Beneficial owners - Icelandic debt securities

09.01.2018

The following types of beneficial owner are recognised for tax purposes in Iceland:

  • Residents of a DTT country
  • Non-resident beneficial owners
  • Tax Exempt Entities
  • Icelandic Banks complying with article 3.2 of Act no 94/1996
  • Icelandic beneficial owners

Debt securities - exempt from non-resident taxation - withholding and capital gains tax

Debt securities falling under scope of Article 1 of Act. no. 39/ 2013,  Article 1 of Act no. 53/2014 and Article 1 of Act no 107/2015  (exemption from non-resident taxation of interest).

Non-resident beneficial owners

Beneficial owners that are non-residents of Iceland may benefit from a 0% reduced tax rate on interest payments and gains realised on transactions from Icelandic debt securities.

Clearstream Banking customers that are Icelandic Banks – complying with Article 3.2 of Act no. 94/1996

Clearstream Banking customers that are Icelandic Banks complying with Article 3.2 of Act no. 94/1996 may benefit from a 0% reduced tax rate on interest payments and gains realised on transactions from Icelandic debt securities.

Note: Such entities are considered as Icelandic tax withholding agents, implying they must retain the appropriate tax amounts from their respective clients.

Icelandic residents

Icelandic beneficial owners resident in Iceland for tax purposes may not benefit from any reduced tax rate on interests payments but are subject to the resident tax rate of 22% on interest payments and gains realised on transactions from Icelandic debt securities.

Other Debt securities - (not exempt from non-resident taxation) - withholding and capital gains tax

Non-resident beneficial owners

Non-resident beneficial owners that are residents in a country which has not signed a DTT with Iceland may benefit from the 12% non-resident tax rate on interests payments.

Beneficial owners that are non-residents of Iceland and who follows the exemption procedure between non-resident parties (the securities may not be sold to an Icelandic buyer) may benefit from a 0% reduced tax rate on gains realised on transactions from Icelandic debt securities.

Residents of Double Taxation Treaty (DTT) countries

The beneficial owners that are residents in a country which has signed a DTT with Iceland may benefit from a reduced tax rate on interests payments and gains realised on transactions from Icelandic debt securities.

The maximum withholding tax rates are defined in the DTT list.

Tax Exempt Entities

The below tax exempt beneficial owners may benefit from a tax exemption on interests payments and gains realised on transactions from Icelandic debt securities.

  • Tax exempt international organisations; or
  • Foreign states and other official or public entities.

Clearstream Banking customers that are Icelandic Banks - complying with Article 3.2 of Act no. 94/1996

Clearstream Banking customers that are Icelandic Banks complying with Article 3.2 of Act no. 94/1996 may benefit from a 0% reduced tax rate on interest payments and gains realised on transactions from Icelandic debt securities.

Note: Such entities are considered as Icelandic tax withholding agents, implying they must retain the appropriate tax amounts from their respective clients.

Icelandic residents

Icelandic beneficial owners resident in Iceland for tax purposes may not benefit from any reduced tax rate on interests payments but are subject to the resident tax rate of 22% on interest payments and gains realised on transactions from Icelandic debt securities.