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Iceland's 2018 Budget Approved

by Ulrika Lomas,, Brussels

09 January 2018

Iceland's Parliament has approved a number of tax changes as part of the 2018 Budget, including the extension of a value-added tax break on supplies of low-emission vehicles.

Approved by Parliament on December 29, 2017, the Budget also includes an increase to tax on investment income, changes to individual income tax thresholds, and higher fuel, environmental, and sin taxes.

Under the measures, tax on investment income increases to 22 percent from 20 percent, although the existing tax-free allowance for interest income is raised to ISK150,000 (USD1,440).

The ceiling of the lower tax bracket, within which income is taxed at 36.94 percent (including the average municipal rate of 14.44 percent), rises to ISK10,724,556 from ISK10,016,488. Income above the new threshold will continue to be taxed at a combined rate of 46.24 percent.

The 2018 Budget also includes a provision extending a VAT exemption on the sale of low-emission vehicles, including hybrid cars and vehicles powered by electricity.

TAGS: environment | VAT rates | tax | investment | value added tax (VAT) | Iceland | interest | VAT legislation | tax thresholds | legislation | individual income tax

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