Income tax on rent, worked example, in Iceland

October 17, 2018

Non-resident couple´s rental income1
Monthly Rental Income2 1,500 6,000 12,000
Annual Rental Income 18,000 72,000 144,000
= Taxable Income 50% 9,000 36,000 72,000
Income Tax4
Flat rate 22% 1,980 7,920 15,840
Annual Income Tax Due 1,980 7,920 15,840
Tax Due as % of Gross Income 11.00% 11.00% 11.00%

Notes


1 The property is jointly owned by husband and wife.

2 Exchange rate used: 1.00 EUR = 115.00 ISK

3 For long-term lease of residential properties, only 50% of gross income is taxable.

4 Rental income earned by nonresident individuals is taxed at a flat rate of 22%.