Icelandic Business and Economy
Iceland - The cost-competitive edge
Iceland's operating environment is competitive with leading countries in the industrial world. With its low tax structure, high education levels and competitive costs for skilled labour, land and electricity Iceland is a strong candidate for businesses to short-list when seeking new locations for their international operations.
For businesses Iceland offers:
· Corporate income tax of 20%, among the lowest in Europe
· A strategic location half-way between Europe and North America
· Competitive energy cost
· Democratic, stable environment
· 12% refund of film and TV production costs incurred in Iceland
· European and Scandinavian regulatory framework and quality standards
For more information on doing business in Iceland visit: www.invest.is
Regulatory Constraints and Reliefs
As a member of the 18-nation European Economic Area (all EU states and three of the four EFTA states), Iceland implements the same basic liberal business philosophy as the European Union. Except in a few limited areas, all EU commercial legislation and directives take effect in Iceland. Consequently, Iceland makes an ideal springboard for tariff-free access to the major EU market area, as well as a fully competitive location for EU companies to operate.
Exchange Controls: No restrictions are imposed in Iceland on buying or selling of foreign exchange.
Foreign Ownership of Business: In principle, foreign ownership of business is unrestricted. However, some limitations apply to specific sectors, namely fishing, primary fish processing, energy production and aviation.
A wide range of portfolio investment options are available through licensed securities trading companies.
Official Attitude and Incentives
Iceland has systematically made its business environment increasingly attractive for investment and location, among other things with the series of tax cuts which now give Iceland one of the lowest levels of corporate income tax in Europe.
Advantages offered by Iceland for industrial investors include the most competitive electricity prices in Europe at 2-3 US cents/kWh for large industrial users, depending upon delivery terms, and industrial steam at 6 barg or USD 3 per metric tonne. Industrial sites with good natural harbours, for small and large ventures, are available in many parts of the country, and many local authorities have designed development strategies and scenarios which provide for new investments. Highly skilled labour is available, including experts in software and a wide range of research fields.
Special incentives are granted for film and TV production in Iceland, whereby 12% of total costs are refundable. Production cost incurred in other EEA countries is also refundable within certain limits.
The Icelandic Tax System
The Icelandic tax system is relatively simple and effective. In the last few years the emphasis has been to simplify it further, reduce tax rates, broaden the tax base and conclude more bilateral taxation agreements, which will increase the competitiveness of Icelandic corporations and attract foreign investors.
Financial Reporting and Audit Requirements in Iceland
Every company resident and operating in Iceland must submit annual accounts that comply with statutory accounting rules and disclosures, and reflect a true and fair view of the company’s assets, liabilities, results and financial position. Presentation is modelled upon standard EU requirements. The requirement of adjustments being made to revalue assets and liabilities on the principles of inflationary accounting was abolished in 2001.
Companies above a certain size which are publicly quoted and have subsidiaries are required to prepare consolidated group accounts. Tax returns are filed with local tax authorities.
Corporations registered in Iceland, with the main part of their income from foreign sources, can apply to keep their books of accounts and records in a foreign currency.
Limited liability companies registered on an official financial market are allowed to issue their share capital in a foreign currency. Other limited liability companies with the main part of their income from foreign sources will be able to issue their share capital in a foreign currency provided that certain requirements are met.
Source: "Doing Business in Iceland 2nd. ed."Invest in Iceland Agency.
The Overseas Business Services (OBS) was established in 1997 as part of the Icelandic Foreign Service. Its main task is to coordinate the work of trade counsellors in Icelandic Embassies around the world. It aims to meet demands of Icelandic firms concerning business opportunities abroad.
Supporting the foreign expansion of Icelandic companies
The OBS works with Icelandic business organizations, including the Trade Council of Iceland. The OBS works at strengthening the competitive position of Icelandic companies on international markets by providing specialised commercial services in Icelandic embassies.
OBS advisers can open doors for companies in the relevant regions, inter alia by assisting them to overcome difficult culture and language problems in different markets.
Specialized trade counsellors are posted in six embassies abroad, i.e. in the USA, Great Britain, France, China, Russia and Germany. Additionally, core trade services are provided in the embassies in Belgium, Finland, Norway, Denmark and Sweden.
Services provided by the OBS
· Tariffs and dues
· Rules of origin
· Establishing a business in North America
· Contact and communication with American authorities
· Information about technical trade barriers
· Market information from public sources
· Partner search
· PR and events
· Establishing a business in North America
· Investments in North America
· Trade delegations
· Listing of companies and business contacts
For more information contact:
Atli Ásmundsson, Consul General.
Mr. Hlynur Guðjónsson, Trade Commissioner for Canada.
Iceland Naturally is a joint marketing program among tourism and business interests developed to increase demand for Icelandic products including frozen seafood, bottled water, agriculture, outdoor clothing, and tourism, in North America. The program combines efforts of the New York offices of the Icelandic Tourist Board and the Icelandic Foreign Service OBS (Overseas Business Services) with eight leading companies: Icelandic USA, Icelandair, Icelandic Agriculture, Iceland Spring Natural Water, Leifur Eiriksson Air Terminal, 66 North, the Blue Lagoon and Glitnir Bank. Iceland Naturally represents the essence of Iceland, its purity and unspoiled natural environment.
Iceland Naturally promotes the purity products from Iceland and encourages travel to this Ohio-sized island country of 290,000 people. Iceland is among the least populated countries in the world, yet despite its small size, it is one of the richest and most technologically advanced. These factors, combined with the purity of the air and water, result in quality products, particularly seafood, bottled water and natural lamb.
The purpose is to build a relationship between Iceland and American and Canadian consumers interested in Iceland and it's products. The marketing venture includes advertising in leading travel and lifestyle publications, a web site, bi-monthly e-mail newsletters, in-store promotions, in-restaurant promotions, sweepstakes and other promotions. The Iceland Naturally web site is rich with links to many different Icelandic organizations, providing visitors with an online window to the land, the people and the culture.
Outdoor enthusiasts and adventure travelers are amongst the many audiences targeted by the marketing effort of Iceland Naturally. With unspoiled natural wonders, including spectacular glaciers and steaming geysers, the country is a magnet for those with a passion for the outdoors. The Iceland Naturally campaign promotes recreational activities such as mountain biking, hiking, fishing and horseback riding, as well as the inherent purity of Icelandic products.