Guide to Company Incorporation in Iceland

1. What is the minimum share capital of a Icelandic Private Limited Liability Company?
The Iceland Private Limited Liability Company is designated for small to medium-sized business being the most common form of business in Iceland. The minimum requested capital is 500.000 ISK.

2. What is the minimum share capital for an Icelandic Public Limited Liability Company?
The Public Limited Liability Company in Iceland is set up by at least two natural persons, or legal entities, which must provide a minimum capital of 4 million ISK.

3. Are there any special requirements for establishing a Private Limited Liability Company in Iceland?
An Icelandic Limited Liability Company must be set up by at least one person, providing the minimum capital of 500.000 ISK. The liability of the business partners depends on the capital amount invested. Both Public and Private Limited Liability Companies can be established by persons of any nationality provided they fulfill the conditions imposed by relevant laws. In some cases a non-resident of Iceland that becomes a director, manager etc., an exemption by the Minister of Commerce is needed. Such exemptions are not mandatory for citizens of EEA countries. In general a company not domiciled in in Iceland, has the right to operate in Iceland, same as an Icelandic company.

4. How can I register for VAT in Iceland?
Usually after the company receives the registration certificate the Tax Authorities of Iceland are notified by the presence of the new company and the institution contacts the managers of the company. An entrepreneur may choose to register for VAT or not. Companies that operate with VAT applicable trading are registering for VAT. The benefits include VAT refunds. In order for a company to register for VAT an application must be completed and signed along with the company' s Articles of Association. Usually the VAT number is issued immediately and the company starts paying and charging VAT.

5. How can I open a bank account in Iceland?
It is mandatory for a Limited Liability Company in Iceland to open a temporary bank account in which to deposit the initial capital, and then unblock it after the registration certificate is received. For this purpose the company must open a bank account in Iceland by submitting certain documents that vary depending on the bank chosen. Most banks require the presence of the company's manager. However an authorized representative is usually allowed to so all the necessary procedures provided he or she is authorized by power of attorney to do so and original documents and signatures are provided.

6. How can I recruit personnel in Iceland?
Iceland is an economically stable country, even in the difficult last years therefore the workforce of the country is capable, competitive and skilled with relatively high salaries. Therefore it is easy for a newly established company to employ qualified and productive workers, if the necessary conditions are provided. A company has plenty solutions available to find employees, including participating at job placement events, creating company accounts on websites and choose the most appropriate employees, or collaborate with recruitment agencies that provide the best candidates for employers.

7. What is the average salary in Iceland?
Iceland is a permanently developing country, economically speaking with a rather low unemployment rate. The average salary in Iceland is EUR 1300.

8. What is the overall economical situation in Iceland?
Iceland is a country with overwhelming natural resource therefore major flourishing business sectors include international trading, mostly in the fishing industry and tourism. The rate of unemployment is rather low compared to other European countries, however in the last years, going through the economical crisis, the rate has increased. However efforts have been made to revive certain business sectors that have been affected by the economical crisis and one of the most reliable sources of development remains the close relationship of the public and private business sectors. Foreign entrepreneurs seem to be interested in Iceland, mostly in the last decade, due to the incentives available and the favorable conditions offered by the Icelandic government.