Do you live in Iceland and own shares in another Nordic country?
Do you live in Iceland and own shares in a company in another Nordic country? The following information only applies to income from these shares.
Dividend from shares
Share dividends are taxable in the source country. According to the Nordic Tax Treaty the tax rate is 15 per cent. You can avoid double taxation by requesting a deduction from your Icelandic tax for the tax you have paid abroad (credit). The deduction may not exceed the Icelandic tax payable on the dividend.
Taxation in Iceland
Receipts of dividend from another Nordic country are taxable in Iceland in the same way as receipts of dividend from domestic companies. The taxable portion is calculated in the same way and the rate of tax is the usual 22%. The double taxation will be eliminated by deducting the foreign tax from the Icelandic tax. The deduction cannot be a higher amount than the Icelandic tax on the dividend income in question.
Capital gains derived from selling shares
If you sell shares of a foreign company and make a profit, you have a capital gain taxable in Iceland. A loss from selling shares (the same calendar year) is deductable from the capital gain. The tax computation is no different from that of a domestic transaction. The rate of the capital tax in Iceland is 22%.
If the capital gains tax is collected in the other Nordic country the foreign tax will be deducted from the Icelandic tax in order to avoid double taxation. The deduction cannot be a higher amount than the Icelandic tax on the income in question.