Iceland

Last Update by Katie, 06 Jun 2024

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Exchange Rate

13 Jun 2024

 

Cost of Living

Indicative value for a working adult in a city: Reykjavik

Publicly available data (Numbeo, etc..), verified by Marco’s in-country staff

Living Requirement Indicative Amount (ISK)
McDonalds Set Meal 2,400
Monthly Train and Bus Tickets 9,300
3 Bedrooms Rental (City Center) 379,266
3 Bedrooms Rental (Outskirt) 338,518

Current Inflation Rate

6.6%

Wage

Minimum Wages

  • No national minimum wage, will defined by collective agreements

Median Salary

Estimated based on general positions such as HR, Accounting, Admin roles, in tier one cities.

Job Level Monthly Salary (ISK)
Entry-Level
Fresh Graduate
382,000
Mid-Level
5 Years
540,000
Experienced & Managerial Level
10 Years
1,150,000
Specialized & Senior-Level
15 Years
1,200,000+

Annual Salary Growth

8%

Statutory Contribution

Contributions are payable no later than the 14th of the month following the month.

Country Level

Type Employer Rates Employee Rates Notes
Social Security 6.35%
0.425%: for foreign staff who hold A1 certificate
- All staff
Pension Fund 11.5% 4% All staff aged 16 - 70 &; self-employed
Senior Citizen’s Construction Fund - up to 13,749 per year, annual income threshold 2,276,569 ISK All staff aged 16-70
Icelandic Broadcasting Fee - 20,900 per year, annual income threshold 2,276,569 ISK All staff aged 16-70

Other Benefit

Other common employment benefits in Iceland include:

  • December bonus: Employees with 12 weeks service in 1 year: Around 82,000 ISK per year
  • Vacation bonus: Employees with 12 weeks service in 1 year (paid May 1st - August 1st) Around 10.17% of annual salary
  • Payment of union membership fees: Around 0.7 – 1% of salary

Income Tax

Residents

  • Tax period: 1st January-31st December
    Filing start date: 1st March

Country Level

Taxable Income Rate
0 - 446,136 31.48%
446,137 - 1,252,501 37.98%
1,252,501+ 46.28%
Taxable Income Rate
Municipal Tax up to 14.91%

Non-residents

  • Income from Iceland is subject to national income tax and municipal income tax the same as residents

Working Hours

Statutory

40 hours
8 hours a day, 5 days a week

Typical practice

40 hours
Monday-Friday

Overtime

8+ hours a day is considered overtime

  • Paid at an hourly rate of 1.0385%

Employment Contract

Permanent

Probation

up to 3 months

Termination

  • During Probation:
    - 0-3 months service: 1 week
    - 4-6 months service: 1 month
    - < 6 months' service: 3 months
    - Termination notice must be given for a full month
  • Notice period for staff and employers after probation:
    - up to 1 years' service: 1 month
    - up to 3 years' service: 2 months
    - 5+ years' service: 3 months
  • Severance:
    -No statutory severance, but employers can choose to offer a discretionary package, typically 1- 24 months' salary

Public Holiday

15 days

Leave

Leave Type Entitlement Notes
Annual Leave 24 working days All staff
Maternity/Paternity Leave 5 months + 2 months can be shared between parents Expectant mothers or fathers
Parental Leave 3 months shared between parents All staff with children
Adoption/Foster Care Leave Up to 3 months All staff fostering/adopting a child
Carer’s Leave The Directorate of Labour administers duration of entitlement All staff with disabled children/ children with long-term illness
Sick Leave 52 weeks over 24 months All staff

Reference

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