Despite low tax rates in relation to European welfare states, overall taxation and consumption is still much higher than in countries such as Ireland.
The tax is collected by Skatturinn, the Iceland Revenue and Customs Agency and is due in March each year.
Mandatory employee pension insurance is 4% of gross income (employer provides a minimum of 8%) and another 4% of total income may be deducted for private pension insurance (if so, the employer is obliged to pay additional 2% premium for the benefit of the employees) .
Corporate income tax for other types of legal entities (e.g. partnerships) is assessed at a rate of 37.6%.
A number of specific consumer goods and services are subject to a reduced VAT rate of 11% (e.g. food, hotels, newspapers, books, and energy like electricity, heating and fuel).