Expense management module › Global expense management › Iceland
Last updated : 11.05.2026
Expense rules in Iceland.
Iceland applies VAT (VSK) at 24%, one of the highest rates worldwide. Outside EU but in EEA, e-invoice mandatory B2G.
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1Expense rules & reclaimable VAT
VSK 24% standard, 11% on restaurants/lodging/books/transport. E-invoice mandatory B2G.
| Category | VAT | Reclaim | Cap / Note |
|---|---|---|---|
| Meals | 11% | Deductible | VSK invoice |
| Lodging | 11% | Deductible | Reduced lodging rate |
| Alcohol | 24% | Limited | Excluded from business meals |
| Fuel | 24% | Deductible | Detailed invoice |
| Transport | 11% | Deductible | Reduced transport rate |
| Client gifts | 24% | Non-deductible | ISK 5,000 cap |
Receipt
VSK invoice
VSK number required
Meal cap
<= ISK 12,000/pers
Above: justify
SourcesIceland Revenue
2Mileage allowance
Official mileage scale: ISK 142/km (2024). Tax-free up to this cap.
| Mode | Allowance | Cap | Note |
|---|---|---|---|
| Personal car | ISK 142/km | Tax-free cap | Logbook |
| Company car | – | Fuel card | – |
| Taxi/airfare | – | 100% on receipt | Receipt required |
Above scale
Taxable
Subject to income tax
SourcesIceland Revenue
3Per diem and travel allowances
Official tax per diem: ISK 12,000-15,000/day (Reykjavik) tax-free. Above: company policy.
| Destination | Meal | Lodging / night | Daily rate |
|---|---|---|---|
| Reykjavik | ISK 4 000 | ISK 18 000 | ISK 35 000 |
| Akureyri | ISK 3 500 | ISK 14 000 | ISK 28 000 |
| Selfoss | ISK 3 000 | ISK 12 000 | ISK 22 000 |
| Other cities | ISK 2 800 | ISK 10 000 | ISK 20 000 |
Conversion
~1 EUR = 150 ISK
Stable
SourcesIceland Revenue
4Foreign VAT recovery
VSK recovery for foreign companies via RFR form. Deadline: 6 months after fiscal year end.
| Zone | Mechanism | Deadline | Method |
|---|---|---|---|
| Foreign companies | RFR form | 6 months after fiscal year | On eligible invoices |
| IS companies | Immediate credit | Bi-monthly | VSK return |
| Individuals | Not eligible | – | – |
Statute of limitations
6 years
Keep invoices
SourcesIceland Revenue
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