Incentives & Support
Small and medium-sized enterprises investing in qualified R&D projects receive a 35% direct reimbursement on eligible costs. Designed to maximize early-stage innovation and attract high-growth ventures to Iceland. It applies to domestic- and foreign-owned SMEs registered in Iceland.
Larger companies, including international corporations establishing R&D operations in Iceland, receive a 25% reimbursement toward qualifying expenditures. There is no upper cap on project scale.
Available across all industry sectors
Applicable to joint ventures with Icelandic partners
Covers both basic and applied research projects
No minimum spend threshold for application
Iceland’s participation in the EEA gives Icelandic companies access to the EU Single Market. Businesses based in Iceland can operate across EEA member states under harmonized regulations and with rights comparable to EU-based companies.
This framework supports cross-border trade in goods and services, as well as the free movement of capital and people, while Iceland remains outside the EU.
Early-stage ventures can access co-investment and matching from Iceland's primary public startup accelerator, KLAK, in partnership with private investors. Particularly relevant for high-growth, innovation-led businesses. The KLAK Innovation Ecosystem is one of Europe’s most respected Startup Hubs (FT, 2026).
20%
Competitive baseline positioning below the current ~22% OECD average.
0%
Complete exemption on qualifying dividends under established treaty protocols.
44+
Double taxation treaties in force, including the US, UK, and EU member states
24%
Standard VAT rate, 11% reduced rate available for qualifying goods and services
Download and read
Doing business in Iceland
report