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 Swag 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 Swag 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 considered 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 swag 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 Swag
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
While Iceland is part of the EEA, it is not within the EU Customs Union.
Customs Duties & Exemptions
Certain product categories might benefit from reduced or zero customs duties under EEA or EFTA agreements, but not all goods are automatically duty-free. Check product-specific rules.
Paperwork
A commercial invoice, correct HS codes, and potential origin certification (e.g., proof of EEA origin) can help secure any preferential duty rates.
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 Swag customs
Practical & Minimalist
Icelandic culture values functionality and simplicity; practical swag or thoughtful design typically resonates. Overly extravagant gifts may be less appreciated.
Gift-Giving Occasions
Christmas (Jól) is a key time for corporate gifts, but some Icelandic firms also present staff with small tokens at anniversaries or special events.
Environmental Consciousness
Iceland places strong emphasis on nature and sustainability. Eco-friendly swag or minimal packaging often garners positive reception.
4. Sustainability & Local Regulations
4.1 Sustainability & Regulations
Green Focus
Iceland’s environment-centric mindset aligns with broader Nordic sustainability principles. Using recyclable or biodegradable packaging can enhance brand image and reduce waste.
Product Labeling
Items like electronics or toys subject to EU/EEA regulations (CE marking) must meet relevant safety and labeling standards. Including Icelandic instructions is generally encouraged, especially for widely distributed consumer goods.
5. HR & Employee Relations Considerations
5.1 HR & Employee Relations
Remote Employees
If sending items to personal addresses, comply with GDPR-equivalent data protection laws. Secure explicit consent and handle the data responsibly.
Onboarding & Retention
Welcome packs (e.g., branded hoodies, stationery) are typically non-taxable if modest in value and serve an obvious work-related purpose.
6. Summary and Key Takeaways
6.1 Summary & Takeaways
Employee Items vs. Taxable Benefits
Necessary work gear generally remains non-taxable. High-value or personal items may be taxed as wages.
B2B Gifting & Marketing
Reasonable gifts used to promote business are deductible. Promotional items require documentation as marketing expenses.
Shipping & Customs
Iceland’s EEA membership may reduce or waive some duties, but not all. Monday Merch Warehouse in Rotterdam can provide origin certificates if needed to secure reduced tariffs.
Cultural Approach
Icelanders value functionality and eco-friendly choices. Christmas is a common gifting season, though smaller tokens may appear year-round.
7. Frequently Asked Questions
7.1 Questions & Answers
Does giving staff swag incur taxation?
If purely work-related (uniforms), not usually; personal items can be taxed.
Are marketing swag deductible here?
Yes, as long as costs are reasonable and for clear promotional reasons.
Cultural approach?
Icelanders favor practical, high-quality gifts reflecting their minimalist ethos.
Sources
Directorate of Customs (Tollstjóri) – Guidance on import duties and EEA/EFTA rules.
Ríkisskattstjóri (Icelandic Tax Administration) – Tax legislation, including employee benefits.
Federation of Icelandic Trade (Viðskiptaráð Íslands) – Local business compliance and resources.
Disclaimer
This article is for informational purposes only and does not constitute legal or tax advice. Always confirm the latest rules with Icelandic authorities or a local tax professional to remain fully tax compliant.
