Payment Plans
A payment plan can be made for taxes, fees and fines due to lower the monthly payments and delay further collection actions. The amount is paid over a longer period, which entails higher interest costs but a lower monthly payments.
Application
An application for a payment plan can be made online at Ísland.is. The following conditions have to be met.
- All tax returns and documents have been turned in
- The amount is lower than ISK 2,000,000 (or ISK 10,000,000 for companies)
- Collection action has not been started.
By signing and/or making deposits into a payment plan the taxpayer interrupts the limitation period of the debt and a new four-year limitation period starts.
A payment plan does not have any effect on default remedies for taxes/fees not included in the payment plan.
Interest on arrears is still compounded on the debt in accordance with the relevant legal acts, even though the taxpayer makes a payment plan.
The information is only a summary of what a payment plan entails. For detailed information please refer to the terms and condition of the payment plan in question.
Termination
A payment plan is automatically terminated under the following circumstances:
- Non-payment according to payment plan
- Non-payment of new tax assessments
- Non-payment of estimated tax, increases and changes
The termination of a payment plan will revive any default remedy available to the public authorities, for example: attachments/seizures of property, repossession of property and forced sales.
A valid payment plan does not stop notifications of overdue taxes being sent to the taxpayer.
Set offs
A payment plan does not affect set-offs/netting of interest relief (vaxtabætur), child benefits (barnabætur) or any credit balance that may occur in the tax system, including VAT credits. Any set-off is independent of the payment plan and is not registered as a payment into the payment plan. Set-offs do not preclude the withholding of salaries (launaafdráttur), when applicable, unless the debt is paid up as a result of the set-off.
