Iceland Customs Duty

Key Takeaways

• Iceland is not an EU member. It’s in the EEA/EFTA and runs its own, fully separate VAT and customs system - no IOSS, no €150 threshold, none of the EU’s rules apply.
• Iceland’s standard VAT (VSK, or Virðisaukaskattur) is 24%, with an 11% reduced rate for books, food and other consumables, and accommodation.
• Iceland has no general low-value exemption for goods bought from foreign webshops - VAT applies from the first krona. Only genuine person-to-person gifts under 13,500 ISK sent by someone living abroad are exempt, and Skatturinn has explicitly stated that ordinary webshop orders don’t qualify as gifts even if marked as one.
• Customs duty itself is 0% on many everyday categories, including clothing, footwear, and electronics, following tariff cuts in 2016-2017 - but VAT and carrier handling fees still apply regardless.
• Skatturinn (Iceland Revenue and Customs) has administered both tax and customs since the tax and customs directorates merged into one agency on 1 January 2020.

How Icelandic Import Rules Work

Iceland sits outside the EU’s customs union and VAT area entirely. It’s a member of the European Economic Area (EEA) and the European Free Trade Association (EFTA) instead, which gives it access to the EU single market for many goods but leaves it free to run its own import tax system - separate rates, separate thresholds, no IOSS registration scheme, and no €150 cutoff. A package from an EU seller into Iceland is a full international import, not an intra-EU shipment.

The standard VAT rate is 24%, one of the higher standard rates in Europe. A reduced 11% rate applies to a defined list of goods and services, including books, newspapers and periodicals, food and other everyday consumables, and hotel and accommodation stays.

The bigger structural difference from EU or UK rules is the threshold, or rather the lack of one. Iceland’s own tax authority states plainly that all goods imported into the country are subject to import charges regardless of value, with only narrow exceptions. In practice that means:

• Goods ordered from a foreign webshop: VAT (and any applicable customs duty) is calculated on the full value of the goods plus shipping, with no minimum value below which the shipment is ignored. A cheap item still generates a customs charge.
• Genuine gifts: A parcel sent by a private individual abroad to a private individual in Iceland, for a specific occasion (birthday, wedding, Christmas, confirmation), is exempt from import charges if its value is 13,500 ISK or less - and only the portion above that amount is charged if it’s worth more. This exemption does not cover alcohol or tobacco, and Skatturinn has stated directly that goods residents order from foreign online stores do not qualify for it, even if the seller labels the package as a gift.
• Customs duty rates: Iceland eliminated tariffs on many everyday consumer goods, including clothing, footwear, and electronics, in tariff reforms around 2016-2017, so duty on these categories is commonly 0%. Other product categories, particularly certain agricultural and food items, can still carry duty. VAT is charged regardless of whether duty applies.

When a parcel arrives, the carrier submits a customs declaration on the recipient’s behalf, Skatturinn (or the carrier acting for it) calculates what’s owed, and the charges are typically paid online before the parcel is released for delivery or pickup.

For how Iceland compares with the UK, Norway, Switzerland, and other non-EU European destinations, see the Europe customs duty guide.

Iceland-Specific Considerations

One agency handles both tax and customs. Iceland merged its former Directorate of Internal Revenue (Ríkisskattstjóri) and Directorate of Customs (Tollstjóri) into a single agency, Skatturinn (branded internationally as Iceland Revenue and Customs), effective 1 January 2020. Customs supervision is now a dedicated unit inside Skatturinn rather than a standalone office, which is why Icelandic customs guidance and general tax guidance now live on the same site and are handled by the same organization.

Íslandspóstur adds its own handling fee. Iceland’s national postal operator, Íslandspóstur (trading as Pósturinn), charges a fixed handling fee on every dutiable shipment it clears, to cover registration, short-term storage, and administration - separate from the VAT and any duty owed. Published figures for this fee differ depending on where the shipment originates (within Europe versus outside Europe) and have been reported as changing over time; the Icelandic Consumer Association (Neytendasamtökin) has publicly tracked increases to it. Because the exact current figure isn’t consistently published in a single authoritative place, check Íslandspóstur’s own shipment calculator or your specific carrier for the fee that applies to your parcel - other couriers such as DHL, FedEx, or PostNord charge their own separate handling fees that also aren’t uniformly published.

Iceland is a small, import-dependent island market. With a population under 400,000 and no significant domestic manufacturing for most consumer goods, Iceland relies heavily on imports, and shipping costs from mainland Europe or North America tend to run higher than for larger, more central markets. That reality, combined with the lack of a low-value exemption, means the total landed cost of a small overseas order (goods price, shipping, VAT, and handling fee) can end up proportionally higher in Iceland than in many other European countries.

ISK doesn’t use a minor unit in practice. The Icelandic króna (ISK) is quoted and priced in whole krónur - there’s no cents-equivalent subdivision in everyday use. So figures on invoices, customs declarations, and this page appear as round numbers (for example, 13,500 ISK) rather than with decimal places.

Frequently Asked Questions About Customs Duty in Iceland

Is Iceland part of the EU for shopping and customs purposes?

No. Iceland is a member of the EEA and EFTA, not the EU. It follows many EU single-market product rules, but for customs and VAT purposes it runs its own, entirely separate system - its own VAT rates, its own threshold rules, and no participation in the EU’s IOSS scheme or €150 threshold.

Do I have to pay VAT even on a cheap item ordered from abroad?

Generally yes. Iceland does not have a general low-value exemption for goods bought from foreign webshops - Skatturinn’s own guidance states that imported goods are subject to import charges regardless of value. Practically all commercial parcels from outside Iceland will have 24% (or 11%, for qualifying categories) VAT calculated on them.

Can I get around VAT and duty by having a purchase marked as a “gift”?

Not for online orders. Iceland’s genuine gift exemption (up to 13,500 ISK) is meant for actual gifts sent by a private individual abroad for a specific occasion. Skatturinn has stated explicitly that goods Icelandic residents order from foreign online shops do not qualify for this exemption, even if the package is labeled as a gift.

Are clothes and electronics duty-free when shipped to Iceland?

Customs duty itself is commonly 0% on these categories, following Iceland’s elimination of tariffs on many consumer goods around 2016-2017. That doesn’t mean the shipment is free of charges overall, though - 24% VAT still applies to the goods value plus shipping, and the carrier’s own handling fee is added on top.

Who administers customs and VAT in Iceland?

Skatturinn (Iceland Revenue and Customs) handles both. It was formed on 1 January 2020 when Iceland merged its former separate tax authority and customs directorate into one agency, so tax assessment and customs control in Iceland are now run by the same organization rather than two.