Reykjavík has a strong economy. As the governmental, financial, and business center of the country, those working in Reykjavík will notice the presence of many major Icelandic and European corporations, as well as a high concentration of financial banks and service companies, especially in the Borgartún district.
This concentration of business and the rapid growth of the economy stimulated an economic boom in the 1990s and 2000s, the effects of which are still felt today. Additionally, Iceland has been known for its egalitarianism and liberal economy policies, and topped the Human Development Index in 2007.
It is because of this that the city attracts many expatriates from across the world looking to work in a strong economy for a large corporation. Typical expatriate jobs are therefore usually in the financial sector, or in academic positions at the local universities, or as English teachers. There are also jobs available in fishing, renewable power, and electricity production, as well as the service sector.
As Iceland is a European Economic Area member, any expatriates working in Reykjavík that have relocated from an EU nation do not need a work permit or visa. However, if you are an EU citizen staying for more than six months, you are required to apply for a permanent residency permit, which is usually relatively easy to obtain.
If you are moving to work in Reykjavík and you are not an EEA citizen, then you have to apply for both a work permit and a residency permit via the Icelandic embassy or consulate in your country.
The taxation system in Iceland is very simple, and so should be no problem for expatriates living in Reykjavík to understand. For 2015, income tax is calculated depending on your monthly earning as follows:
These rates apply after pension fund premium has been deducted from income, and include 14.48% municipality tax.
Like most other countries, your income tax will be deducted at source by your employer through PAYE. Capital gains tax is 20% for individuals and the local corporate tax is, at 20%, one the lowest in the world. Valued Added Tax (VAT), however, is higher than in most other European countries at 24%.