Invoicing in Iceland

Every contractor in Iceland must issue proper invoices (reikningar) with specific required fields. Once VAT-registered, you charge 24% or 11% VSK on top of your fee. Fustle creates compliant invoices and tracks payments automatically.

Required invoice fields

An Icelandic invoice must include:

Seller kennitala (your ID number)
Buyer kennitala (client ID number)
Sequential invoice number
Invoice date and due date
Description of goods or services
Amount excluding VAT
VAT rate and amount (if VAT-registered)
Total amount due

Missing fields can cause payment delays and tax complications.

VAT on invoices: 24% and 11%

Once registered for VAT (mandatory when turnover exceeds 2,000,000 ISK in 12 months), you must charge VAT on invoices. Standard rate is 24%; reduced rate is 11% for accommodation, some food, and books.

Display VAT separately on each invoice. Fustle applies the correct rate based on your service type and includes VAT in all calculations.

Invoice numbering and record keeping

Use sequential invoice numbers without gaps (e.g., 2026-001, 2026-002). Keep copies of all invoices for at least seven years — Skatturinn may request them during audits.

Fustle assigns invoice numbers automatically and stores all records securely. Export your invoice history anytime for your accountant or tax return.

Getting paid as a contractor

Include clear payment terms on every invoice — typical terms are 14 or 30 days. Provide your bank account details (IBAN) and reference the invoice number in payment instructions.

When payment arrives, Fustle matches it to the invoice and triggers tax calculations. Withholding tax, tryggingagjald (6.35%), and pension (15.5%) are deducted before you receive your net amount.

Credit notes and corrections

If you need to cancel or correct an invoice, issue a credit note (kreditreikningur) referencing the original invoice number. Never delete or reuse invoice numbers.

Fustle supports credit notes and maintains a complete audit trail for Skatturinn compliance.

Related guides

Official resources

VAT rules — Skatturinn

Frequently asked questions

Can I invoice before RSK 5.02 is approved?

You should file RSK 5.02 at least 8 days before starting work. Invoicing before registration is risky — Skatturinn expects you to be registered before earning contractor income.

Do I charge VAT to foreign clients?

Services to clients outside Iceland are often VAT-exempt (zero-rated). The rules depend on where the client is established and where the service is consumed. Fustle helps apply the correct treatment.

Fustle handles taxes — you handle the work

Invoice clients, get paid, and let us calculate and file taxes, VAT, and pension automatically.