Employing in Iceland

Access and hire global talent & deploy them anywhere in the world by removing restrictions from only hiring from local markets.

Enter any international market without the requirement of opening a local entity.

Expanding into
Iceland

Iceland is one of the world’s most spectacular nations. Set in the North Atlantic between the United Kingdom and Greenland, the “Land of Fire and Ice” has a magical landscape of volcanoes, glaciers, forests, and valleys, bubbling hot springs and geysers.

Icelandic countryside with mountain
Icelandic countryside with mountain

Dedicated to Offering You 24/7 Support

Get the Support You Need

Expanding to countries such as Iceland can bring both excitements to the possibilities, and significant stress to ensuring the entity with the country’s rigorous legal structures and laws. Ensuring compliance without sufficient knowledge of the country’s laws also adds to the stress of getting your new entity off the ground and ready to test new markets. Going at it without the proper support can increase the costs, time and risks involved.

Global expansion is a step to make for any business, regardless of what you wish to achieve. The opportunities that can come with an expansion can be both incredibly exciting as well as intimidating and confusing, especially when you consider all the registration procedures that need to be done and the documentation required.

Each new markets bring new challenges, and these can be worked through more efficiently and cost-effectively with the support of a Professional Employer Organisation (PEO) such as Bradford Jacobs, especially through our Employer of Record (EOR) framework.

This can be best utilised when businesses are just beginning their expansion process and require more information before committing to incorporating an entity and fully establishing themselves in that market.

CONTACT US
CONTACT US
Country EOR Guide - Bradford Jacobs

Download our Guide to Iceland

Learn all about expanding into Iceland and see what we can do to make your expansion easier.

DOWNLOAD GUIDE

Download our Guide to Iceland

Learn all about expanding into Iceland and see what we can do to make your expansion easier.

Country EOR Guide - Bradford Jacobs
DOWNLOAD GUIDE

Hiring Staff
in Iceland

The income per capita is high, but the country’s annual GDP is often one of the lowest in the OECD. Overall, though, Iceland has come a long way since it was one of the least affluent countries in Western Europe in the first half of the 20th century – it has grown fast, but not without some turbulence. Price and currency stability were severe problems in the 20th century.

To counteract these problems, Iceland undertook extensive free market reforms in the 1990s. This led to strong economic growth and a world-renowned level of both economic and civil freedoms. The financial crisis of 2007-2010 was felt in Iceland, but this was reversed entirely by a recovery which was aided by a tourism boom starting in 2010. Government consumption is less than in other Nordic countries. Hydropower is the primary source of home and industrial electrical supply in Iceland.

In Iceland, 99% of all electricity is renewable, with IMD considering Iceland’s hydro and geothermal electricity infrastructure to be the most reliable in the world. Iceland is also recognized as a world leader in the utilization of geothermal energy and its focus on diversification.

In terms of education, Iceland ranks 5th globally for the quality of its educational system. It is also the world leader regarding the availability of the latest technologies in companies and firm-level technology absorption (WEF). The workforce in Reykjavik Capital Area is well educated with 41% of the inhabitants achieving a university degree.

The nation also has a large migrant population, with over 20% of the total population being migrants. Iceland’s strongest sectors include agriculture, services, tourism, fisheries, and manufacturing, and boasts a number of investment opportunities in research and development and business acceleration.

Iceland also has strong international ties – Iceland’s closest relations are with the Nordic states, the European Union, and the United States. Iceland has been a member of the United Nations since 1946 and was a founding member of the World Bank in 1946 and NATO in 1949. In terms of integration with Europe, Iceland was a founding member of the OEEC (now OECD) in 1948 and the Nordic Council in 1952; it also joined EFTA in 1970, was a founding member of the CSCE (now OSCE) in 1973 and the EEA in 1992 and joined the Schengen agreement in 1996.

Country:
Iceland
Local Currency:
Icelandic króna (ISK, kr)
Time Zone:
GMT
Country Dial Code:
+354
Tax Year:
1 January – 31 December (calendar year)
VAT:
24%
National Minimum Wage (2023):
N/A
Taxpayer Identification Numbers:
Icelandic Identification Number (kennitala)
System ID Number
Personal ID Number
Main trading partners:
Netherlands, Spain, UK, USA, Germany, Norway, Netherlands, and Denmark.

Hiring Staff
in Iceland

The income per capita is high, but the country’s annual GDP is often one of the lowest in the OECD. Overall, though, Iceland has come a long way since it was one of the least affluent countries in Western Europe in the first half of the 20th century – it has grown fast, but not without some turbulence. Price and currency stability were severe problems in the 20th century.

To counteract these problems, Iceland undertook extensive free market reforms in the 1990s. This led to strong economic growth and a world-renowned level of both economic and civil freedoms. The financial crisis of 2007-2010 was felt in Iceland, but this was reversed entirely by a recovery which was aided by a tourism boom starting in 2010. Government consumption is less than in other Nordic countries. Hydropower is the primary source of home and industrial electrical supply in Iceland.

