Nordisk eTax

Tax card

Those shifting their domicile to Iceland are sent a tax card after they have registered at the National Registry. Those staying in Iceland for a limited period who have obtained a National ID No. from the National Registry have to apply for a personal exemption and tax-rate card from the Directorate of Internal Revenue. The application form, RSK 14.04, can be attained on the Internet at www.rsk.is.

What is a personal exemption and tax-rate card?

The tax card entitle the right to a personal tax credit. For those staying in Iceland for a limited period, the card applies during their stay. A period of stay is based on the number of days according to registration at the National Registry. A period of stay is calculated from the date of arrival through the date of departure from Iceland. Included in the period of stay for this purpose is normal absence from the country because of vacation, etc., occurring during the period of stay.

The card must be delivered to the wage payer right at the start of the employment period so that he can use it in calculating tax withholding for the first payment of wages. If a wage payer does not have a personal exemption and tax-rate card, he cannot take into account the personal exemption in calculating taxes.

Payroll withholding tax on work performed in another Nordic country, and transfer of tax (the Nordic treaty on payment and transfer of tax)

If you work for an employer in your country of residence but are going to perform work in another Nordic country, you or your employer must submit either form NT 1 or form NT 2 to Ríkisskattstjóri, Laugavegi 166, 150 Reykjavik. This will ensure that your tax is deducted in the correct country. If you are liable to tax in your country of residence (i.e. if you stay for less than 183 days in the country of work), you should complete form NT 1. If you are liable to tax in the country of work, you should complete form NT 2. This applies if you stay there for more than 183 days, if your employer has a permanent establishment there, and (in some countries) if you are hired-out personnel.

In certain cases the Nordic treaty on payment and transfer of tax allows the tax authorities to transfer tax between countries. If tax has been withheld from your income from employment in one Nordic country and the same income proves to be taxable in another Nordic country, the tax that has been withheld can be transferred to the country in which the tax is payable. Any tax transferred pursuant to this treaty is always deemed to have been paid on time, so you will not be charged interest etc. on the amount transferred. However, if the amount paid is insufficient to cover the tax payable to the other country, you  will have to pay the excess tax yourself, plus any interest due on that amount .