The Icelandic parliament in late December 2012 approved changes to the rate of value added tax (VAT) on hospitality services, movie tickets, and certain personal- use items. Effective September 2013, the VAT rate on rental of hotel and guestrooms and other accommodation (including campground facilities) will increase from 7% to 14%.
With this change, Iceland will have four VAT rates on goods and services:
- The standard VAT rate of 25.5%
- The VAT rate of 14% on hotel and guestrooms and other accommodation services
- A reduced VAT rate of 7% applies to specific goods and services
- A VAT rate of 0% on certain services and goods (for example, exported goods as well as labor and services provided abroad)