Invoicing
Invoices: what they must contain and how to send them correctly
An invoice is an accounting record for you and your customer, and a VAT document for Skatturinn. If something is missing your customer cannot deduct input VAT and you have a harder time proving the income. Here is the checklist.
- Updated
- Sources reviewed
- Tax year
- 2026
An invoice in Iceland must show the issue date, a number in an unbroken sequence, the name and ID number of seller and buyer, a description of the goods or services, the amount excluding VAT, the VAT rate and amount, and the seller's VAT number if VAT-registered. Businesses outside the VAT register may not show VAT. Invoices and vouchers must be kept for seven years, and corrections are made with a credit note rather than by deleting an invoice.
Key figures
- Mandatory fields
- date, number, ID numbers, description, VAT
- separately per rate
- Numbering
- unbroken sequence
- Retention
- 7 years
- from the end of the financial year
- Corrections
- credit note
- never delete an invoice
Mandatory fields
| Field | Note |
|---|---|
| Issue date | the day the invoice is issued |
| Invoice number | unbroken sequence without gaps; pre-numbered forms or a system that guarantees the order |
| Seller | name, ID number (kennitala) and VAT number if VAT-registered |
| Buyer | name and ID number |
| Description | what was sold, type and quantity or scope of work |
| Amount excluding VAT | per VAT rate if more than one applies |
| VAT | rate (24% or 11%) and amount, shown separately |
| Total | including VAT |
If you are not VAT-registered you may neither charge VAT nor imply it is included. Many state "Seller is not on the VAT register" on the invoice to remove any doubt. Exempt services such as healthcare or teaching are invoiced without VAT with a reference to the exemption.
Due date, final due date and payment details
The invoice should say when it is to be paid. Payment terms of 14 or 30 days are common. Give your bank account number (or IBAN for foreign customers) and ask for the invoice number to accompany the payment so it matches. Penalty interest may only be charged after the final due date and at the rates the Central Bank publishes.
Numbering and recording income
Skatturinn requires all income to be recorded as it arises and invoices to run in sequence. Gaps call for explanations. Create the invoice when the work is done or delivered, not when payment arrives. If a customer pays in advance, issue an invoice for the advance payment.
Credit notes and corrections
An invoice may not be altered after it is sent, and may not be deleted. If the amount, VAT or buyer is wrong, issue a credit note that references the original number and reverses it in full or in part, then issue a new correct invoice. That way the books show what happened.
Foreign customers
Services sold to businesses outside Iceland are in many cases not subject to Icelandic VAT (the service is deemed used abroad). The invoice is then issued without VAT with an explanation. The rules depend on the type of service and where the buyer is; check Skatturinn's guidance on selling services abroad. Quote amounts in the contract currency but book them in ISK at the issue-date rate.
Retention and bookkeeping
Invoices, credit notes and vouchers must be kept for seven years from the end of the financial year, on paper or in a readable electronic form. Electronic invoices are fully valid as long as they carry the mandatory fields and can be verified. See bookkeeping and expenses.
Invoicing in Fustle
Fustle numbers invoices in sequence, places ID numbers, VAT rates and amounts where they belong, creates credit notes and keeps everything together. You choose the VAT treatment per line and Fustle calculates the amounts. See Invoicing.
Frequently asked questions
Can I email a PDF invoice?
Yes. An electronic invoice is fully valid if it carries the mandatory fields and can be stored unaltered. Many larger buyers and public bodies do, however, ask for structured e-invoices (XML) through an e-invoicing network.
What if I forgot VAT on an invoice?
Issue a credit note for the original invoice and a new invoice with the correct VAT. You are responsible for paying VAT on the sale whether or not you collected it.
Do I need to invoice work for private individuals?
Yes, all sales must be recorded with an invoice or in a point-of-sale system that meets the income-recording rules. A simpler receipt can be used for smaller amounts to individuals, but the sale still has to be recorded.
How do I charge penalty interest?
Penalty interest runs from the due date or final due date stated on the invoice, at the rates the Central Bank publishes. Send a reminder before adding collection costs.
Sources
- Skatturinn — tekjuskráning og reikningarskatturinn.is/atvinnurekstur/bokhald-og-tekjuskraning/tekjuskraning
- Skatturinn — bókhaldskatturinn.is/atvinnurekstur/bokhald-og-tekjuskraning/bokhald
- Skatturinn — almennt um virðisaukaskattskatturinn.is/atvinnurekstur/virdisaukaskattur/almennt-um-vsk/
- Lög um virðisaukaskatt nr. 50/1988althingi.is/lagas/nuna/1988050.html
- Lög um bókhald nr. 145/1994althingi.is/lagas/nuna/1994145.html
General information, not advice on your situation. Skatturinn and other authorities assess each case. Check the review date and sources before relying on a figure.
Related content
- VATValue added tax (VAT) for the self-employedValue added tax for the self-employed in Iceland: when registration becomes mandatory (2,000,000 ISK turnover), when 24% or 11% applies, what is exempt, how input VAT is deducted and the VAT return due dates.
- Getting startedStarting out: seven steps to your first invoiceSeven steps from idea to first invoice: legal form, RSK 5.02, category and calculated remuneration, pension fund, VAT, invoicing system and the first withholding return. For anyone starting self-employment in Iceland.
- Getting startedRSK 5.02: registering as an employer and for VATWhat RSK 5.02 is, who must file it, the 8-day rule, what to fill in and how the electronic registration works. A guide for contractors and the self-employed in Iceland.
- Expenses and deductionsCapture the receipt while the purchase is still fresh.Capture receipts, record why a purchase relates to work and review AI-extracted details. Clear expense records make the next steps easier.
- Figures and datesGlossary: the terms a contractor needs to knowCalculated remuneration, withholding, tryggingagjald, útsvar, input VAT, skilagrein, disguised employment: the terms a contractor in Iceland needs to understand, each explained in one sentence with the Icelandic word and a link to the detailed guide.
Where does Fustle fit in?
Record the work and create the invoice. The service you choose determines the support included.