Iceland Business License: Complete Company Registration Guide
Starting a business in Iceland requires navigating multiple government agencies and understanding the country's unique regulatory framework. This comprehensive guide explains the complete process of obtaining an Iceland business license and registering your company.
Iceland's business structure options
Iceland recognizes five primary business structures: sole proprietorship, private limited company, public limited company, partnership, and cooperative society.
Private limited companies are the most popular choice for international entrepreneurs, providing limited liability protection. Sole proprietorships have no minimum capital requirement but offer no liability protection.
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Public limited companies face stricter reporting requirements. Partnerships require at least two partners who share unlimited liability. Cooperatives need multiple members and focus on mutual benefit rather than profit maximization.
The kennitala requirement: your business identity number
Every business in Iceland needs a kennitala (identification number). This identification number connects your company to all government systems and is mandatory to establish a company.
Foreign entrepreneurs must obtain a kennitala through Registers Iceland. You need a valid passport, proof of address in Iceland, and completed application form.
EEA citizens can apply immediately upon arrival. Non-EEA citizens need a residence permit first, which requires additional processing time through the Directorate of Immigration.
Primary registration with RSK
The Directorate of Internal Revenue (Ríkisskattstjóri, or RSK) handles all company registrations in Iceland. This is your mandatory first step before applying for any sector-specific licenses.
RSK registration requires your kennitala, chosen company name, business structure documents, and required documentation. Processing takes several business days if all documents are complete. RSK will assign your company a unique registration number and VAT number.
Sector-specific licensing authorities
Most businesses need additional permits beyond RSK registration. Iceland distributes licensing authority across specialized agencies based on your business activities.
Municipalities handle local business permits, zoning approvals, and operating licenses for retail, restaurants, and service businesses. Municipal permit fees vary depending on the activity type.
The Public Health Authority regulates food businesses, healthcare services, and cosmetics. Food service licenses require fees plus ongoing inspection costs.
The Icelandic Tourist Board licenses tour operators, travel agencies, and accommodation providers. Tour operator licenses include initial fees plus annual renewal requirements.
The Transport Authority oversees taxi services, freight transport, and vehicle rental companies. Transport license fees vary based on vehicle capacity and service type.
The Environment Agency handles permits for industrial activities, waste management, and environmental impact assessments. Fees vary widely based on environmental risk assessment.
Step-by-step registration process
Step 1: Obtain your kennitala
Apply through Registers Iceland with passport, address proof, and residence documentation. EEA citizens can complete this more quickly than non-EEA citizens who need residence permits first.
Step 2: Choose and reserve company name
Search available names through RSK's online database. Reserve your chosen name for a fee. Reservations last several months.
Step 3: Open bank account and deposit capital
For limited companies, deposit required capital in an Icelandic bank. Banks require your kennitala and preliminary company documents.
Step 4: Prepare incorporation documents
Draft articles of association, memorandum of association, and board resolutions. Documents must be in Icelandic or officially translated.
Step 5: Register with RSK
Submit all documents plus registration fee. RSK reviews and approves your company registration.
Step 6: Apply for sector-specific licenses
Contact relevant authorities based on your business activities. Processing times vary significantly by agency and license type.
Required documentation checklist
For RSK registration, you need completed registration forms, articles of association in Icelandic, memorandum of association, board member consent forms, proof of capital requirements, kennitala for all directors and shareholders, and registration fee payment.
Sector-specific authorities add their own requirements. Restaurants need food safety certificates, floor plans, and equipment specifications. Tour operators need insurance certificates, safety protocols, and guide qualifications. Transport companies need vehicle registrations, driver licenses, and insurance documentation.
Working with multiple authorities
Iceland's decentralized system means you'll interact with several agencies simultaneously. Each has different application processes, timelines, and requirements.
Start with RSK registration since other authorities require your company registration number. Apply for municipal permits early since they often involve site inspections. Environmental permits take longest, sometimes requiring extended periods for complex assessments.
Most agencies accept applications in English, but final permits are issued in Icelandic. Consider hiring a local attorney or business service provider to coordinate applications and ensure compliance.
EEA and EFTA advantages
As an EEA member, Iceland offers streamlined business establishment for European entrepreneurs. EEA citizens can establish businesses on equal terms with Icelandic nationals and don't need special permits for most activities.
EFTA agreements provide additional benefits for certain European entrepreneurs. However, sector-specific requirements still apply regardless of citizenship status.
Non-EEA entrepreneurs face additional restrictions in certain sectors like fishing, energy, and media. Some activities require special permits or local partnership arrangements.
Ongoing compliance obligations
Once registered, businesses face regular reporting requirements. RSK requires annual tax returns, VAT filings, and updated company information when directors or ownership changes.
Private limited companies must file annual accounts within specified timeframes. Public companies face stricter disclosure requirements and must publish audited accounts.
Sector-specific authorities have their own compliance schedules. Food businesses need regular health inspections. Tour operators must renew insurance certificates and update safety protocols. Transport companies need regular vehicle inspections and driver qualification updates.
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