Iceland EOR & PEO

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EOR in Iceland

Horizons ensures day-to-day guidance to help your business navigate Iceland labor laws and regulations. Horizons also ensures payroll is processed on a normal schedule and that all Icelandic taxes are withheld.

As the Iceland Employer of Record, Horizons is responsible for employee income tax withholding, payment of payroll taxes to state authorities, and submission of tax returns to the Iceland Tax Office.

Partnering with our Iceland EOR is the quickest and most cost-effective way to enter the Icelandic market.

Note, a Iceland Employer of Record is also known as a Iceland Professional Employer Organization (PEO).

Facts & Stats

stay compliant with Iceland labor laws

Employment Laws

Employment contracts in Iceland

Employment contracts in Iceland can either be verbal or written, but we strongly recommend always producing a written contract for every employee. These contracts should contain any details of the role, such as salary/wage and any benefits, should be written in the Icelandic language, and use the local currency of the Icelandic krona.

Fixed-term

Indefinite

Working hours in Iceland

A standard working week in Iceland is 40 hours, with five eight-hour days. Anything above this should be paid at overtime rates, which should be at least 180% of normal pay.

Holiday Schedule in Iceland [2024]

Iceland has a range of national public holidays that are celebrated annually. In 2024 these holidays are:

Date	Holiday name
1 Jan, 2024	New Year’s Day
27 Jan, 2024	Þorrablót
28 Mar, 2024	Maundy Thursday
29 Mar, 2024	Good Friday
31 Mar, 2024	Easter Sunday
1 Apr, 2024	Easter Monday
20 Apr, 2024	First Day of Summer
1 May, 2024	Labour Day
9 May, 2024	Ascension Day
19 May, 2024	Pentecost
20 May, 2024	Whit Monday
17 Jun, 2024	Icelandic Republic Day
1 Aug, 2024	Commerce Day
24 Dec, 2024	Christmas Eve (from noon)
25 Dec, 2024	Christmas Day
26 Dec, 2024	Second Day of Christmas
31 Dec, 2024	New Year’s Eve (from noon)

Vacation leave in Iceland

Employees in Iceland are generally entitled to a minimum of 24 days of paid vacation leave annually.

Sick leave in Iceland

Employees in Iceland receive two days of paid sick leave for every month of employment. Additionally, mothers can take up to 12 days off every year to care for a sick child.

Parental leave in Iceland

Female and male employees in Iceland can take up to three months of leave after the birth of their child. A following three-month allowance can be shared between the parents. Additionally, there is an allowance of up to four months of unpaid leave for childcare.

Terminations and severance in Iceland

Employees in Iceland are generally entitled to between one week and six months of service, depending on length of service. Employers must also hold a meeting with employers to explain the circumstances and reasoning for the termination.

Probation periods are generally limited to three months.

Taxation in Iceland

Employees in Iceland must pay an income tax, which is on a progressive scale ranging from 20.6% to 31.8%, and a municipal tax of 14.44%.

The corporate rate in Iceland is generally 20%. However, there are different rates for different types of businesses, such as partnerships.

Health coverage in Iceland

Iceland has a public healthcare system, so employers do not need to nor are expected to provide private medical insurance.

hassle-free Iceland compensation & benefits

Compensation & Benefits

Compensation laws in Iceland

There is no legally mandated minimum wage in Iceland. Instead, individual minimums are determined by collective bargaining agreements and negotiations between employers and employees. However, as of recent data, the average monthly salary in Iceland is around ISK 232,000 per month.

Minimum Wage Country Comparison Chart	(Per month in USD)
Switzerland (Geneva)	$4,000
Italy	$2,255
Australia	$1996
Algeria	$156
Uzbekistan	$22

Benefit management in Iceland

Establishing an Icelandic benefits system for your workforce can be difficult as a foreign organization. With the language and cultural differences, and a complicated, unique collection of employment laws, running a comprehensive and compliant benefits system can be very time-consuming.

Alternatively, you could use a payroll outsourcing firm to handle your Icelandic payroll. At Horizons, our Iceland payroll experts can set up and manage your benefits system for you, freeing you to focus on your successful expansion.

Iceland Employer Of Record Peo

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EOR in Iceland

Employment Laws

Working hours in Iceland

Compensation & Benefits

Frequently asked questions

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Hire in Iceland in 24h without your own local entity.

With Horizons, you get quick service, transparent pricing, and expert support.

Frequently asked questions

What is the difference between an Iceland PEO and an Iceland EOR?

Generally speaking, the terms “Iceland PEO” and “Iceland EOR” are used interchangeably.

Can an EOR in Iceland hire both local and foreign nationals to work in Iceland ?

An EOR in Iceland can feasibly hire both local and foreign nationals to work in Iceland.

However, the ability of Horizons to sponsor your foreign national employee in Iceland may be limited due to visa quotas practiced in many countries.

Contact us with your requirements and our Global Mobility team with review the case and get back to you within 2 business days.

How long does Horizons' Iceland EOR service take to hire an employee?

In most cases, Horizons’ Iceland EOR can hire & onboard your employee within 24 hours. The actual start date of the employee will depend on their notice period obligation to their previous employer as well as any relevant hiring rules in Iceland.

Is it possible to get a work visa in Iceland ?

It is possible to get a work visa in Iceland. Horizons’ Global Mobility team is a dedicated team of work visa experts. They assess the details of each case to determine feasibility and costs before Horizons applies for the work visa on behalf of your employee. If the Global Mobility team determines that your case is feasible, the process is smooth and transparent. Visa spots in Iceland are limited, however—get started today to secure your employees’ visa spot.

Iceland EOR & PEO

Start hiring in Iceland

Simple, compliant hiring with Horizons EOR

EOR in Iceland

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stay compliant with Iceland labor laws

Employment Laws

Employment contracts in Iceland

Fixed-term

Probationary period

Termination notice period

Severance

Indefinite

Probationary period

Termination notice period

Severance

Working hours in Iceland

Vacation leave in Iceland

Sick leave in Iceland

Parental leave in Iceland

Terminations and severance in Iceland

Taxation in Iceland

Health coverage in Iceland

hassle-free Iceland compensation & benefits

Compensation & Benefits

Compensation laws in Iceland

Benefit management in Iceland

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