Remote’s guide to employing in

iceland flag

Make employment in Iceland easy. Let us handle payroll, benefits, taxes, compliance, and even stock options for your team in Iceland, all in one easy-to-use platform.

  • Capital City


  • Currency

    Icelandic krona (kr, ISK)

  • Languages


  • Population size


Services available in this country:
Employer of Record ProductContractor Management

Facts & Stats

Iceland Map Illustration
  • Capital City


  • Currency

    Icelandic krona (kr, ISK)

  • Languages


  • Population size


  • Ease of doing business

    Very easy

  • Cost of living index

    $$$$ (2021)

  • Payroll frequency


  • VAT - standard rate


  • GDP - real growth rate


Land of fire (volcanoes), ice, and everything in-between (hot springs and geysers), Iceland combines a rich cultural history with strong economic performance, driven by extensive civil liberties, a high human development index, and a market economy with a vast social welfare system.

Iceland is the world’s most peaceful nation and along with its Scandinavian neighbours, boasts impressive performance on equality, democracy, per capita wealth, and environmental sustainability.

Grow your team in Iceland with Remote

Looking to employ workers in Iceland? Companies hiring in Iceland must either own a legal entity in the country or work with a global employment solutions provider, usually one that provides employer of record services.

Remote can employ your team in Iceland on your behalf through our local legal entity in the country and handle payroll, benefits, taxes, and compliance for your Iceland team. You can also pay contractors now in Iceland with Remote.

Risks of misclassification

Iceland, like many other countries, treats self-employed individuals or contractors and full-time employees differently. Misclassification of contractors in Iceland may lead to fines and penalties for the offending company.

Employing in Iceland

Most employee entitlements are defined by collective bargaining based on the 1938 Act on Trade Unions and Industrial Disputes. With 91.8% of the workforce organised into unions, Iceland has the highest union membership rate. Overall, employees in Iceland enjoy protection against discrimination based on age, religion, sexual orientation, gender expression, and race.

Common questions that could come up during the hiring process include the minimum wage, overtime rates, and guaranteed paid time off. Remote can help you offer a complete, competitive, and compliant benefits package to your employees in Iceland.

Minimum Wage

There’s no minimum wage mandated under Icelandic law; employers and employees can enter into collective bargaining to determine wage rates as they see fit.

Payroll Cycle

For customers of Remote, all employee payments will be made in equal monthly instalments on or before the last working day of each calendar month, payable in arrears.

Onboarding Time

We can help you get a new employee started in Iceland fast. The minimum onboarding time we need is only 20 working days.

Our team ensures your employees are onboarded and paid as quickly as possible while keeping your business compliant with all local employment legislation. The minimum onboarding time begins after the employee submits all required information onto the Remote platform. The onboarding timeline is also dependent upon registration with local authorities.

For all non-nationals of the country of employment, the Right to Work assessment (if applicable) will add three extra days to the total time to onboard. There may be extra time required if we need to follow-up on the right to work assessment.

Please note, payroll cut-off dates can impact the actual first day of employment. Remote has a payroll cut-off date of the 10th of the month unless otherwise specified.

16 Public holidays

Monday, 1 January 20241New Year's Day (Nýársdagur)
Thursday, 28 March 20242Maundy Thursday (Skírdagur)
Friday, 29 March 20243Good Friday (Föstudagurinn langi)
Sunday, 31 March 20244Easter (Páskadagur)
Monday, 1 April 20245Easter Monday (Annar í páskum)
Thursday, 25 April 20246First Day of Summer (Sumardagurinn fyrsti)
Wednesday, 1 May 20247Labour Day (Verkalýðsdagurinn)
Thursday, 9 May 20248Feast of the Ascension of Jesus Christ (Uppstigningardagur)
Sunday, 19 May 20249Pentecost (Hvítasunnudagur)
Monday, 20 May 202410Pentecost Monday (Annar í hvítasunnu)
Monday, 17 June 202411Icelandic National Day (Þjóðhátíðardagurinn)
Monday, 5 August 202412Commerce Day (Frídagur verslunarmanna)
Tuesday, 24 December 202413Christmas Eve (Aðfangadagur)
Wednesday, 25 December 202414Christmas Day (Jóladagur)
Thursday, 26 December 202415Saint Stephen's Day (Annar í jólum)
Tuesday, 31 December 202416New Year's Eve (Gamlársdagur)

