior-year taxable turnover was below ISK 4,000,000. Separate monthly regimes also exist.

Question 5

How often must businesses submit VAT returns in Iceland?

Accepted Answer

Standard VAT-registered businesses file bimonthly returns six times per year under Value Added Tax Act No. 50/1988, Article 24. Qualifying agricultural taxpayers generally file six-monthly, due 1 September and 1 March. Eligible previously registered small businesses may apply for annual filing, due 5 February, where prior-year taxable turnover was below ISK 4,000,000. Separate monthly regimes also exist.

Question 6

What penalties apply for late VAT payments in Iceland?

Accepted Answer

Under Value Added Tax Act No. 50/1988, Article 27, late VAT payments incur a surcharge of 1% per commenced day, capped at a maximum of 10% (reached in ten commenced days). Unpaid tax past one month incurs statutory default interest under Article 28 and Act No. 38/2001.

Question 7

How long must invoices and accounting records be retained in Iceland?

Accepted Answer

Under Accounting Act No. 145/1994, Article 20, ordinary accounting records and invoices are generally retained for seven years from the end of the financial year. Cash-register internal tapes may qualify for three-year retention where the statutory conditions are satisfied. Annual financial statements must be retained for 25 years. Records must be stored in Iceland, with temporary overseas storage limited to six months.

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E-facturatievereisten in IJsland

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