In Iceland, 99% of all electricity is renewable, with IMD considering Iceland’s hydro and geothermal electricity infrastructure to be the most reliable in the world. Iceland is also recognized as a world leader in the utilization of geothermal energy and its focus on diversification.

In terms of education, Iceland ranks 5th globally for the quality of its educational system. It is also the world leader regarding the availability of the latest technologies in companies and firm-level technology absorption (WEF). The workforce in Reykjavik Capital Area is well educated with 41% of the inhabitants achieving a university degree.

The nation also has a large migrant population, with over 20% of the total population being migrants. Iceland’s strongest sectors include agriculture, services, tourism, fisheries, and manufacturing, and boasts a number of investment opportunities in research and development and business acceleration.

Iceland also has strong international ties – Iceland’s closest relations are with the Nordic states, the European Union, and the United States. Iceland has been a member of the United Nations since 1946 and was a founding member of the World Bank in 1946 and NATO in 1949. In terms of integration with Europe, Iceland was a founding member of the OEEC (now OECD) in 1948 and the Nordic Council in 1952; it also joined EFTA in 1970, was a founding member of the CSCE (now OSCE) in 1973 and the EEA in 1992 and joined the Schengen agreement in 1996.

Country:
Iceland
Local Currency:
Icelandic króna (ISK, kr)
Time Zone:
GMT
Country Dial Code:
+354
Tax Year:
1 January – 31 December (calendar year)
VAT:
24%
National Minimum Wage (2023):
N/A
Taxpayer Identification Numbers:
Icelandic Identification Number (kennitala)
System ID Number
Personal ID Number
Main trading partners:
Netherlands, Spain, UK, USA, Germany, Norway, Netherlands, and Denmark.

The Main Sectors of the Icelandic Economy

The country focuses on the following key sectors, which all have a significant impact on the country’s economy:

Agriculture

Agriculture has been one of the leading industries of Iceland for centuries. Only about 5% of the total population is involved in farming in modern-day Iceland. Only about 1.2% of Iceland’s territory is seen as arable land, mainly confined to lowland areas. Carrots, potatoes, cabbages, turnips, kale, and bananas are some of the food crops grown in the country. Livestock rearing is also increasing rapidly in Iceland, with farmers keeping a wide variety of animals such as goats, sheep, and cattle.

Tourism is the largest service industry in Iceland, but the banking sector also significantly promotes the country’s economy. During the global financial crisis, Iceland’s banking sector was heavily affected – however, this sector was overhauled, with only three major banks currently in operation. Any smaller banks have either been consolidated or acquired by the big three, including Arion Bank, NBI, and Islandsbanki.

Tourism also plays a significant role in Iceland’s economy, accounting for over 20% of the country’s total GDP. A tourism boom started in 2010 and is still growing, with an increasing economic significance. The number of tourists also increased, surpassing the 2 million mark in 2017. Most tourists to Iceland arrive in the summer months, and most are drawn from South and Central Europe. In 2017, it was recorded that the industry is responsible for about 42% of the total export revenue. The industry is also responsible for over 20% of the country’s employment.

Manufacturing

Iceland’s growing manufacturing industry is mainly boosted by hydropower generation. The country has the world’s most significant electricity production per capita – this power is a result of the large-scale availability of hydroelectric and geothermal energy sources. Hydropower is the primary source of industrial and home electrical supply in the country and has played a significant role in the growth and development of the manufacturing sector.

The most important components of the manufacturing industry are the power-intensive industries which mainly produce export products. The manufacturing industry accounts for 35% of all export goods, a 13% increase from 22% in 1997.

Iceland is one of the most significant fisheries nations in the Northeast Pacific. The most important species of fish harvested is cod, with an average catch of 150,000 tons every year. The fishing industry is one of the critical industries in Iceland, directly employing around 5.3% of the total workforce and contributing 11% to the GDP directly (25% if an account is taken of the indirect effects of the ocean cluster).

However, it is also estimated that around 20% of the labour force depends on fisheries and related sectors. Most jobs are provided by companies that manufacture fisheries equipment or companies engaging in processing marine products.

The Main Sectors of the Icelandic Economy

The country focuses on the following key sectors, which all have a significant impact on the country’s economy:

Iceland geothermal bathing pools

Agriculture

Agriculture has been one of the leading industries of Iceland for centuries. Only about 5% of the total population is involved in farming in modern-day Iceland. Only about 1.2% of Iceland’s territory is seen as arable land, mainly confined to lowland areas. Carrots, potatoes, cabbages, turnips, kale, and bananas are some of the food crops grown in the country. Livestock rearing is also increasing rapidly in Iceland, with farmers keeping a wide variety of animals such as goats, sheep, and cattle.

Tourism is the largest service industry in Iceland, but the banking sector also significantly promotes the country’s economy. During the global financial crisis, Iceland’s banking sector was heavily affected – however, this sector was overhauled, with only three major banks currently in operation. Any smaller banks have either been consolidated or acquired by the big three, including Arion Bank, NBI, and Islandsbanki.

