Tourist tax in Iceland A complete guide

Iceland, famous for its breathtaking landscapes and natural wonders, has introduced a tourist accommodation tax to support sustainable tourism. Whether you're operating a hotel, guesthouse, or a short-term rental, understanding the tourist tax in Iceland is essential for compliance. This guide covers everything you need to know, including tax rates, guest registration requirements, and how to manage your obligations.

Is there a tourist tax in Iceland?

Yes, Iceland has a tourist accommodation tax in place. As of January 2024, this tax applies to all overnight stays in hotels, guesthouses, campsites, mobile homes, and even cruise ships. The rates vary, with ISK 1000 for cruise ships, ISK 600 per night for hotel rooms, and ISK 300 per night for campsites.

For tourists

Why is there a tourist tax in Iceland?

The tourist tax in Iceland was introduced to support sustainability and help protect the country’s unique natural environment. With growing tourism, the tax funds projects that manage the environmental impact, preserve natural resources, and ensure Iceland remains a beautiful and sustainable destination for visitors.

Rate of the tourist tax in Iceland

The tourist tax rates in Iceland vary depending on the accommodation type. Below is an overview of the “accommodation tax” rates, which apply per room, per night, ensuring that guests contribute fairly based on the level of accommodation and time of year. Note: The accommodation tax applies only to stays of up to 30 consecutive days.

Accommodation type	Tourist tax rate
Hotels, apartments, guesthouses	ISK 600
Camp sites and parking spaces for mobile homes, caravans, campers	ISK 300
Cruise ships	ISK 1000

Always apply up-to-date rates?

Frequently asked questions from tourists

• Do I have to pay the tourist tax in Iceland?

  Yes, if you're staying in hotels, guesthouses, campsites, or even renting through platforms like Airbnb, you’ll need to pay the tourist accommodation tax. The tax is typically added to your bill and helps fund sustainability projects in Iceland

• How much is the tourist tax in Iceland?

  The tourist tax is ISK 600 per night for hotel stays and ISK 300 per night for campsites and mobile homes. If you're on a cruise, it’s ISK 1,000 per passenger, per night.

• Is the tourist tax included in my booking price?

  It depends. Some accommodations may include the tourist tax in the booking price, while others might add it separately at check-in or checkout. Always check with your host or accommodation provider for clarity.

• Why is Iceland charging a tourist tax?

  Iceland’s tourist tax helps support environmental sustainability and mitigate the impacts of growing tourism. The revenue is used to maintain and preserve Iceland’s natural landscapes and resources, ensuring they remain protected for future visitors.

• Are children exempt from the tourist tax in Iceland?

  No, the tourist tax in Iceland applies per room or per accommodation unit, not per person. This means the rate remains the same regardless of how many people, including children, are staying in the room.

For hosts

Guest registration in Iceland

Although there is no national law in Iceland that obliges accommodation providers to register personal details of guests, we strongly advice to do so. This way, you will always be able to proof the number of guests you received, and for how long. Next to that, local laws might require hosts to register personal details of their guests.

How Trippz can help you

Handling of tourist tax

• Remittance of accommodation tax

  As an accommodation provider in Iceland, you are responsible for collecting the tourist accommodation tax from your guests. This tax applies to all overnight stays in hotels, guesthouses, campsites, mobile homes, and even cruise ships. The amount collected, such as ISK 600 per night for hotels and guesthouses, must be remitted to the authorities. While specific remittance schedules may vary, it’s crucial to stay on top of these payments to avoid penalties. Be sure to check with the Directorate of Internal Revenue for deadlines and procedures to ensure timely remittance of the tourist tax.

• Keeping your administration for the accommodation tax

  To stay compliant with Icelandic regulations, it’s important to keep detailed records of the tourist tax you collect from your guests. This includes tracking the number of nights stayed, the tax amounts collected, and any supporting documentation like invoices or receipts. These records should be stored securely and kept for several years, as they may be requested by the Directorate of Internal Revenue during audits. Staying organized will help you avoid any issues and ensure you're always prepared in case of inspections or reviews.

  This is also why we recommend keeping a guest registration, to substantiate your tourist tax return

• Accommodation tax when renting through an online booking platform

  If you’re renting your property through platforms like Airbnb or Booking.com, you are still responsible for collecting and remitting the tourist accommodation tax. While the platform might handle the booking, it’s up to you to ensure the correct tax is applied and reported. Make sure to include the tourist tax in your listing details, and double-check the platform’s policy on tax collection.

• Home hosting limits and requirements in Iceland

  If you're renting out your personal residence, you’re participating in home hosting, which comes with a few simple rules. You can rent your home or vacation property for up to 90 days per year, with individual stays limited to a maximum of 30 days. You can earn up to ISK 2,000,000 in a calendar year from home hosting. If you have two properties—like your primary home and a summer cottage—this limit applies to the combined income from both. Keep in mind, if you’re renting more than 5 rooms or hosting more than 10 people, the home hosting rules won’t apply.

