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hire in Iceland

Iceland PEO &
Employer of Record

SALARY PAYMENT IN Icelandic Króna (ISK)

CONTRACT LANGUAGES Icelandic / English

PAYROLL TAX 35% – 38%

PAYROLL CYCLE Monthly

TIME TO HIRE 24 hours

Hire and pay talents
with Horizons in
180+ countries

Simple, compliant hiring with Horizons PEO

PEO 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 PEO is the quickest and most cost-effective way to enter the Icelandic market.

Facts & Stats

PEO Platform Hire in Iceland, and pay employees through our platform or app. PEO Cost Our Iceland PEO solution is the most affordable on the market. Time-to-hire Fast onboarding in Iceland, hire in as little as 24 hours.
Contracts We draft labor contracts compliant with Icelandic labor law. Local Benefits We administer all mandatory benefits and contributions in Iceland. 180+ Countries It doesn’t stop with Iceland — we are an international PEO
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
Probationary period3 months
Termination notice period30 days
SeveranceNot required by law, please refer to the specific employment agreement.
Indefinite
Probationary period3 months
Termination notice period30 days
SeveranceNot required by law, please refer to the specific employment agreement.

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.

Hire compliantly in Iceland without a local entity.

Quick, compliant hiring in 24 hours—no subsidiary required.

Public holidays in Iceland

Iceland has a range of national public holidays that are celebrated annually. In 2023 these holidays are:
Date Holiday name
1 Jan, 2023 New Year’s Day
6 Apr, 2023 Maundy Thursday
7 Apr, 2023 Good Friday
9 Apr, 2023 Easter Sunday
10 Apr, 2023 Easter Monday
20 Apr, 2023 First Day of Summer
1 May, 2023 Labour Day
18 May, 2023 Ascension Day
28 May, 2023 Whit Sunday
29 May, 2023 Whit Monday
17 Jun, 2023 Icelandic Republic Day
7 Aug, 2023 Commerce Day
24 Dec, 2023 Christmas Eve (from noon)
25 Dec, 2023 Christmas Day
26 Dec, 2023 Second Day of Christmas
31 Dec, 2023 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.

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.

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

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

FAQs

An Iceland PEO and an Iceland EOR are two types of companies which specialize in providing human resources services to businesses in Iceland.

The main difference between an Iceland PEO and an Iceland EOR is in the scope of their services.

Iceland PEOs provide a full range of HR services, including payroll, benefits administration, and employee recruiting—all under one roof as a co-employer. Engaging an Iceland PEO is essentially outsourcing your HR duties in Iceland.

Iceland EORs actually take over as the legal employer of your employees based abroad. Iceland EORs become responsible for labor compliance for your employees in Iceland.

At Horizons, we offer both PEO and EOR services in Iceland. Get in touch now and let us know what service you are seeking.

A PEO 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.

In most cases, Horizons’ Iceland PEO 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.

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.