Fjármagnstekjur

Fjármagnstekjur, or capital income taxes, are taxes levied on income generated from financial assets and on the profit realized from the sale of such assets. They apply to both individuals and legal entities and are distinct from taxes on earned wages or business income. The main components typically include taxes on dividends, interest, rental income from property, royalties tied to capital, and capital gains from the disposal of financial instruments, real estate, or other investments. In many tax systems these taxes are collected through separate rules or through special rates, and may be subject to withholding at source for certain types of income, with the remainder reported on annual tax returns.

Design considerations for fjármagnstekjur include revenue adequacy, equity, and effects on saving and investment behavior. Proponents argue that capital income taxation helps reduce inequality and ensures that those earning from wealth contribute to public finances. Critics contend that high or poorly designed capital taxes can distort investment, encourage tax avoidance, and be difficult to administer, particularly with cross-border holdings or inflation.

In Iceland, fjármagnstekjur are defined by tax law and administered by the national tax authority. The exact rates, exemptions, and rules for asset classes are subject to reform through Alþingi legislation and policy debates. The topic is commonly discussed alongside other aspects of personal and corporate taxation, with international comparisons influencing policy choices.