Ákvarðandi bréf nr. 998/2001
Liability and payment of value added tax and other excise duties of your activities in Iceland
28. December 2001
G-Ákv. 01-998
Dear sir
In your fax, dated December 11. 2001, you asked the Director General to confirm questions regarding liability and payment of value added tax and other excise duties of your activities in Iceland.
Your fax states that a Norwegian company is occasionally purchasing and selling marine gas oil in Iceland. The company´s customers are mainly Norwegian and Danish ships with foreign destination and fishing boats registered outside Iceland.
1. Excise duties
This part of your inquiry has been forwarded to the Ministry of Finance.
2. Value Added Tax
Chapter II of the Value Added Tax Act no. 50/1988, defines which parties are liable to value added tax. Article 3 (1) of the Value Added Tax Act states that the duty to collect a value added tax and turn the proceeds in to the Treasury is imposed upon those who sell or deliver goods or valuables, including marine gas oil, on a professional or independent basis or perform taxable labour or service. All businesses engaged in the trade of taxable goods or services are required to register their business to the Regional Tax Director. They are required to collect VAT of their transactions and return it to the Treasury in accordance with the Value Added Tax Act. If the taxable turnover does not reach ISK 220.000 in a twelve months period, the vendor is not required to register. If a non-resident who is engaged in the trade of taxable goods or service does not have a permanent establishment in Iceland, he is obligated to secure the services of an agent with a permanent establishment in Iceland, who shall be legally obligated to carry out the non-resident entrepreneur's duties as they relate to registration, the submission of returns, etc. Such duly appointed representative is jointly and severally liable with the non-resident entrepreneur for all such legally required proceedings, including the remittance of tax due. Only those entrepreneurs who are duly registered in Iceland may claim credit for input tax.
The supply of bunkers oil and marine gas oil is in general liable to Icelandic VAT. In compliance with Art. 12, paragraph 1 note 5, provisions, fuel, instruments and other equipment delivered for use on board of inter-country vessels, as well as the service provided to such vessels, is exempt from the duty of paying value added tax (zero-rated). This exception does not cover fishing boats, whether they are registered in Iceland or not.
The supply of bunkers oil and marine gas oil to fishing boats, if they are registered outside Iceland, can be excluded from taxable turnover in compliance with Art. 12, paragraph 1, note 1, which states that VAT is not levied on exported goods. To be able to gain an advantage of this exception and to verify the export of goods (zero-rated), the vendor must keep in his bookkeeping data a copy of the invoice regarding the exported goods and a copy of an account of the export declarations in the form as requested by the Customs Law, No. 55/1987. If, on the other hand, your client sells marine gas oil to fishing boats that are registered in Iceland, VAT is levied on that sale.
The Director General wishes to emphasize that since your client is selling marine gas oil in Iceland, he has to register in Iceland, even if he only sells marine gas oil in Iceland to inter-country vessels and fishing boats registered outside Iceland.
Director of Internal Revenue
