The state of Iceland encourages foreign investment, mostly by offering incentives for many business sectors. Therefore a number of foreign investors see a real possibility for economic success and decide to invest here. Non-resident investors can normally choose between a series of different legal structures. Foreign investors are also free to establish independent companies or branches of foreign incorporated business in many domains, except the ones where certain restrictions apply. An Icelandic branch is a separate legal entity and the responsibility for its debts and obligations is attributed to the foreign company.
 

Before applying for registration a company branch in Iceland must first prepare the documents required for the application for registration including company charter and articles of association of the branch. Also, a list of managers' names and addresses must be provided along with the power of attorney for the representative, individual or legal entity who will manage the company branch. Also prior to registration, the branch must open a bank account for which a bank deed must be received. After completing these procedures the branch is ready to apply for registration.
 

The Icelandic branch becomes operational upon issuance of the registration certificate. In order to do that the founders must apply for registration submitting a file containing all the required documents. The application must contain the notarized articles of association of the company, the list of managers and their specimen signatures and the decision of the parent foreign company to open a branch in Iceland. Also, a proof of the existence of the foreign parent company must be provided, and this usually consists of a certificate of registration or incorporation issued by the competent legal authority in the country of origin. The final document required for registration is the financial statements of the head office for the preceding year. After all the documentation is ready and submitted the registration certificate is issued in a matter of days. In some cases, additional information may be requested.

After registration, the Icelandic branch must register for tax purposes, including VAT and other taxes. Also if the branch decides to hire employees, they must be registered for Social Security. The registration procedure implies submitting information on each employee.
 

Usually, foreign investment is encouraged in Iceland and there are few restrictions for business entity establishment. However, the branch of a foreign company must have a permanent address in Iceland and at least one director must be a member of EEA. Also, the branch must be managed by a representative authorized to do so by power of attorney.
 

The process of incorporation does not differ much from setting up a regular Icelandic company. Preparing the required documentation is completed in one day, but the time required may vary, depending on the notary's schedule. Also in one day, two at the most the registration certificate is issued and the branch can start applying with tax authorities. The process of branch establishment in Iceland usually takes one week.