Import VAT and Duty in Iceland
VAT Rates in Iceland
The standard VAT rate in Iceland is 24% (VSK (virðisaukaskattur)). Reduced rate of 11%.
Import VAT and customs duty in Iceland are administered by Icelandic Customs (Tollstjóri), with VAT administered by Iceland Revenue and Customs (Skatturinn).
The rate applying on import is the rate that applies to a supply of the same or similar goods on the Iceland domestic market, which is why correct commodity classification matters at the classification stage and not only at invoicing.
The Taxable Amount in Iceland
Import VAT is calculated on the Customs value on a CIF basis, plus customs duty and other charges payable at importation. Freight and insurance to the point of entry into Iceland are included in the customs value, so a shipment budgeted on goods value alone will understate the VAT payable.
Customs Duty in Iceland
Iceland applies the EU Common Customs Tariff under the EEA Agreement; the rate is set by the commodity code and origin, not by a flat national rule. Duty is set by the commodity code and origin at the date the declaration is accepted — there is no single national rate that applies across a consignment.
Low-Value Consignments in Iceland
Iceland is outside the EU customs union and VAT union, so the EU EUR 22/EUR 150 framework and the temporary EUR 3 per-item duty do not apply. VSK (virðisaukaskattur) is charged on commercial imports with no low-value exemption. Any de-minimis that exists applies only to non-commercial consignments and is set under Iceland law, not EU law.
Accounting for Import VAT in Iceland
VAT-registered Icelandic importers can account for import VAT through the periodic VAT return rather than paying at the border. That is a cash-flow mechanism, not an exemption, and it does not apply to customs duty.
Planning Duty and VAT for Iceland
Iceland has no deep-sea container port of its own. China-origin containers usually tranship through a North European hub such as Rotterdam or Antwerp and then discharge at Reykjavík harbour, after which cargo moves by road to the final destination. That transhipment connection is the single largest variable in Icelandic transit planning: a direct deep-sea call and a transhipped routing can differ by well over a week on the same trade lane. Air cargo consolidates at Keflavík, which has strong North Atlantic connections.
That routing, and the country-specific points below, are what turn a generic EU calculation into a Iceland one. They belong in the landed-cost model from the outset rather than being discovered at clearance:
- Iceland is outside the EU customs union and VAT union — the EU EUR 150 duty-relief and EUR 3 per-item rules do not apply
- Iceland applies import VAT (VSK) to commercial imports with no low-value exemption
- Iceland has no deep-sea container port; containers tranship via a North European hub
Frequently Asked Questions
The standard rate is 24% (VSK (virðisaukaskattur)). Reduced rate of 11%.
The taxable amount is the Customs value on a CIF basis, plus customs duty and other charges payable at importation. Freight and insurance to the point of entry into Iceland form part of the customs value, so under-declaring freight understates the VAT.
No. Iceland sits outside the EU customs union and VAT union, so the EU EUR 22/EUR 150/EUR 3 framework does not apply. VSK (virðisaukaskattur) is charged on commercial imports with no low-value exemption; any de-minimis that exists applies only to non-commercial consignments and is set under Iceland law, not EU law.
No. The temporary EUR 3 per-item duty applies only within the EU VAT union and has no application to imports into Iceland, which is a separate customs territory.
No. VAT-registered Icelandic importers can account for import VAT through the periodic VAT return rather than paying at the border. That is a cash-flow mechanism, not an exemption, and it does not apply to customs duty.