Iceland Budget Proposals for 2027 Include Increased Bank Tax, Various VAT Changes, and Others

The Government of Iceland released the Budget proposal for 2027 on 7 September 2026. The main tax-related proposals include:

• Increasing the bank tax from 0.145% to 0.254% while maintaining the ISK 50 billion exemption threshold;
• Implementing a tourism industry levy for visitors accessing state-owned tourist destinations;
• Changing the applicable VAT rate for geothermal lagoons and steam baths from the reduced rate of 11% to the standard rate of 24%;
• Reducing the VAT reimbursement percentage …