How to Start Freelancing in Iceland
Starting as a freelancer in Iceland takes a few clear steps: choose your business category, file RSK 5.02 at least 8 days before you begin, set up pension fund access, and send your first invoice. Fustle guides you through each step and automates ongoing compliance.
Step 1: Confirm you are a contractor, not an employee
Before registering, make sure your working arrangement qualifies as self-employment. Key indicators: you control how and when you work, invoice for projects or hours, and bear business risk.
If a client dictates your schedule, provides equipment, and treats you like staff, you may be a disguised employee (gerviverktaki) — which creates tax liability for both parties.
Step 2: File RSK 5.02 (8-day rule)
Download RSK 5.02 from skatturinn.is and submit it at least 8 days before your first day of work or invoicing. The form registers you as your own employer.
Select your starfaflokk (job category A–H) — this determines your calculated remuneration minimum. If you expect revenue over 2,000,000 ISK in 12 months, also register for VAT on the same form.
Step 3: Set up pension and tax accounts
After approval (1–14 business days), you receive a staðgreiðsluvefslykill to log in at skatturinn.is. Set up access to your lífeyrissjóður (pension fund) portal — you must pay 15.5% monthly (4% + 11.5%).
Open a separate business bank account if possible. Track all income and expenses from day one for your annual tax return.
Step 4: Send your first invoice
A valid Icelandic invoice must include: your kennitala, client kennitala, invoice number, date, description of services, amount excluding VAT, VAT rate (24% or 11% if registered), and payment terms.
With Fustle, create and send compliant invoices in minutes. Fustle automatically calculates withholding tax, tryggingagjald (6.35%), and pension based on your calculated remuneration.
Ongoing: Monthly tax filings
Every month by the 15th, report and pay: income tax (31.49% / 37.99% / 46.29% brackets), tryggingagjald (6.35%), and pension (15.5%). Apply your personal tax credit of 72,492 ISK/month.
Fustle files these reports automatically. You receive a clear breakdown of what was paid and what you keep.
Related guides
Official resources
Frequently asked questions
How long does RSK 5.02 registration take?
Skatturinn typically processes RSK 5.02 within 1–14 business days. Plan ahead — the 8-day rule means you cannot start working immediately after filing.
Do I need a separate company (einkahlutafélag)?
Most freelancers operate as einstaklingsfyrirtæki (sole proprietorship) using their personal kennitala. A company is only needed for specific business structures or liability reasons.
What does Fustle cost?
Fustle offers transparent pricing with everything included: invoicing, tax filing, VAT, and pension. Visit our pricing page for current rates.
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