10 Essential Questions About TIN in Iceland

In Iceland, the primary identification number is the Kennitala (kt.). It serves as a universal identifier for both tax and civil purposes.

• For Individuals: It is the national ID number used for everything from healthcare to personal income tax.

• For Businesses: It is the commercial registration number assigned upon incorporation, used for corporate tax and legal identity.

The Icelandic system is remarkably streamlined, revolving around the Kennitala:

• Kennitala (kt.): The 10-digit primary identifier for all persons and legal entities.

• VAT Number (VASK-númer): A 5 or 6-digit number assigned to businesses that exceed the registration threshold.

• System ID Number (Kerfiskennitala): A temporary ID number issued to foreign nationals or entities that need a taxpayer identity but do not have permanent residence.

• EORI Number: Required for customs and trade with the EU, linked directly to the business Kennitala.

Icelandic identifiers follow a precise 10-digit logic that reveals birth or registration data at a glance.

• The Kennitala Structure: Exactly 10 numeric digits (e.g., 120174-3399).

  • Digits 1–6: Date of birth (DDMMYY) or registration.

  • Digits 7–8: Randomly assigned (usually 20–99).

  • Digit 9: Checksum (Modulo 11).

  • Digit 10: Century indicator (9 for 1900–1999, 0 for 2000–2099).

• The VAT Number: A 5 or 6-digit numeric string, often prefixed with "IS" (e.g., IS 12345).

Technical Insight: To distinguish between people and companies, Iceland adds 40 to the first two digits (the "Day" component) for legal entities. Therefore, a business Kennitala will always start with 4, 5, 6, or 7 (e.g., a company registered on the 10th would start with 50).

The Registers Iceland (Þjóðskrá) is responsible for issuing Kennitalas to individuals.

For businesses, the Internal Revenue Directorate (Skatturinn) (Fyrirtækjaskrá) issues the Kennitala during company registration. The VAT number is subsequently issued by the same authority after a separate application.

Registration Thresholds & Mandates:

• Mandatory VAT Registration: Any business (local or foreign) with a taxable turnover exceeding ISK 2,000,000 (approx. €13,400) in a 12-month period must register.

• B2G E-Invoicing: Since 2020, all public sector entities are mandated to receive structured e-invoices. While B2B e-invoicing is voluntary in 2026, most Icelandic firms utilize the Peppol network for interoperability.

• Non-Residents: Foreign businesses selling digital services to Icelandic consumers (B2C) must register for VAT under the "VOES" (VAT on Electronic Services) scheme if they cross the ISK 2 million threshold.

Tax Rates (2026):

• Standard VAT: 24%.

• Reduced VAT: 11% (applied to food, books, hotel rooms, and heating).

• Corporate Income Tax: 20% for LLCs and 37.6% for partnerships.

Registration is almost entirely digital, though foreign directors may need to provide verified passport copies.

• Step 1: Company Registration: Register your entity (e.g., an ehf. or private limited company) with the Register of Enterprises to receive your Kennitala.

• Step 2: VAT Application: Submit form RSK 5.02 to the Skatturinn. Foreign companies often require a local VAT representative.

• Step 3: System ID (Optional): If you are a foreign contractor working in Iceland for less than 6 months, apply for a System Kennitala via form RSK 3.30.

In a small, highly connected economy like Iceland, verifying a partner's status is standard due diligence.

• Official Registry: Use the Skatturinn Business Search to verify the status of any Kennitala.

• VAT Search: The Skatturinn portal allows you to confirm if a specific Kennitala is registered in the VAT registry (VASK-skrá).

• TaxDo Automation: Manual checks across Icelandic-language portals can be slow. TaxDo’s GTL service provides real-time API verification to confirm an Icelandic VAT ID or Kennitala is active and matches the official record.

Iceland’s "Century Logic" and "Company Offset (+40)" make manual validation prone to human error. TaxDo provides the essential automation layer:

• GSV (Global Syntax Validation): Instant structural and checksum checks for the 10-digit Kennitala, distinguishing between individuals and legal entities automatically.

• GTL (Global Real-Time Tax ID Verify/Lookup): Connects to the Skatturinn master files to confirm a Business VAT ID is "Active," protecting you from non-deductible input VAT claims.

TaxDo TIN Validation Coverage in Iceland

In Iceland, the Kennitala is the anchor for every interaction with the state and the private sector.

Using an invalid or inactive Kennitala in Iceland leads to immediate operational failure:

• Digital "Ghosts": Without a valid kt., you cannot log in to the Island.is portal, which is required for all government filings.

• VAT Liability: If you pay an invoice to a supplier whose VAT status isn't active, you cannot reclaim the 24% VAT, significantly increasing your costs.

• Customs Penalties: Incorrect ID data on import manifests results in "Gridlock" at the Reykjavik port, accruing storage fees and administrative fines.

• Reputation Risk: Icelandic businesses rely heavily on the CreditInfo registry; an inactive or invalid Kennitala will result in a "No Credit" rating, effectively shutting down B2B trade.