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IsIceland Subsidiary.






Country Capital



Icelandic króna (ISK)

Expanding to a new country is an exciting time for companies, but it may involve establishing a subsidiary. The process can be challenging, but with the proper preparation and expertise, it can offer many advantages.

How to establish an Iceland subsidiary

Iceland-based business operations may be conducted in a variety of forms. The most common types of entities are a public limited company, a private limited company, a branch office, and a representative office for international investors. Non-citizens are allowed to own a business in Iceland but will need at least 1 resident director or manager.

Some of the requirements for establishing a private limited company, which is the most comment entity forms, are the following:

  • Search and reserve for the company name in the Directorate of Internal Revenue’s website.
  • Contribute minimum capital of ISK 500,000.
  • Appoint at least 1 shareholder.
  • Appoint at least 1 director.
  • Pay the registration fee of ISK 130,500.
  • Open a bank account.
  • Establish a local registered address.

After all of this is completed, companies can register with the Registrar of Enterprises. They must submit a notification and agreement of incorporation, articles of association, and an affidavit from a CPA regarding the startup capital. When the registrar processes the application, they will publish the notice in the official gazette.

When the company is officially incorporated, the next step is applying for a Value-Added Tax (VAT) number through the Directorate of Internal Revenue. Companies have 8 days after business begins to apply for their VAT number. When they start recruiting employees, they must notify the country’s tax authorities for income tax purposes.

Iceland subsidiary laws

Iceland has rules regarding international ownership of subsidiaries. While private limited companies can be wholly owned by international employers, fish processing, fishing, aviation, and energy production companies cannot. Private limited companies must have at least 1 director and 1 shareholder within the European Economic Area (EEA) or the Organisation for Economic Co-operation and Development (OECD).

Another notable subsidiary law is that companies are required to have articles of association. This document serves as a constitution for the company and should describe how it will operate and what rules it will follow. Companies may choose to work with a lawyer to establish compliant company terms.

Subsidiary essentials in Iceland

Establishing a subsidiary in a new country requires 2 major resources — time and money. The incorporation process takes about 2 weeks, but this time frame doesn’t factor in additional time spent on finding a building to rent, identifying directors, and working with a lawyer to create articles of association.

Incorporation requires startup capital, application fees, and other expenses, such as rent and CPA costs. Companies may need to travel to Iceland during the setup process. If so, they should be sure to consider that expense as well. When they’re ready to grow in a new country, it’s vital to make sure they have the necessary resources.

The advantages of an Iceland subsidiary

While subsidiary establishment requires time and money, it has a few distinct benefits. Subsidiaries have a separate identity from the parent company, allowing it to create a unique professional identity and integrate into the local professional culture. Without direct ties to the parent company, it can become a workplace that reflects the area.

A subsidiary will also be able to take on liability of its own. If the Iceland-based entity runs into legal trouble, the company can reduce overall losses by shielding the parent company and affiliates from general business liabilities.

Enter new markets with G-P — no new entities required.

Beat the competition and enter new markets in minutes, not months, with G-P. We’ve paired our industry-leading team of in-region HR and legal experts with our #1 Global Growth Platform™ to help you hire compliantly in 180+ countries, eliminating the need to set up local entities or subsidiaries.

Get in touch today to learn more about how we can streamline the global growth process.


THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). G-P does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect G-P’s product delivery in any given jurisdiction. G-P makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.

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