Iceland can suit a UK resident looking for a base in the EEA - but how much would it cost to start a business there and what are the various cost categories to budget for?

This guide walks through the cost of starting a business in Iceland in 2026, from registration and share capital to payroll, immigration and operating costs, so you can build a realistic budget in GBP and ISK.

And if you're sending a large amount, you can get a discounted rate applied automatically to your transfer. On a £50k transfer, you could save up to £1,000 with Wise vs your bank.

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Note: Wise Business offers a free Essential plan for basic spending and transferring. If you need to receive money, set up direct debits, or generate invoices, you'll pay a one-time £50 setup fee to unlock the Advanced features.

The figures and costs mentioned in this article are illustrative unless specified otherwise. Fees, eligibility checks, protections and timelines mentioned in this article may vary by customer, business type, application outcome, plan and country. Check official websites and terms and conditions for the most accurate and up-to-date information.

Wise services and features aren't available in all regions, country and product restrictions apply. Visit wise.com to check availability, and for fee details and terms for your region, visit our pricing page for Wise Business.

Summary of things to budget for

Before you budget: UK nationals who didn't already have residence rights before 1 January 2021 need a residence permit to stay in Iceland for more than 90 days, and non-EEA/EFTA nationals generally need a work permit. Forming an Icelandic company doesn't itself resolve that personal immigration cost or eligibility.

ehf. share capital

ISK 500,000 paid in full is the minimum capital for an ehf., or einkahlutafélag, Iceland's private limited company, under Skatturinn guidance. This is company capital, rather than a filing charge, so retain it as a separate line from the registry tariff and the funds needed for premises or the first months of trading.

An ehf. is normally the closest Icelandic equivalent to a small UK limited company. The Skatturinn guidance states that a valuation declaration is needed where capital is contributed in assets rather than cash. Budget a professional quote if the contribution is non-cash or formation documents need translation.

Company, branch and registry-document costs

ISK 140,500 is the tariff for establishing an ehf., while ISK 276,500 applies to an hf., a limited-liability company, a cooperative and a foreign-company branch, under Skatturinn's corporate-register tariff. A sole proprietorship is ISK 73,500 and each of the listed partnership forms is ISK 95,500. A self-governing corporate entity is ISK 140,500.

The same tariff lists ISK 1,500 for a paper registry document, ISK 1,000 for an electronically sealed online copy and ISK 3,000 for a specially prepared certificate.

Budget ISK 3,700 for a merger or division announcement, ISK 2,200–3,700 for the listed additional-announcement and deregistration items, ISK 137,700 to change an ehf. into an hf., and ISK 12,700 for the reverse change. A company should still obtain a quote for translations, legalisation and adviser work because the tariff does not publish those market prices.

Larger-company capital and annual accounts

ISK 4,000,000 is the minimum share capital for an hf., Iceland's public limited-company form, under Skatturinn's public-company guidance. It is a much larger capital commitment than an ehf., alongside the ISK 276,500 registry tariff.

ISK 600,000 is the administrative fine for missing or incomplete annual financial statements where filing is required, under Ísland.is guidance. The corporate-register tariff also sets ISK 1,000 for an annual-accounts summary of up to 10 pages and ISK 50 for each additional page where a copy is required. Include year-end accounting and filing support in the first-year budget.

Tax, VAT and payroll costs

20% of profit is the tax rate for Icelandic private and public limited companies, while the general company-starting guidance gives 36% for partnerships and cooperative societies. Self-employed individuals face source-published lower and upper income-tax rates of 36.94% and 46.24% respectively, so the legal form changes the continuing cost base.

24% is the general VAT rate and 11% the reduced rate for specified goods and services, while the 2026 key-rates page sets general payroll tax at 6.35% of employee wages. The company-starting guidance says a VAT-taxable business needs to notify the relevant authority at least eight days before it begins and obtain a VAT number before trading.

These are operating obligations rather than formation fees. Build them into the first-year cash forecast alongside bookkeeping, wage administration and any accountant's quote.

Visa, work-permit and document costs for UK residents

Quote-led residence-permit, work-permit, translation, legalisation, health-insurance, travel and immigration-adviser costs should be budgeted before a UK resident plans to work in Iceland.

Ísland.is confirms the over-90-day residence position for UK nationals, while its work-permit guidance describes the general permit requirement for people outside the EEA and EFTA.

These personal costs are separate from the ehf.'s ISK 500,000 capital and ISK 140,500 formation tariff. Get a route-specific quote before committing to relocation or local employment.

Premises and operating runway

Quote-led rent, deposit, registered address, licences, insurance, accounting, payroll, software and working-capital costs will often exceed the registry fee. notes that some activities need a special permit or licence before trading.

Use an ISK budget for the company capital, fees and local invoices. Keep that separate from a personal immigration reserve, then convert the final company-funding total to GBP shortly before sending.

Note: Disclaimer: The information in this article is for reference purposes only and should not be considered financial advice. All investment decisions should be made after thorough research and consultation with a qualified financial advisor. Remember that investments, even in low-risk funds, are never guaranteed, and your capital is at risk.

Navigate the initial costs of setting up a business in Iceland with Wise Business

The Wise Business account was built with the cross-border needs of businesses in mind - and some of the features offered suit those wishing to open a business in Iceland perfectly.

Wise Business offers a free Essential plan for basic spending and transferring. If you need to receive money, set up direct debits, or generate invoices, you'll pay a one-time £50 setup fee to unlock the Advanced features.

With Wise Business, you can:

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💳 Get business debit cards with 0.5% cashback for you and your team to keep track of team expenses and spend all over the world, with real-time visibility and categorisation. See full cashback terms and conditions
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Make the wise choice when selecting a business account for your domestic and global needs.

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Wise Interest disclaimer: Growth not guaranteed. Your balance will go down in the event of a government default or interest rates going negative. Taxes may apply. 3.32% variable rate on GBP is based on 7 day performance as of 05 Aug 2026. For full 5-year past performance and fund information, visit https://wise.com/interest. Investments are offered by Wise Assets UK Ltd. (FRN 839689)

FAQs

Is a sole proprietorship always the cheapest Icelandic route?

It can avoid the ehf.'s ISK 500,000 capital, but it doesn't remove the need to price permits, equipment, insurance, bookkeeping and personal liability. The published tariff lists ISK 73,500 for sole-proprietorship establishment, so check the exact route before relying on a zero-fee assumption.

Sources:

Private limited companies — Skatturinn
Corporate-register tariff — Skatturinn
Public limited companies — Skatturinn

Sources last checked on 2nd October 2026

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