Iceland: A Nordic Gateway Between Europe and North America

Perched on the edge of the Arctic Circle in the North Atlantic, Iceland is a land of dramatic contrasts where glaciers meet volcanoes and geothermal springs warm entire cities. This Nordic island nation of just 380,000 residents has built an economy that punches well above its weight, combining robust financial services, innovative technology sectors, and world-leading renewable energy with strong connections to European markets through the European Economic Area.

Living in Iceland

Life in Iceland offers a unique blend of natural wonder and modern sophistication. Reykjavik, the world's northernmost capital, is a vibrant city where cutting-edge architecture sits alongside colorful traditional buildings, and world-class restaurants serve innovative Nordic cuisine. Beyond the capital, landscapes of otherworldly beauty unfold—cascading waterfalls, black sand beaches, and the ethereal glow of the Northern Lights in winter.

The population of approximately 380,000 creates a close-knit society where connections matter and trust forms the foundation of business relationships. Icelandic is the official language, but English proficiency is exceptionally high—virtually all business can be conducted in English, and younger generations are effectively bilingual.

Iceland's healthcare system is among the best in the world, with universal coverage provided through the national health insurance system. Safety in Iceland is exceptional, with the country regularly topping global safety indices.

Doing Business in Iceland

Iceland's economy has diversified significantly since the 2008 financial crisis, emerging stronger and more resilient. The country maintains a 20% corporate tax rate and is a member of the European Economic Area, providing access to the EU single market without full EU membership.

The business culture is informal yet professional. First names are universal regardless of seniority, decisions can be made quickly, and access to decision-makers is remarkably direct compared to larger economies.

Personal income tax is progressive, reaching up to 46%, reflecting Iceland's Nordic welfare model. Iceland imposes no currency controls, and the Icelandic króna floats freely.

Company Formation and Registration

Company formation in Iceland follows a structured process overseen by the Register of Enterprises. The most common vehicle for foreign investors is the private limited company (einkahlutafélag or ehf), which requires minimum share capital of ISK 500,000 (approximately USD 3,600).

The formation process typically takes two to three weeks. Foreign ownership is permitted at 100% in most sectors, though certain industries such as fishing and energy may have restrictions. At least one board member must be resident in the European Economic Area.

Considerations

Iceland's isolation is its most significant challenge for many businesses. The country is a five-hour flight from both North America and continental Europe, and the small domestic market limits scale opportunities. Operating costs rank among Europe's highest.

The ISK currency's volatility requires attention for businesses with international revenues or costs. For entrepreneurs who value quality of life, access to European markets, and political stability, Iceland offers a compelling combination of lifestyle and business opportunity.