Verified Facts
Doing business in Iceland is relatively easy, with a strong focus on innovation, sustainability, and a highly skilled workforce, making it an attractive destination for foreign investment and entrepreneurship.
Quick Facts
Business Environment
Iceland's business environment is characterized by a high level of transparency, a strong rule of law, and a relatively low level of corruption. The government is generally supportive of foreign investment, with a range of incentives and initiatives aimed at attracting foreign companies to the country. However, the bureaucracy can be slow-moving, and the country's remote location and limited domestic market can pose challenges for some businesses. Overall, Iceland's business environment is considered to be favorable, with a strong focus on innovation and sustainability.
The government has implemented various initiatives to support entrepreneurship and foreign investment, including the establishment of a one-stop shop for foreign investors and a range of tax incentives. Additionally, Iceland is a member of the European Economic Area (EEA), which provides access to the European single market and a range of other benefits. However, the country's unique cultural and environmental context can also pose challenges for foreign businesses, and companies must be sensitive to these factors in order to succeed.
Iceland's economy is highly dependent on a few key industries, including tourism, fisheries, and renewable energy. The country's stunning natural beauty and unique cultural heritage make it an attractive destination for tourists, while its abundant natural resources and favorable business environment make it an attractive location for companies in the renewable energy and fisheries sectors.
Starting a Business
| Step | Requirement | Time | Cost (USD) |
|---|---|---|---|
| 1 | Choose a business name and register with the Register of Enterprises | 1 day | $100 |
| 2 | Obtain a tax identification number from the Directorate of Internal Revenue | 1 day | $0 |
| 3 | Register with the Social Insurance Administration | 1 day | $0 |
| 4 | Obtain any necessary licenses and permits | 1-3 months | $500-$2,000 |
| 5 | Open a business bank account | 1-3 days | $100-$500 |
| 6 | Register for value-added tax (VAT) | 1 day | $0 |
| 7 | Obtain a certificate of registration from the Register of Enterprises | 1 day | $100 |
| The process of starting a business in Iceland is relatively straightforward, with a range of online resources and support services available to help entrepreneurs navigate the process. |
Investment Opportunities
| Sector | Opportunity | Growth Potential | Notes |
|---|---|---|---|
| Renewable Energy | Investment in geothermal and hydroelectric power | High | Iceland's unique geology and abundant natural resources make it an ideal location for renewable energy production |
| Tourism | Development of sustainable tourism infrastructure | Medium | Iceland's stunning natural beauty and unique cultural heritage make it an attractive destination for tourists |
| Fisheries | Investment in sustainable fishing practices and seafood processing | Medium | Iceland's fishing industry is a significant contributor to the country's economy, and there are opportunities for investment in sustainable fishing practices and seafood processing |
| Technology | Development of innovative technology solutions | High | Iceland's highly skilled workforce and favorable business environment make it an attractive location for tech companies |
| Creative Industries | Development of creative industries such as film and music production | Medium | Iceland's unique cultural heritage and stunning natural beauty make it an attractive location for creative industries |
| Healthcare | Investment in healthcare technology and services | Medium | Iceland's highly developed healthcare system and favorable business environment make it an attractive location for healthcare companies |
Foreign Direct Investment
- FDI inflows to Iceland have been steadily increasing in recent years, with a focus on the renewable energy, tourism, and technology sectors.
- The main investing countries in Iceland are the United States, the United Kingdom, and other European countries.
- The government offers a range of incentives to attract foreign investment, including tax incentives and investment grants.
- Restricted sectors for FDI include certain areas of the fishing industry and other sectors that are considered sensitive or strategic.
- The government is actively promoting FDI through a range of initiatives, including the establishment of a one-stop shop for foreign investors and a range of support services.
Legal & Regulatory Framework
- Iceland's business laws are based on European Union law and are considered to be favorable to foreign investment.
- Intellectual property protection is strong, with a range of laws and regulations in place to protect patents, trademarks, and copyrights.
- Labor laws are considered to be flexible, with a focus on protecting workers' rights while also allowing for flexibility and adaptability.
- Dispute resolution mechanisms are in place, including arbitration and mediation services.
- The regulatory framework is considered to be transparent and stable, with a range of online resources and support services available to help businesses navigate the system.
- Iceland is a signatory to a range of international agreements, including the Paris Convention and the Berne Convention, which provide additional protection for intellectual property rights.
Challenges & Risks
- One of the main challenges facing businesses in Iceland is the country's remote location and limited domestic market.
- The economy is highly dependent on a few key industries, which can make it vulnerable to external shocks.
- The country's unique cultural and environmental context can also pose challenges for foreign businesses, and companies must be sensitive to these factors in order to succeed.
- The bureaucracy can be slow-moving, and the process of obtaining necessary licenses and permits can be time-consuming.
- The cost of doing business in Iceland can be high, particularly in terms of labor costs and the cost of living.
- Currency risks are relatively low, given the stability of the Icelandic krona, but companies must still be aware of the potential for exchange rate fluctuations.
Free Zones & Incentives
- Iceland has two special economic zones, one in the Reykjavik area and one in the northeast of the country, which offer a range of incentives and benefits to businesses.
- The government offers a range of tax incentives, including a reduced corporate tax rate for certain industries and a tax exemption for foreign investors.
- Investment grants are available for businesses that invest in certain sectors or regions, such as the renewable energy sector or rural areas.
- The government also offers a range of support services, including business advice and mentoring, to help businesses succeed in the Icelandic market.
- The Icelandic Investment Promotion Agency provides a range of services and support to foreign investors, including information and advice on the business environment and investment opportunities.