Foreign experts

Special rules apply to the taxation on remuneration to foreign experts that come to Iceland for work. The legislation, which came into effect January 1st 2017, stipulates that only 75% of the income is taxed for the first three years from the start of employment provided certain conditions are met. A special committee appointed by the Ministry of Finance and Economic Affairs evaluates whether the conditions are met.

Once an application has been approved, tax is withheld from 75 percent of the income. Calculations for Social security tax, contributions to pension funds, child benefits and private housing interest subsidy are based on total income.

Applicants can apply for a correction on tax withheld before the approval of application by filling out form RSK 5.17 after the application has been approved.

An employee is a foreign expert if the following conditions are met:

  • The employee has not resided or held a legal domicile in this country for the next 60 continuous months prior to when he/she began working in this country, although the first three months of his/her stay in this country are not included.
  • The employees area of expertise is limited or non-existent in Iceland.

The rule is only applicable if the foreign expert:

  • is employed by a legal entity that is domiciled in Iceland or is a foreign company with a permanent establishment in Iceland; and
  • is hired for work that requires special expertise or level of skill which is very limited or non-existent in Iceland; and
  • is hired for work that relates to professional research, development and/or innovation, teaching or it relates to specialized tasks; or
  • works in management or project management or his work relates to projects that are core components of his employer's business.

The application shall be submitted to the committee no later than three months from the date when the employee began work in this country.

Information regarding applications is provided by the Icelandic Centre for Research, Rannís.

Additional information

Rules and regulations

Regulation on deduction from the income of foreign experts (in English) - Regulation No. 1202/2016

Foreign experts – Art. 1 of Regulation No. 1202/2016 

25 percent reduction of taxable income – Art. 30, Para 1, Section A, Point 6 of Income Tax Act No. 90/2003

Committee – Art. 4. of Regulation No. 1202/2016

Condition for the reduction – Art. 1. of Regulation No. 1202/2016

Application – Art. 2. and 3. of Regulation No. 1202/2016


Umsókn um endurgreiðslu á staðgreiðslu af launum – RSK 5.17

Application for a refund of taxes withheld on wages and salaries – RSK 5.17


Ministry of Finanace and Economic Affairs

Further information at The Icelandic Centre for Research (Rannís)