Iceland VAT rates in 2026
| Standard | 24% |
|---|---|
| Reduced | 11% |
- 11% applies to food, accommodation and books.
- Fuel was temporarily taxed at 11% from 1 May to 31 August 2026 and returned to 24% on 1 September 2026.
How to calculate VAT in Iceland
To add tax, multiply the price before tax by 24% and add it on. To find the price before tax inside a total, divide the total by 1.24. Taking 24% off the total gives the wrong answer, because the tax was charged on the smaller pre-tax price.
Tax = Price × 24 ÷ 100 Price before tax = Total ÷ 1.24
| Price before tax | kr 20,000 |
|---|---|
| VAT at 24% | kr 4,800 |
| Total | kr 24,800 |
| A total of kr 49,600 includes tax of | kr 9,600 |
| …so the price before tax was | kr 40,000 |
Iceland VAT on common amounts
At 24%, this is the tax and the total on everyday prices.
| Price before tax | Tax | Total |
|---|---|---|
| kr 800 | kr 192 | kr 992 |
| kr 1,600 | kr 384 | kr 1,984 |
| kr 4,000 | kr 960 | kr 4,960 |
| kr 8,000 | kr 1,920 | kr 9,920 |
| kr 20,000 | kr 4,800 | kr 24,800 |
| kr 40,000 | kr 9,600 | kr 49,600 |
| kr 80,000 | kr 19,200 | kr 99,200 |
| kr 400,000 | kr 96,000 | kr 496,000 |
Standard and reduced VAT rates in Iceland
Most goods and services in Iceland are taxed at the 24% standard rate. The reduced rates (11%) apply only to goods and services that Iceland's law lists, so check which rate applies to what you sell before you invoice.
VAT on your invoices
A VAT invoice usually shows your VAT registration number, the net price, the VAT rate and amount for each line, and the gross total. Business customers use it to reclaim the VAT they paid. Our invoice generator adds the tax line for you.