Competitive benefits package in Iceland

At Remote, we’re obsessed with helping you craft the best possible employee experience for your team. We are leading the way in practising “fair equity,” which means making sure employees everywhere have access to both the required and supplemental benefits they need to thrive (and that will allow you to attract the best local talent).

Our benefits packages in Iceland are tailored to fulfil the local needs of your employees. Typically, our packages contain some or all of the following benefits:

  • Health Insurance

  • Dental Insurance

  • Vision Insurance

  • Mental Health Support

  • Pension or 401(K)

  • Life and Disability Insurance

Taxes in Iceland

Learn how employment taxes and statutory fees affect your payroll and your employees’ paychecks in Iceland.

  • 11.50%

    Mandatory Pension Fund

  • 2.00%

    Supplementary (optional) Pension Fund (the employee can elect to supplement their pension by either 2% or 4%, and the employer then is obliged to match this with 2% in either case)

  • 6.10%

    Social security contribution (this contribution is calculation on the Gross salary + Mandatory Pension Fund + Supplementary Pension fund amounts)

  • 1.55%

    Union fee

  • 0.10%

    Rehabilitation Fund

  • 10.17%

    Holiday Allowance - once annually (this value is a minimum 10.17% of annual gross salary and can go up to 13.04% of annual gross salary, depending on the employees tenure with the employer)

Types of leave

Employees accumulate paid time off, depending on their tenure in the same line of work.

The minimum PTO entitlement is 24 weekdays annually, compensated at a rate of 10.17% of your normal wages. With five years of experience working in the same industry, you’re entitled to 25 weekdays off, paid at 10.64% of your normal wages.

After five years of employment with an employer, you’re entitled to 27 weekdays, paid at an 11.59% rate. This increases to 30 weekdays, compensated at a 13.04% rate after 10 years of employment with the same employer.

Employment termination

Termination process

Employee contracts can be terminated at will if prior notice is provided. Employers are not required to provide any specific reason for terminating an employee.

Notice period

Both employers and employees are required to provide notice three months before resignation or termination unless otherwise specified in the employment contract.

Severance pay

There is no legally mandated severance pay, but unions can negotiate a mutual rate applicable to their members.

Probation periods

Probations periods are typically capped at three months into the new job.

Fair Pricing in Iceland

Employer of Record

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Starting at US$599/month

for annual plans

Top features

  • Satisfaction guaranteed

  • No deposits or hidden fees

  • Zero onboarding or offboarding fees

  • Compliant equity incentives support including withholding and reporting

  • Built-in security and compliance

  • Fast onboarding (average 2-3 days)

  • Flexible, localised benefits

Contractor Management

Compliantly onboard and pay contractors


per contractor/month

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Top features

  • Only pay for contractors you actively work with

  • Work with contractors in 200+ countries

  • Create, edit, and sign tailored, localised contracts

  • Approve contractor invoices with one click or auto-pay

  • Transparent payments with complete visibility

Global Payroll

Consolidate your multi-country payroll


per employee/month

Top features

  • Reduce costs by centralising payroll management

  • Ensure local compliance for every country

  • Direct support from in-house local payroll experts

  • Accurate, on-time, compliant payroll to level-up your employee experience

  • Tax and labour authority reporting handled for you


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Top features

  • Guided onboarding and offboarding

  • Employee profile and document management

  • Time and attendance (time off and tracking)

  • Expense management and reimbursement

  • Employee self-serve on the platform and mobile app