Capital
Reykjavík
Currency
Icelandic króna
Languages
Icelandic
Population size
0.37M
Average Monthly Salary
€3100
EU
Not a Member
Region
Northern-Europe
Gift Giving Norms
Small, quality items reflecting Icelandic culture
Major Corporate Gift Days
Christmas, National Day
Customs Complexity
Low
VAT - Standard Rate
24%
Duty Free Threshold
€80
Ave Duty Rate
2%
1. Employee Merch vs. Gifts
Under Icelandic law, non-cash benefits provided to employees can be considered taxable income unless they are unequivocally needed for the job. The Icelandic tax authorities (Ríkisskattstjóri) oversee whether items qualify as work-related or personal perks.
1.1 Merchandise for Employees
Work-Related (Generally Non-Taxable)
Uniforms & Essential Equipment
If branded apparel or gear is essential for the job (e.g., protective clothing, standard company uniform), it typically remains non-taxable.
Branded Accessories
T-shirts, mugs, or other items bearing a clearly visible logo—especially if distributed uniformly—often qualify as part of workplace identity rather than a personal benefit.
Potentially Taxable Benefits
High-Value or Personal Items
Electronics, premium fashion, or purely personal goods may be deemed part of an employee’s salary. In that case, the employer must handle additional income tax and social levies.
Frequent Gifting
Repeated gifts throughout the year may be reclassified as part of remuneration. Seek local tax advice if you plan multiple merchandise distributions annually.
1.2 Gifts for Non-Employees (Clients, Partners, Event Attendees)
Tax & Deductibility
Business gifts usually count as deductible if they serve a promotional or goodwill purpose. However, high-value or frequent gifts without a clear business rationale might arouse scrutiny from tax authorities.
Compliance & Anti-Corruption
Iceland typically ranks well in transparency; gifts that appear excessive, especially to those with public sector links, can raise compliance concerns. Keep thorough documentation of costs and recipients.
1.3 Marketing Merch
Items (e.g., T-shirts, pens, tote bags) distributed at fairs or corporate events are generally recorded as marketing expenses, provided you retain invoices and distribution logs to show their promotional nature.
2. Shipping, Customs & Duties
2.1 Shipping
2.2 Importing
Import Duties & VAT
Iceland imposes customs duties on certain categories (e.g., textiles) plus local VAT (24%) on (value + duties + shipping). For lower-value shipments (often under ISK 7,000, though this threshold can change), simplified rules may apply.
2.3 DDP vs. DAP
Delivered Duty Paid (DDP)
The sender covers duties and VAT, streamlining receipt for the Icelandic recipient.
Delivered At Place (DAP)
The recipient pays import fees upon arrival, risking delays if they are unprepared or unaware of these charges.
2.4 With Monday Merch
Our warehouse in Rotterdam (an EU location) can ship items to Iceland. We provide necessary documentation—like a EUR.1 certificate (if applicable)—to help you secure potential reduced duties and ensure everything remains tax compliant.
3. Cultural & Local Etiquette
3.1 Gifting customs
4. Sustainability & Local Regulations
4.1 Sustainability & Regulations
5. HR & Employee Relations Considerations
5.1 HR & Employee Relations
6. Summary and Key Takeaways
6.1 Summary & Takeaways
7. Frequently Asked Questions
7.1 Questions & Answers
Does giving staff merch incur taxation?
If purely work-related (uniforms), not usually; personal items can be taxed.
Are marketing gifts deductible here?
Yes, as long as costs are reasonable and for clear promotional reasons.
Cultural approach?
Icelanders favour practical, high-quality gifts reflecting their minimalist ethos.
