Changes regarding tax exemption on interest

From September 1st 2009, foreign investors in Iceland will no longer be exempt from tax on interest. Interest from deposits, investment funds, bonds, accounts, etc. will be subject to 15%-23,5% tax, except for interest paid:

• by the Central Bank of Iceland
• to foreign states, international organizations or other public entities that are tax exempt in their country of residence.

Any previous exemptions from withholding will become void. Foreign investors will be able to benefit from a lower taxation rate as per the Double Treaty Agreement in place between Iceland and their country of residence. They need to send an application to Icelandic tax authorities to get confirmation of treaty benefits.