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Taxes

Withholding tax: monthly filing on your own salary

Withholding tax is the tax deducted from salary as it is paid. As a self-employed person you are the employer who deducts and files it. Here is what the return contains, when it must be in and what happens if it is not.

Updated
Sources reviewed
Tax year
2026

A self-employed person on the employer register files a monthly withholding return at skattur.is for their calculated remuneration. It shows the month's salary, withholding of income and municipal tax in brackets of 31.49–46.29% less the personal tax credit of 72,492 ISK, and 6.35% social security. The due date is the 1st of the next month and the final due date the 15th; after that a surcharge of up to 10% applies to unpaid withholding, plus penalty interest. Withholding is a prepayment that is finally settled at the annual assessment.

Key figures

Due date
1st of the next month
Final due date
15th of the next month
Surcharge
1% per day, max 10%
plus penalty interest
Withholding rates
31.49% / 37.99% / 46.29%
Personal tax credit
72,492 ISK/month
Social security on the return
6.35%

What withholding tax is

The Withholding of Public Levies Act No. 45/1987 obliges employers to deduct income and municipal tax from salaries and pass it on monthly. When you pay yourself calculated remuneration in your own business, you are the employer. Withholding is a provisional payment: the final tax for the year is set at assessment after the tax return is filed, and the difference is refunded or collected.

What is on the return

ItemHow it is calculated
Salary / calculated remunerationthe amount you registered, at least the category reference
Pension contribution4% of salary, reduces the taxable base
Additional pension savings2–4% if chosen, also reduces the base
Taxable basesalary − pension contributions
Withholding31.49% / 37.99% / 46.29% of the base by bracket
Personal tax credit−72,492 ISK per month (or a share if used elsewhere)
Social security6.35% of salary + 11.5% employer pension

Example with 550,000 ISK of calculated remuneration: contribution 22,000 ISK, base 528,000 ISK, withholding 156,859 ISK in bracket 1 and 11,351 ISK in bracket 2 = 168,210 ISK, less the credit: 95,718 ISK. Social security (550,000 + 63,250) × 6.35% = 38,941 ISK. The return therefore shows 95,718 ISK of withholding and 38,941 ISK of social security.

Due date and final due date

The due date is the 1st of the next month and the final due date the 15th of the next month. Payment by the final due date carries no surcharge. The January return must therefore be paid by 15 February. If the 15th falls on a weekend or public holiday, the final due date moves to the next working day.

How to file

  1. Log in to skattur.is with electronic ID.
  2. Withholding return for the month: enter the amounts or submit them electronically from a payroll system.
  3. Pay via the claim in your online bank or by transfer with a reference.
  4. Store the confirmation with your books.

A return is due for every month the registration is active, including months with no receipts, because calculated remuneration does not depend on collections. If the business is dormant, tell Skatturinn rather than skipping returns.

Surcharge and penalty interest

If withholding is not paid by the final due date, a surcharge of 1% of the unpaid amount per day begun, up to 10%, applies. Penalty interest also runs from the due date. If no return is filed, Skatturinn estimates the amount and adds the surcharge. Always file the return on time even if payment is late; an estimate costs more than a delay.

The personal tax credit and several employers

There is one personal tax credit per person per month. If you also have a salaried job you decide where it is used, usually with your main employer. Withholding on calculated remuneration is then paid without the credit. If both use it in full you underpay during the year and receive a bill at assessment. See personal tax credit.

Wage statements and year end

In January the employer files the annual wage return with wage statements (RSK 2.01) for the previous year's salary and withholding. For a sole proprietorship that is a statement for yourself. The data is pre-filled into your tax return.

Withholding in Fustle

In Payroll, Fustle calculates withholding, the personal tax credit and social security for each month with the year's parameters and prepares the return amounts. You file at skattur.is and pay the claim; Fustle keeps the duty visible until a direct connection exists. Try the payroll calculator to see the figures for your amount.

Frequently asked questions

Do I file a return if no invoice was paid that month?

Yes, if you are on the employer register. Calculated remuneration is the salary you pay yourself for the work, not what came in. If the business is paused, notify Skatturinn so the duty lapses.

What is the difference between the due date and the final due date?

The due date is when the debt falls due (1st of the next month). The final due date is the last day to pay without a surcharge (15th of the next month). Penalty interest runs from the due date if you pay after the final due date.

What if I paid too much withholding?

Withholding is a prepayment. At assessment, after the return is filed, it is compared with the final tax for the year and the difference is refunded with interest or collected.

Can I lower calculated remuneration mid-year?

Yes, by notifying Skatturinn if circumstances change, for example a lower working ratio. It may not fall below the category minimum unless Skatturinn accepts a justification.

Sources

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.

Where does Fustle fit in?

Record the work and create the invoice. The service you choose determines the support included.

Explore Payroll →Try the payroll calculator →