Reimbursement of VAT

Under the provisions of Regulation no 1243/2019, issued by the Ministry of Finance and Economic Affairs, foreign enterprises, which are neither residents of Iceland nor have a permanent establishment here, may obtain reimbursement of Value Added Tax paid on goods and taxable services which have been purchased or imported for the commercial purposes of such enterprises in Iceland after March 1, 1995.

Such reimbursement can be effected to foreign enterprises which would be subject to registration for VAT in Iceland according to Article 5 and Article 6 of the Value Added Tax Act no. 50/1988 if the enterprises in question carried on such business in Iceland. This means i.a. that such enterprises as insurance companies, banks and other financial institutions can not obtain such reimbursement.

Another prerequisite shall be that the enterprise shall neither have sold goods nor taxable services in Iceland during the period to which the application refers.

Any reimbursement of Value Added Tax to foreign enterprises shall be only to the same extent as Icelandic enterprises can include the Value Added Tax on purchases of a corresponding nature in the tax on purchases under Article 15 and Article 16 of the Value Added Tax Act.

No reimbursement shall thus be granted in respect of Value Added Tax on purchases relating to meals for the owners and employees of the enterprises or relating to entertainment expenses and presents.

Form

To apply for reimbursement, form RSK 10.29 (Application for VAT Reimbursement to Foreign Enterprises), shall be used.

The application shall be addressed to:

Skatturinn
Laugavegur 166
IS - 150 Reykjavík

The form is to be filled in Icelandic or English, using block letters or typing.

Period

The application shall refer to purchases of goods and taxable services over a period of at least two months, i.e. January - February, March - April, May - June, July - August, September - October, November - December, and not exceeding one calendar year. The period may be less than two months where it is a question of the remaining part of a calendar year. The applications shall be submitted at least 15 days after the period in question and not later than 6 years after the end of the calendar year to which the application refers.

Minimum Amounts

The minimum amounts for reimbursement claims are recalculated annually based on changes to the consumer price index.

For the year 2025 the application shall concern Value Added Tax amounting to not less than ISK 101.000. Where the application covers a calendar year or the remainder of a calendar year the amount shall be at least ISK 20.200.

Declarations

On the application form the applicant shall make a declaration in regard to the purposes of the purchases. The applicant shall also declare that the enterprise has during the reimbursement period in question neither delivered goods nor rendered taxable services in Iceland in respect of which the enterprise would be liable to registration and taxation.

Documentation

Applications which have been received before the deadline should be processed within three months from the end of the application period. Applications which are received after the deadline will be processed with application pertaining to the next repayment period.

The applicant may request that the reimbursement be affected in his country of residence or in Iceland. Should the applicant request that the reimbursement be affected in his country of residence he shall bear all the cost arising thereof.

Certificate

Enclosed with the application shall be a certificate by the competent authority in the state where the enterprise is resident stating which type of business the applicant carries on there.

Such a certificate shall be valid for one year from the date of issue. 

Payment

The application must be accompanied by copies of sales invoices, printed copies of electronic sales invoices, copies of other income registration documents, or payment documents from customs authorities showing the Value Added Tax paid by the applicant. The documents submitted as the basis for the VAT refund application must meet all requirements regarding form and content.

Miscellaneous

The applicant may apply for reimbursement during his stay or complete an application later and send it by mail or give an agent authorization to apply for and collect on his behalf the reimbursement of Value Added Tax. Form RSK 10.36 (Authorization for VAT Reimbursement to Foreign Enterprises) must be used for this authorization.

The submission of any incorrect or misleading information or nondisclosure of information required in connection with an application for reimbursement of Value Added Tax or in declarations made is punishable by law.