Tourism also plays a significant role in Iceland’s economy, accounting for over 20% of the country’s total GDP. A tourism boom started in 2010 and is still growing, with an increasing economic significance. The number of tourists also increased, surpassing the 2 million mark in 2017. Most tourists to Iceland arrive in the summer months, and most are drawn from South and Central Europe. In 2017, it was recorded that the industry is responsible for about 42% of the total export revenue. The industry is also responsible for over 20% of the country’s employment.

Manufacturing

Iceland’s growing manufacturing industry is mainly boosted by hydropower generation. The country has the world’s most significant electricity production per capita – this power is a result of the large-scale availability of hydroelectric and geothermal energy sources. Hydropower is the primary source of industrial and home electrical supply in the country and has played a significant role in the growth and development of the manufacturing sector.

The most important components of the manufacturing industry are the power-intensive industries which mainly produce export products. The manufacturing industry accounts for 35% of all export goods, a 13% increase from 22% in 1997.

Iceland is one of the most significant fisheries nations in the Northeast Pacific. The most important species of fish harvested is cod, with an average catch of 150,000 tons every year. The fishing industry is one of the critical industries in Iceland, directly employing around 5.3% of the total workforce and contributing 11% to the GDP directly (25% if an account is taken of the indirect effects of the ocean cluster).

However, it is also estimated that around 20% of the labour force depends on fisheries and related sectors. Most jobs are provided by companies that manufacture fisheries equipment or companies engaging in processing marine products.

Commercial Laws
in Iceland

Compliance Highlights

Tax and Labour Authorities in Iceland

Iceland Revenue and Customs – known locally as Skatturinn, this organisation is responsible for collecting individual and corporate tax payments and documentation in the country, receiving remitted income contributions and providing top-quality service to ensure residents and citizens understand their tax responsibilities.

The Directorate of Labour – The Directorate forms part of The Ministry of Social Affairs and manages the employment service of the entire country, as well as social funds such as the Unemployment Insurance Fund, Maternity/Paternity Leave and Parental Leave Funds, and the Wage Guarantee Fund. They also work on or assist in numerous labour-market relates projects.

Ministry of Social Affairs – is responsible for the administration and policymaking of social affairs and social security in Iceland as prescribed by law, regulations, and other directives.

General requirements

  • Contracts are invalid if they offer inferior terms to those stipulated by law or collective agreements
  • Employers intending to engage an employee for more than one month and to work eight hours a day must provide a written contract or statement outlining the fundamentals of the role. Oral agreements are permitted under law but not advisable
  • The contract must be given to the employee within two months of starting work
  • Terms of the contract must comply with minimums set out by collective agreements
  • Employers applying for work permits for foreign nationals must supply an employment contract with the application
  • Contracts for non-EU or EEA citizens must include details of their valid work permit and visa
  • The typical contract is open-ended; fixed-term contracts are allowed. Successive fixed-term contracts should not generally exceed a total of 24 months, although there is no limit for managerial personnel. Probation periods must not exceed three months
  • There is no legal requirement for contracts to be drawn up in Icelandic

Commercial Laws
in Iceland

Evening view of Icelandic town

Compliance Highlights

Tax and Labour Authorities in Iceland

Iceland Revenue and Customs – known locally as Skatturinn, this organisation is responsible for collecting individual and corporate tax payments and documentation in the country, receiving remitted income contributions and providing top-quality service to ensure residents and citizens understand their tax responsibilities.

The Directorate of Labour – The Directorate forms part of The Ministry of Social Affairs and manages the employment service of the entire country, as well as social funds such as the Unemployment Insurance Fund, Maternity/Paternity Leave and Parental Leave Funds, and the Wage Guarantee Fund. They also work on or assist in numerous labour-market relates projects.

Ministry of Social Affairs – is responsible for the administration and policymaking of social affairs and social security in Iceland as prescribed by law, regulations, and other directives.

General requirements

  • Contracts are invalid if they offer inferior terms to those stipulated by law or collective agreements
  • Employers intending to engage an employee for more than one month and to work eight hours a day must provide a written contract or statement outlining the fundamentals of the role. Oral agreements are permitted under law but not advisable
  • The contract must be given to the employee within two months of starting work
  • Terms of the contract must comply with minimums set out by collective agreements
  • Employers applying for work permits for foreign nationals must supply an employment contract with the application
  • Contracts for non-EU or EEA citizens must include details of their valid work permit and visa
  • The typical contract is open-ended; fixed-term contracts are allowed. Successive fixed-term contracts should not generally exceed a total of 24 months, although there is no limit for managerial personnel. Probation periods must not exceed three months
  • There is no legal requirement for contracts to be drawn up in Icelandic

Contact Us

Join Our Newsletter

Stay up to date with latest service offerings while receiving tips and strategies for making your next remote hire.

JOIN US