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.

Apply for a payment plan

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.