Skattsöfnun

Skattsöfnun, the Icelandic term for tax collection, is the process by which a government raises revenue from individuals and businesses to fund public services and social infrastructure. It covers a range of taxes and duties, including income tax on individuals and corporations, value-added tax (VAT), excises, and other charges. The overarching goal is to provide public goods and to allocate resources in line with fiscal and economic policy, while aiming for fairness and efficiency in the tax system.

The administration responsible for skattsöfnun in Iceland is Skatturinn (the Tax Administration). It administers tax collection, processes tax returns, issues assessments, and enforces compliance. It provides guidance to taxpayers and maintains online services to file returns, view accounts, and pay taxes. Skatturinn also uses information from employers and other data sources to verify reported income and transactions.

Methods of collection include withholding at source (for wages and salaries), self-reported income for individuals and businesses, and periodic prepayments or instalments. VAT is charged on most goods and services and remitted by registered businesses. Taxable entities must comply with reporting requirements, keep records, and respond to notices of assessment.

Enforcement and appeals form part of the system. Penalties may apply for late payments or underreporting, and taxpayers have the right to appeal assessments. In recent years, the Icelandic tax system has undergone digital modernization, expanding online filing, data sharing, and real-time information to improve efficiency and compliance.