The standard tax year in Iceland is the calendar year. Subject to approval, alternate tax years may be allowed.
Annual tax returns should be filed no later than 31 May of the year following the close of the previous tax year. The deadline can be extended with an application. When tax returns are prepared by professional service providers, the deadline can generally be extended to 10 September at the latest.
Companies are required to make advance tax payments based on the previous year's tax liability. Payments are made monthly, except for January and October.
The annual assessment is made by the tax authorities by 31 October following the submission of the annual tax return. Any additional tax due is paid in installments in November and December.
As a part of measures to support the companies amid the COVID-19 pandemic, Iceland has provided extensions for the payment of taxes until next year to improve liquidity in business operations.
Effective 31 March 2020, certain tax payments are deferred for up to three payments during the period 1 April 2020 to 1 December 2020 with the payment due to be made by 15 January 2021. In case of a significant drop of revenue in comparison to the previous year, extended instalments may be provided for repayment with due dates on 15 June, 15 July, and 15 August 2021. Following tax payments are deferred:
- Withholding tax payments including tax withheld on salary by employers facing operational difficulties in 2020 due to COVID-19 subject to conditions that employers have no outstanding tax or penalty obligations at the end of 2019;
- Social security contributions;and
- Real estate (property) tax payments.
The electronic filing of tax returns in Iceland may be completed via the Skattur.is website (Icelandic).