Step 1: Choosing a business name
First, choose a unique name for your company that is not already in use by another company in Iceland. Go to the website of the Icelandic Patent office and select the “Trademarks” search engine were you can review the search results. If you find a similar or identical trademark, you may need to choose a different name or modify your preferred name to avoid trademark infringement. If not, you can proceed with registering your business name.
You can reserve your preferred business name for up to six months by submitting an application to the Icelandic Patent Office. This step is not mandatory but can be helpful if you’re not ready to register the company yet.
Step 2: Determine the legal structure
Decide on the legal structure of your company, such as limited liability company (LLC), a sole proprietorship, or a partnership. The most common legal forms in Iceland is the LLC.
More information on the company form found on this page.
Step 3: Register the company
Register the company with Skatturinn by submitting an application and other required documents, such as the company’s articles of association, a list of directors and shareholders, and proof of the payment of the register fee.
Step 4: Obtain a tax ID number
Your are obligated to complete a registration form RSK 5.02 and submit to the Directorate of Internal Revenue. Once you have register you will be given a VAT registration number and a registration certificate.
Step 5: Register for VAT
If your company is expected to have an annual turnover of ISK 2 million or more, you must register for value-added tax (VAT) with the Directorate of Internal Revenue. You’ll need to file VAT returns with the Icelandic Tax Administration on a regular basis (usually monthly or quarterly), depending on your business activities and turnover.
It’s important to note that registering for VAT it is a legal requirement in Iceland if your business meets the VAT threshold. Failure to register for VAT can result in penalties and fines.
Step 6: Obtain necessary permits and licenses
Depending on the nature of your business you may need to obtain specific permits and licenses from the relevant authorities in Iceland, such as the Food and Veterinary Authority, the Environment Agency, or the Consumer Agency. You can find information on specific permits and licenses required for you business by contacting the relevant government agency or local authority. Some permits and licenses may need to be renewed periodically, so it’s important to keep track of expiration dates and renew your permits and licenses as needed.
Step 7: Set up a bank account
Open a bank account for your company to manage your financial transactions. Here are some popular bank options in Iceland: Landsbankinn; Arion Bank; Íslandsbanki. You can apply for one bank account either online or on site.
Step 8: Hire employees
If you plan to hire employees, register your company with the Directorate of Labour and Social Affairs (Vinnumálastofnun) and obtain an employer identification number. Sign an employment contract with your new employee that outlines the terms and conditions of their employment, including their salary, benefits, work schedule, and other relevant details.
If your new employee is a foreign national, they may require a work permit and/or residency permit to work in Iceland. You’ll need to obtain there permits before the employee starts working for your company.