Economic Geography

Economy of Iceland

According to Numbeo’s cost of living survey, which takes into account the price of around 50 items like accommodation, food, drink, clothing, mobile phone bills, taxi fares, leisure activities, utility, Iceland is the 5th most expensive country in the world.

On Forbes list it is 26th best country for business and 23rd on ease of doing business list (World Bank).

GDP (PPP) 2018 estimate
• Total $18 billion
• Per capita $54,288

GDP (nominal) 2018 estimate
• Total $25 billion
• Per capita $70,332

As of dec 2017:

GDP Growth: 7.2%
GDP per Capita: $60,000
Trade Balance/GDP: 7.9%
Population: 300,000
Public Debt/GDP: 55%
Unemployment: 3%
Inflation: 1.7%

Main industries are: tourism, fishing, wool producing…
Sources of geothermal power provides cheap electricity and heating which reduce cost of manufacturing. Renewable energy from hydroelectric and geothermal power sources provides close to 85% of all the nation’s primary energy and 99.9% of Iceland’s electricity being generated from renewables.

Establishing limited company costs approximately 130.500,00 isk and minimum capital is 500.000,00 isk. Corporate income tax is 20%. Income tax is high, but it provides amazing social security, free education and other public services so most citizens are happy to pay it. Each employee has a personal tax credit of 53,895 ISK per month which is deducted from calculated taxes. Unused credit may be transferred to one’s spouse. It is 36,94 % for income between ISK 0 – 893.713 pr. month, 46,24 % for income exceeding ISK 893.714 pr. month. If annual income is below ISK 1.750.782 no income or municipal income tax is to be paid. Mandatory employee pension insurance is 4% of gross income (employer provides a minimum of 8%) and another 4% of total income may be deducted for private pension insurance (then employer is obliged to pay additional 2% premium for the benefit of the eployees).