Tax return

Who has to submit a tax return?

Those with unlimited tax liability in Iceland must, without exception, submit a tax return. Those with limited tax liability must also submit a tax return, except those receiving wages or an annuity from Iceland, but residing in other Nordic countries, do not have to submit a tax return because of this income, provided that they have paid correctly determined withholding tax in Iceland (for further details see the discussion under Limited tax liability and Pensions and annuities). Those with unlimited tax liability because of real estate shall submit a tax return.

Where can a tax return be obtained?

Tax return forms can be obtained from tax offices, but the tax return form, RSK 1.01, can also be obtained on the Internet at www.rsk.is . The tax return form in English, 1.10 and 1.13 (simplified version), is also available. A tax return can be submitted both on paper and electronically on the web page www.rsk.is. You need a web page password to submit a tax return electronically. Those who have not been assigned a web page password can apply for one at www.rsk.is.

Individuals residing abroad are not assigned a web page password but can apply for one at www.rsk.is.

When shall tax return be submitted?

A tax return shall be submitted to the Directorate of Internal Revenue during the advertised submission period. Those coming to Iceland for a limited stay must submit a tax return to the Directorate of Internal Revenue at least one week before departure. Your address abroad must appear on the tax return along with the name of your agent in Iceland. If a tax return is not submitted prior to departure, it shall be submitted during the tax return period, and submission is then possible both on paper and in electronic form on the web page of the Directorate of Internal Revenue at www.rsk.is. Taxes are assessed the year after the tax year at the end of July. If a tax return is not submitted, your income is estimated and taxes are assessed on the basis of this estimated amount.

Where should tax returns be submitted?

There are nine tax districts in Iceland, and there is a tax director in each district. A tax return shall be submitted in the district where the person submitting the return was domiciled at the end of the tax year. Those who have moved away from Iceland, but have limited tax liability because of assets, shall submit a tax return where the assets are located. Those staying in Iceland for a limited period, and who have worked in more than one tax district, shall submit a tax return in the district where they have earned the most income.

Automatic exchange of information

To ensure correct taxation of income, all the Nordic countries have introduced rules requiring employers etc. to submit information to the tax authorities about any wages, etc. that they have paid. This information will include the name and address of the recipient and the type and amount of income concerned. The obligation to provide information also applies to payments made to persons living in other countries.

The tax authorities in the Nordic countries are obliged to exchange such information automatically. For example, if a person living in Denmark receives dividend on Finnish shares, information will be sent from Finland to Denmark about the dividend paid. Large quantities of data are exchanged between the Nordic countries.

Persons resident (fully taxable) in any of the Nordic countries must declare their entire income in the tax return in their country of residence, including any income from abroad. You should also state how much tax you have paid in the other country. The tax authorities need this information in order to be able to levy the correct tax.

No information from the other Nordic countries is included in the pre-completed tax return in your country of residence since the tax authorities usually receive this information at a later date.