Employer of Record (EOR) in Iceland

Hire in Iceland in days, with no entity and no exposure to getting the wrong sector collective agreement applied to your hire. We place you with the right vetted EOR partner, at pricing you will not get going direct, and stay on your side for the life of the relationship.

  • Independent advice
  • Vetted partners
  • Operational in days

What an Employer of Record does for you in Iceland

An Employer of Record is a company that legally employs your Icelandic staff on your behalf. You choose the person and direct their work day to day. The EOR is the legal employer on paper, which is what lets you build a team in Iceland without forming your own company.

In practice the EOR partner takes on everything that needs an Icelandic legal entity and local expertise: a compliant employment contract under the correct sector collective agreement (kjarasamningar), monthly payroll with income tax withheld at source, tryggingagjald (Iceland’s flat, employer-only payroll tax, with no employee-side equivalent) and mandatory pension contributions calculated and remitted, statutory filings to Skatturinn and to the employee’s chosen pension fund, statutory benefits and leave, and compliant onboarding and lawful exits with notice set by the applicable agreement rather than one national labour code. You get a working team in days. The EOR carries the legal and compliance weight; you carry the commercial relationship. The only question worth spending time on is which partner is genuinely strong in Iceland, and that is the question we answer for you.

01

Legal employer, on paper

A compliant Icelandic employment contract under the correct sector collective agreement, with all statutory terms correct from day one.

02

Compliant from day one

Monthly payroll, income tax withheld at source, tryggingagjald calculated correctly, and pension contributions remitted, with all statutory filings made to Skatturinn and the employee’s pension fund.

03

No entity required

Statutory benefits, annual leave, notice and severance under the applicable collective agreement, and lawful onboarding and exits. You get a working team in days; the EOR carries the legal weight.

How it works: four steps to a compliant hire

From first call to a compliant Icelandic hire at work, usually in days.

01 — Scope & quote

We map the role, salary, and the correct sector collective agreement, and come back with a clear all-in monthly cost. No guesswork, no hidden extras.

02 — Compliant contract

Your employment contract is drafted to Icelandic standards under the correct collective agreement by the partner, and we sanity-check the terms and pricing before you sign. Compliant from day one.

03 — Onboard in days

A correct Icelandic contract is issued under the applicable collective agreement, with all statutory terms from day one. Your hire can start in days.

04 — Payroll & compliance run

Income tax and tryggingagjald calculated correctly, pension contributions deducted and remitted, payslips issued, statutory filings made to Skatturinn and the employee’s pension fund. You direct the work; the compliance just runs.

What EOR in Iceland costs

Two parts: the statutory cost of employing someone, and the EOR partner fee. In Iceland the employer-side cost is unusually simple to describe but easy to misquote: tryggingagjald is a single flat payroll tax with no employee-side mirror, and pension is a fixed statutory percentage on top, so there is no split-contribution system to reconcile the way there is in many European markets. We handle both correctly and keep the number honest before you commit.

Tryggingagjald, broken down

Four components make up the flat 2026 rate: almennt tryggingagjald, atvinnutryggingagjald, abyrgdasjodur launa, and markadsgjald. It is employer-only; there is no employee-side mirror the way there is in continental split-contribution systems.

No wage table to check against

There is no statutory minimum wage to measure a quote by. The floor that genuinely applies is set by whichever sector collective agreement covers the role, and pricing a hire off a generic “Icelandic minimum wage” number is how companies under- or over-quote before they have even made an offer.

Income tax (employee)

A three-tier system that combines a national rate with the average municipal share, rising on the top band, offset by a personal tax credit that reduces what is withheld each month. Deducted at source and reconciled through Skatturinn. Borne by the employee, not added to your cost.

EOR partner fee

A transparent per-employee monthly fee. We benchmark across our vetted network, typically 15 to 25% below going direct, and renegotiate for you at renewal.

Why run it through Bradford Jacobs

We know which EOR partners are genuinely strong in Iceland, by sector and by complexity. We place you with the right one, at pricing you will not get going direct, and stay on your side for the life of the relationship.

Independent, not a single provider

We are independent: we assess what you actually need, place you with the right vetted partner, secure pricing you will not get going direct, and stay on your side to escalate or renegotiate. You get advice, not a product pitch.

  • Independent advice
  • Vetted partners only
  • On your side at renewal

Pricing you can’t get direct

Iceland has no minimum wage to check a quote against, and the number that genuinely applies is set by whichever sector collective agreement covers the role. A company that prices a hire off a generic “Icelandic minimum wage” figure, or skips identifying the right collective agreement altogether, mis-costs the role before the offer even goes out. We identify the correct agreement, price the hire against it, benchmark across our vetted network for rates typically 15 to 25% below going direct, and renegotiate on your behalf at renewal. Most companies do not know how much room there is to negotiate. We do.

