Company formation in Iceland

If you are looking for a well-developed jurisdiction that is very similar to an offshore due to certain advantages it offers, Iceland may become a good option for your choice. This country has an averagely-developed economy with an emphasis on fishery and tourism. It takes steps to encourage foreign investments and enables access to major European markets. So, many businessmen may find Iceland especially suitable for making investments.

Major Forms of Legal and Business Presence in Iceland

If you want to become present in Iceland, you may actually arrange that in one of the next forms:

• Private Limited Company – one of the most popular types of business entities where the liability of its shareholders is restricted to the contributed amounts only. The minimum chartered capital for this entity constitutes ISK 500 000. There is no minimum number of shareholders for this entity. Certain restrictions for the transfer of the shares exist for this type of entity.
• Public Limited Company – a commercial vehicle where the liability of shareholders is also restricted to the amounts of contributions made. But, shares, in this case, can be offered to the public. The minimum chartered capital for this type of entity shall be at least ISK 4 million. Minimum 2 shareholders are required to establish this commercial entity.
• Branch – a type of commercial presence of foreign companies in Iceland that is subject to the same conditions as local companies. A branch can conduct the same types of activities as its foreign company. The registration and manager-resident are required in this case.
• Representative office – a type of non-commercial presence in Iceland for promotional activities mostly.

Registration Requirements and Steps

Setting up a company in Iceland, a private limited company, for instance, may require passing these preliminary steps:

1. Deifying your business priorities in Iceland and/or worldwide (you need to clarify the exact types of business activities you are going to conduct).
2. Choosing and verifying a business name for a future entity.
3. Collecting information about founders, beneficial owners, and management of a future company.
4. Arranging the registered address for the future commercial vehicle in Iceland.
5. Paying up the statutory capital.
6. Drafting statutory documents for a corporate entity.
7. Submitting the set of documents for the registration with the Register of Limited Companies operated by the Director of Internal Revenue.
8. Registering for tax and social security purposes
9. Opening a corporate bank account
10. Getting additional licenses and permits (required for certain types of activities only).

Legal and Regulatory Framework

The local legal framework may be preliminarily assessed as very advantageous for doing business and making investments. There are no restrictions for investors in terms of establishing a company in Iceland.

The major legal acts regulating the procedure of establishing and operating an entity in Iceland are Act No. 2/1995 on Public Limited Companies and Act No. 138/1994 on Private Limited Companies. The Ministry of Finance and Economic Affairs and the Financial Supervisory Authority are major regulatory bodies for the purposes of doing business in Iceland.

Advantages of the Jurisdiction

If you intend to create a company in Iceland, this may beneficial in view of the next advantages the jurisdiction has:

• Compliance with major European standards of doing business
• Comparatively fast and non-costly procedure for the company incorporation
• Encouragement of foreign investments

Tax System of Iceland

For an option of registering a company in Iceland, you may need to be aware of the next tax highlights of the jurisdiction:

• Corporate income tax (CIT) rate – 20 %
• Personal income tax rate – 31.8%, plus municipal taxes
• Value-added tax rate – 24 %
• Withholding tax rates (for non-residents) – (i) dividends – 20 % (ii) interests – 12 % (iii) royalties – 20 %
• Capital gains tax rates – (i) corporate – equal to the standard CIT (ii) individual - 22%.

How Prifinance Specialists May Assist You

If you want to preliminarily evaluate the option of opening a company in Iceland, financial specialists may be able to help you assess all the advantages of this jurisdiction that could be available to your business. We can also assist you with the preparation of all required documents and complete the registration process. Our specialists are ready to open a corporate bank account in Iceland or elsewhere and support the further commercial activities of your entity in this country. Reach out to us shortly for more precise discussions and suggestions.