Iceland Payroll Services
It is essential for international companies planning expansion into Iceland to have a clear plan and make the right moves from day one. This is vital for foreign companies establishing a presence and planning to run payroll in Iceland – the ‘Land of Fire and Ice’ set in the North Atlantic.
Iceland is a comparatively rich nation. Although it ranks outside of the world’s top 100 for Gross Domestic Product (GDP) at US$23.5 billion, the nation is sixth globally for GDP per capita in 2021 at US$68,844. Iceland’s economy was predicted to grow by 5.2% in 2022 and 4.0% in 2023.
So, the potential is there to reward expansion. Setting up a subsidiary in Iceland to run payroll is one option, but this involves a protracted process of registration, and poses many questions – but at Bradford Jacobs, we have all the answers.
Our Professional Employer Organization (PEO) and Employer of Record (EOR) platforms provide complete solutions to every issue your company will face before your planned move into the Icelandic economy. Our teams step in from the start, locating top-rated talent in Iceland then guiding you through such procedures and navigating the administration of the Icelandic payroll system for you.
What Icelandic Payroll Options are available for Companies?
Remote payroll: This option allows businesses to operate under a single payroll system, by adding employees in Iceland to the parent company’s payroll. However, these employees must operate under different regulations, which is likely to cause problems.
Internal payroll: You may operate payroll for your subsidiary, especially if you are committed to growing your company’s presence in Iceland. However, this does require hiring dedicated HR staff who understand Iceland’s employment and compliance laws.
Iceland payroll processing company: If you are considering outsourcing, then working with an Icelandic payroll company will help in processing your payroll – but not when it comes to compliance.
Iceland payroll outsourcing: However, there is another option available that solves both concerns – by working with Bradford Jacobs. We can handle payroll and compliance for all your employees in Iceland. We lift the administrative stress from your shoulders so you can focus on what you do best.
Icelandic Payroll Services
Companies moving into Iceland as a base for further expansion open up a wealth of opportunities into Scandinavia, Northern Europe, and the United Kingdom.
Challenges come alongside the potential benefits, however. Payroll management is among those challenges, whether your company is considering moving employees abroad or hiring new staff in-country. Employment laws, payroll and income tax regulations are areas where you cannot afford mistakes.
International companies wanting to hire staff and operate payroll in Iceland have the option of establishing a legal entity subsidiary, usually as a private limited liability company, known as an Einkahlutafélag, or Ehf. This company form requires minimum share capital of 500,000 Icelandic krona (ISK), the equivalent of €3,434 or US$3,874 with a minimum of one founder and one director if there are fewer than four shareholders.
Taking this step before running payroll in Iceland requires an in-depth knowledge of company, tax, and employment law, and staying up to date with taxation rates.
However, there is an alternative and simpler route. Bradford Jacobs’ will navigate around these potential pitfalls effectively and efficiently. We recruit the staff in-country and then put into action our comprehensive knowledge of tax and payroll regulations. As part of our service, Bradford Jacobs files returns, and remits associated payments for tax and social security contributions directly from our payroll system to the relevant authorities.
Outsourcing your payroll in Iceland will streamline your operations by dealing with the following for your staff:
- Obtaining employees identification number (kennitala, kt), which is both the Personal ID and the System ID, registered with Registers Iceland. The System ID enables state and regional authorities to obtain information on individuals.
- Registering employees with the Directorate of Internal Revenue and Customs (Skatturinn)
- Ensuring staff are covered by the provisions of Iceland’s State Social Security Institute (Tryggingastofnun) for pensions, health, and disability insurance
- Electronically submitting the employees Form, A-271 with all required documentation for registration on the National Registry
- Submitting Form, A-272 confirming employer’s agreement with the employee
- Assisting any foreign employees to attend the Registration Office on their arrival with correct documentation
- Ensuring any incoming employees staying longer than six months are registered as legally domiciled with Registers Iceland. Different rules may apply to non-EEA citizens and other Nordic nationals
- Ensuring non-EU citizens have the correct residence permit from the Directorate of Immigration, that Registers Iceland are notified so the individual can be entered on the Population Registry
- Ensuring employees comply with Iceland’s multi-layered state personal tax system, which has three categories, plus municipal taxes
- Remitting taxes to the Iceland Directorate of Revenue and Customs each month, and collecting refunds or making extra payments on five dates each year
- Filing returns by March 10 of the year following the calendar tax year, preferably electronically
- On June 1 taxpayers receive collection and assessment notification from Regional Tax Directors
What is required to set up Cypriot Payroll?
The requirements for setting up payroll in Cyprus will depend on how you establish your presence in the country. If you would like to set up as a subsidiary, you will need to have your subsidiary established first – but this can take some time, depending on where you incorporate as well as the entity type you choose (to see more about establishing a subsidiary entity in Cyprus, click here).
To start processing payroll in Cyprus, you will need:
- a local tax identification number
- Registration with the National Tax Department
- Registration with the National Health Insurance System
- Registration with the Social Insurance Foundation
- A local bank account (optional)
Registering with the authorities and the bank will take at least 5 working days to a few weeks, depending on the documentation required.