  • 15-25% below direct
  • Network benchmarking
  • Renegotiated for you

Straight to the top when it matters

When something needs resolving, and in global employment it sometimes does, you come to us. We escalate directly, past the helpdesk, to people who can actually move it.

  • Direct escalation
  • No support queues
  • Named account contact

Two decades across markets

Two decades placing and managing EOR arrangements across global markets, with the local knowledge of Iceland’s collective-agreement system, tryggingagjald, and CBA-driven notice and severance that keeps you compliant.

  • EOR specialists
  • CBAs & tryggingagjald
  • Risk removed

Built for conversion to your own entity

Most companies use EOR for 12 to 24 months, then move to their own Icelandic ehf. (einkahlutafelag, private limited company). We plan that crossover and manage the transition when the economics justify it.

  • EOR to entity path
  • Transition managed
  • Crossover planning

Why an EOR is the fastest compliant way into Iceland’s CBA-driven market

Two things slow foreign employers down in Iceland: the time to incorporate an ehf., and the risk of applying the wrong sector collective agreement’s notice, severance, and dismissal terms. An EOR removes both.

Collective agreements, not one code

Iceland has no single labour code: working hours (36 or 37.5 hours a week, depending on the agreement), notice, severance, and dismissal terms are set by whichever sector collective agreement covers the role, alongside mandatory tryggingagjald and pension contributions. An EOR carries all of it correctly from day one, so an assumption about “the” national rule never becomes a liability.

Operational in days, not weeks

Incorporating your own ehf. in Iceland takes real time and paperwork, and you cannot legally employ anyone under it until the registration with Fyrirtaekjaskra completes. An EOR removes that wait entirely: a compliant Icelandic contract is issued and your hire starts in days. You prove the market first, then incorporate later only if the headcount justifies it. This is the real value of EOR in Iceland: speed into a small, CBA-driven market, with the compliance carried by an expert.

Everything your Icelandic EOR covers

One transparent monthly fee per employee covers all of this. No hidden extras.

Compliant Icelandic contract

A compliant Icelandic employment contract under the correct sector collective agreement, issued and maintained for you.

Payroll, tryggingagjald & pension

Monthly payroll run, with income tax withheld at source, tryggingagjald calculated correctly, and pension contributions deducted and remitted each month.

Statutory benefits

All statutory benefits administered: minimum 24 days’ paid annual leave, the statutory public holidays, parental leave administered via Faedingarorlofssjodur, and notice on exit under whichever collective agreement applies, since Iceland has no single at-will default. The employee’s own pension contribution is deducted from salary, not billed to you.

Compliance & support

Ongoing HR compliance and a single point of contact, for the life of the engagement.

Your questions answered

Straight answers on how Employer of Record works in Iceland.

Is my hire employed by Bradford Jacobs or by me?

Legally, your hire is employed by the Icelandic EOR partner we place you with, which is what keeps you compliant without an entity. Day to day they work for you: you set the work, the goals, the relationship. You get the team; the partner carries the legal employer obligations.

Usually within days once the role, salary, and correct sector collective agreement are agreed, with a compliant Icelandic contract from day one. Compare that to the time an ehf. incorporation can take, during which you cannot legally employ anyone under your own entity.

Predictable, at 17.85% of gross salary combined: tryggingagjald, a flat employer-only payroll tax, plus the employer’s mandatory pension contribution. Neither has an income ceiling to plan around, unlike many continental systems. Add the transparent EOR partner fee and you have your all-in cost.

Yes, when done properly. The EOR is a real Icelandic legal employer meeting its obligations under the correct sector collective agreement, tryggingagjald, pension, and Skatturinn tax rules. The risk is using an under-resourced partner who does not know which agreement applies, which is exactly why we place you with vetted partners and stay on your side.

The compliant contract under the correct collective agreement, monthly payroll (income tax withholding, tryggingagjald, and pension contributions), statutory benefits and leave administration, and ongoing HR compliance. We give you one all-in monthly figure up front, with no hidden extras.

Yes, and most companies do once the headcount and permanence justify it. We manage the transition from EOR to your own Icelandic ehf., and can support the incorporation itself. Most use EOR for 12 to 24 months first.

Ready to hire in Iceland?

Tell us the role and we will come back with a compliant, all-in monthly cost and the right partner, usually within a day. No entity, no lock-in, no pitch, just the fastest compliant way to get your person working in Iceland.

Tax and labour data verified July 2026 (Skatturinn, Vinnumalastofnun, island.is). Figures change; we confirm the current position when we scope your hire.