• Short-term rental registration requirements in Iceland

  When renting out your personal residence, you don’t need a licenste to start. but it’s important to notify the Disctrict Commissioner about your rental activities.

• VAT on short-term rentals in Iceland

  If your rental income exceeds ISK 2,000,000 per year, you’ll need to charge VAT on your short-term rentals. For stays of 30 days or less, the VAT rate is 11%, and if your rental period is longer than a month, you won’t need to worry about VAT at all. Make sure to register for VAT with the Directorate of Internal Revenue within 8 days of starting your rental business. You'll also need to keep accurate records and submit your VAT returns regularly to stay compliant.

• Paying income tax over short-term rental income

  Starting from 2018, as the lncome tax act was changed, rental income from your property in Iceland is considered a business activity unless it meets specific exemptions. If you rent out no more than two properties, or if your home hosting brings in less than ISK 2,000,000 per year, your income will be taxed as capital gains. Anything above this threshold, or outside these exemptions, is treated as general income and subject to income tax. You can even deduct operational costs to minimize your taxable income. For more details, check with the Directorate of Internal Revenue to ensure you're managing your rental income effectively.

Frequently asked questions from hosts

• Do I need to charge the tourist tax to all my guests?

  Yes, as an accommodation provider, you’re required to charge the tourist accommodation tax to all guests staying at your property, whether it's a hotel, guesthouse, or a short-term rental. This applies regardless of the guest's nationality.

• How do I remit the tourist tax I collect?

  The tourist tax you collect must be remitted to the Directorate of Internal Revenue. Be sure to check with them for specific remittance schedules and guidelines to ensure timely and accurate payments.

• Do I need to charge the tourist tax if I’m renting through Airbnb or Booking.com?

  Yes, even if you’re renting through platforms like Airbnb or Booking.com, you are still responsible for charging and collecting the tourist tax from your guests. Make sure to check whether the platform includes the tax in their pricing, or if you need to collect it separately.

• What records do I need to keep for the tourist tax?

  You must keep accurate records of the tax you collect, including the number of nights stayed, the amount of tax charged, and guest details. These records should be stored for a minimum of several years in case of an audit by the tax authorities.

• Is there a maximum amount of income I can earn from short-term rentals before I have to charge VAT?

  Yes, if your total rental income exceeds ISK 2,000,000 in a calendar year, you are required to charge VAT on your rentals. For rentals of 30 days or less, the VAT rate is 11%.

How Trippz helps hosts

Organize your administration simply

Classifying your accommodation, keeping a guest registry, collecting and remitting the correct amount of tourist tax; besides taking good care of your guests' travel, there is a lot of administrative work involved in renting out your accommodation. Work that you may not have even thought of initially when you started, and that you probably want to spend as little time on as possible. Therefore, you want to organize your administration as simply as possible.

And fortunately you can, with Trippz!

All in one overview

Trippz is here to make your life as easy as possible, while complying with all regulations. Through our (web)app you automate your guest registration, and you can even prepare your administration for the tourist tax. You don't have to worry about collecting the tourist tax either. Because we keep track of all local regulations, we know exactly what rate your guests have to pay. On arrival day, your guests will automatically receive a message from us to pay their tourist tax. At the end of their stay, the money will be automatically deposited into your account. All you have to do is periodically transfer the total amount to the municipality. Simple!

Automatically sync all Airbnb bookings

You can now synchronise all your Airbnb bookings with Trippz on your account. This means you have to do even less yourself. Ideal for hosts who rent out a lot via Airbnb. Do you rent through another platform? We expect to complete more integrations in the near future. Get in touch to find out if your platform will soon be added to Trippz

About Trippz for hosts

Frequently asked questions about Trippz

• Is it difficult to start using Trippz?

  Not at all! Trippz is designed to be user-friendly. It is developed as a web application, so you do not need to download an app. You can start right away!

• What does the use of Trippz cost?

  At the moment, it is free of charge!

• Can I import all my bookings from Airbnb?

  Yes, you can! We have worked on an integration with airbnb, through which you can automatically import all your bookings. Thereby, the messages about guest registration will also be send automatically through our platform.

• Can I import all my bookings from my own booking system?

  After the integration with Airbnb, we are now working on all other sorts of integrations. Integrating your own platform is not yet available, but will be in the future!

• What if a guest doesn’t want to register digitally?

  This is an unfortunate situation, that does happen from time to time. If a guest does not want to enter digitally, you can manually enter their details into Trippz afterwards.

• What if my municipality changes the tourist tax rates?

  At Trippz, we actively follow all tax rates in areas that we cover. When a new tax rate is implemented, we will update the rates accordingly. Still missing something? Please reach out to us!

• What happens if my municipality collaborates with another one?

  No problem. As said, we actively follow all municipalities and their rules. We will automatically update this for you. If you want to be sure, you can always message us in advance, so we are even more on top of things!

• How does it work if another organization manages the tax in my municipality?

  With Trippz, you can export all the information you need. You can easily copy the needed information towards the file the tax organization requires from you.