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The description of corporate structures and prices quoted below is serving as a general guide and may be subject to the most recent changes of the legislation in various jurisdictions. We invite you to contact us for the latest update and free quotation.

COUNTRY: Iceland

Iceland Trading Company

Legal form: The most common and economically important type of business in Iceland is the limited liability company (corporation). Other structures are partnerships, cooperative societies, businesses run by the self-employed and branches of foreign limited companies.

Name of the company: Companies in Iceland must use the suffix Limited or Ltd. to denote limited liability and can use any name unless it includes words such as Empire, Crown, Imperial, Royal, Chartered or Municipal. Special consent is required for names such as European, Iceland or International.

Memorandum and Articles of Association: New public limited companies and private limited companies must be registered with the Register of Limited Companies. Before registration, the founders are liable for all commitments entered into on behalf of the company. When a limited liability company is established a memorandum of association must be prepared containing a draft of articles of association, names and addresses of founders, subscription price of the shares and deadline for subscription and payment of subscribed capital. The draft of articles must contain information including the name and location of the company, its objectives, share capital, board of directors, legal venue, auditors and financial year. The articles of association are adopted by the shareholders at the first general meeting and the company must be registered with the Register of Limited Companies within six months of the date of the memorandum of association in the case of a public limited company or two months in the case of a private limited company. An unregistered company can neither acquire rights nor assume duties.

Shareholders: A public limited company must have at least two founders, at least one of whom must reside in Iceland or be a resident and a citizen of an EEA or OECD country. A private company may be founded by one or more persons. At least one  must reside in Iceland or be both a citizen and resident of an EEA or OECD country. No limits are set on the maximum number of shareholders.

The minimum share capital: A public limited company must have an initial capital of at least ISK 4 million (USD 65,370- please check current exchange rate), which has to be paid within one year of registration, and a private limited company at least ISK 500,000 (USD 8,171 – please check current exchange rate), which has to be paid before registration.

Directors of the company: A public limited company must have a board of directors consisting of at least three persons, and must appoint at least one managing director. The managing director(s) and at least half of the members of the board must reside in Iceland or be residents and citizens of any other EEA or OECD country, but an exemption may be granted by the Minister of Commerce.  A private limited company shall have one or two persons on its board of directors if it has four shareholders or fewer; otherwise, the minimum is three persons. One or more managing directors may be appointed by the board, and if there is only one person on the board of directors he may also serve as managing director. The managing director(s) and at least half of the members of the board must reside in Iceland or be residents and citizens of any other EEA or OECD country, but an exemption may be granted by the Minister of Commerce. If there is only one person on the board of directors, he must fulfill the residence qualification.

Registered office: Every company, registered in Iceland is required to have a registered office and address in Iceland, which should be notified at the Registry Office.

Icelandic International Trading Company (ITC): The Icelandic International Trading Company (ITC) was brought into being in March 1999 when the Icelandic Parliament passed Act no. 31/1999, on International Trading Companies and Act no. 29/1999, on Amendment to Various Taxation Laws in respect of International Trading Companies. An International Trading Company is a normal Icelandic limited liability company that has met certain operational conditions and as such has been granted a special operating license. International Trading Companies pay just 5% income tax and are exempt from net worth tax and stamp duties.

In Iceland, both private limited companies (Einkahlutafelag - ehf.) and public limited companies (Hlutafelag - hf.) can be established by persons of any nationality. There are some limitations on the scope of operation of an ITC, such as the fact that ITCs cannot trade in goods covered by the EEA agreement.

ITCs can act as intermediaries in the trading of services between entities located outside of the jurisdiction of Iceland. This includes the ability to provide end consumers with, for instance, financial and insurance services, telecommunication services, internet services, computer advisory services and others. Note that the services must be supplied by the foreign entity and not the ITC. The ITCs attraction as a low-tax pass-through point for services between two parties gives the shrewd tax planner an exciting new weapon in the struggle against tax conformity.

Icelandic ITCs offer a number of further specific benefits, particularly with regards to aircraft and vessel leasing. The invention of the ITC has made Iceland - an ultra-respectable European jurisdiction with excellent communications and banking facilities - yet another non-traditional haven in which to accumulate "under taxed" profits.

Audit and financial returns: Corporations and registered branches of non-resident entities must file an annual income tax return by the end of May, irrespective of whether or not they have any taxable income. Every limited liability company in Iceland is required to elect an auditor or inspector and have its annual accounts audited. For public limited companies (corporations), a state-authorized public accountant must perform a full-scale audit. Publicly listed companies must elect two auditors, one of whom must be a state-authorized public accountant.

Time needed for formation: Usually it is 1-3 working days.

In order to proceed with the formation of the Iceland Trading Company please visit our  how do I start  page and then proceed to  filling in our application form