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Iceland

#34 overall · Score 59.0 / 100 · unchanged from 2025

Overall

#34

59.0 / 100

unchanged from 2025

Corporate

#13

69.0 / 100

up two places from 2025

Individual

#32

50.1 / 100

unchanged from 2025

Consumption

#19

58.1 / 100

up four places from 2025

Property

#34

37.7 / 100

unchanged from 2025

Cross-border

#26

63.8 / 100

unchanged from 2025

Strengths

  • Iceland's corporate tax rate of 20 percent is below the OECD average of 24.2 percent, and cost recovery for industrial buildings is one of the best in the OECD.
  • The Icelandic VAT threshold is one of the lowest in the OECD.
  • Iceland has a territorial tax system that fully exempts foreign dividends and capital gains with no country limitations.

Weaknesses

  • Companies are limited in the amount of net operating losses they can use to offset future profits, and companies cannot use losses to reduce past taxable income.
  • Iceland's controlled foreign corporation rules apply to both passive and active income.
  • Property taxes are not deductible from corporate income, leading to double taxation of business real estate assets.

Component Scores

Iceland category scores out of 100Corporate Taxes: score 69.0, rank 13. Individual Taxes: score 50.1, rank 32. Consumption Taxes: score 58.1, rank 19. Property Taxes: score 37.7, rank 34. Cross-Border Tax Rules: score 63.8, rank 26255075100Corporate Taxes: 69.0 (rank 13)Individual Taxes: 50.1 (rank 32)Consumption Taxes: 58.1 (rank 19)Property Taxes: 37.7 (rank 34)Cross-Border Tax Rules: 63.8 (rank 26)CorporateIndividualConsumptionPropertyCross-border
Category Rank Score vs 2025
Corporate Taxes #13 69.0 up two places from 2025
Individual Taxes #32 50.1 unchanged from 2025
Consumption Taxes #19 58.1 up four places from 2025
Property Taxes #34 37.7 unchanged from 2025
Cross-Border Tax Rules #26 63.8 unchanged from 2025

Ranking Changes, 2014–2026

Iceland's best overall rank was 33rd and its worst was 36th. It ranks 34th in 2026.

Overall rank by year for IcelandIceland: 2014 rank 36, 2015 rank 33, 2016 rank 33, 2017 rank 33, 2018 rank 33, 2019 rank 33, 2020 rank 34, 2021 rank 34, 2022 rank 35, 2023 rank 35, 2024 rank 35, 2025 rank 34, 2026 rank 342014201520162017201820192020202120222023202420252026Iceland 2014: rank 36Iceland 2015: rank 33Iceland 2016: rank 33Iceland 2017: rank 33Iceland 2018: rank 33Iceland 2019: rank 33Iceland 2020: rank 34Iceland 2021: rank 34Iceland 2022: rank 35Iceland 2023: rank 35Iceland 2024: rank 35Iceland 2025: rank 34Iceland 2026: rank 34#36#34

OECD Context

Each row places all 38 countries on a 0–100 score scale for one measure. Iceland is highlighted; the dashed line is the OECD median.

All 38 Countries' Ranks

Overall and category ranks for all 38 countries
CountryOverallCorporateIndividualConsumptionPropertyCross-border
Estonia#1#2#1#24#1#7
Latvia#2#1#8#22#4#6
New Zealand#3#31#7#1#8#14
Switzerland#4#7#9#4#36#2
Lithuania#5#3#10#23#6#16
Luxembourg#6#20#21#7#15#5
Czech Republic#7#9#4#32#5#11
Australia#8#29#14#9#3#23
Turkey#9#21#6#15#22#8
Hungary#10#5#3#38#23#4
Israel#11#11#31#11#10#18
Slovak Republic#12#24#2#33#7#17
Sweden#13#6#18#26#9#12
Costa Rica#14#35#13#6#11#29
Canada#15#17#28#8#25#28
Netherlands#16#23#30#14#20#3
United States#17#8#17#3#27#37
Austria#18#18#27#17#17#10
Germany#19#30#34#13#12#9
Norway#20#15#29#27#16#15
Mexico#21#28#26#12#2#38
Finland#22#10#24#28#21#24
Greece#23#22#5#29#30#19
Chile#24#32#23#10#13#36
Slovenia#25#14#12#30#24#30
Korea#26#26#38#2#31#34
Belgium#27#16#15#25#28#21
Japan#28#36#35#5#26#31
Ireland#29#4#36#35#18#27
United Kingdom#30#25#22#34#33#1
Denmark#31#19#37#20#14#32
Poland#32#12#11#36#29#25
Portugal#33#34#19#21#19#33
Iceland#34#13#32#19#34#26
Spain#35#33#20#18#35#20
Italy#36#27#16#37#38#22
Colombia#37#37#25#16#37#35
France#38#38#33#31#32#13

Among European Peers

Iceland ranks 24th of 27 European OECD members on the overall index.

Source: 2026 International Tax Competitiveness Index.

Notes on the Data

The 2026 Index uses the most up-to-date data available as of July 2026. Data may not reflect changes in countries making rapid reforms.

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About the Authors

Alex Mengden Tax Foundation
Expert

Alex Mengden

Economist

Alex Mengden is an Economist at the Tax Foundation, where he focuses on international tax issues and tax policy in Europe. He holds a BA in philosophy and economics from the University of Bayreuth and an MSc in economics from the Ludwig Maximilian University of Munich.

Tax Foundation Staff

Luis Zarka

Transatlantic Tax Fellow

Luis Zarka was a 2026 Transatlantic Tax Fellow with the Tax Foundation’s Center for Global Tax Policy.

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Sarah Wilbur

Communications Manager

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Vice President of Communications

Jesse Solis is Vice President of Communications at the Tax Foundation, where he leads the communications team and works to build coverage of Tax Foundation’s experts and their work across the globe. He joined the team in 2021 as Communications Manager and became Communications Director in 2024.