Changes were made in some articles in the Act on Accommodation Tax in December 2023.
These came into effect on January 1, 2024.
The Accommodation tax must be paid when an accommodation unit is rented out for the purpose of an overnight stay. This includes accommodation on board a cruise ship, while it stays in a port in Iceland, or elsewhere in the state's customs territory.
Key Considerations:
- - New Registration and Re-registration: All operators, including those previously registered, must register in the accommodation tax register. Registration will be available soon on the Tax Service website; further details will follow.
- Exemptions/Accommodation tax shall not be collected in the following cases:
- - Accommodation sold in 2023 or earlier, delivered in 2024 or later, is exempt from the overnight tax if fully paid with a issued sales invoice. Partial invoicing does not qualify; the exemption requires full payment or invoicing for the entire trip in 2023 or earlier.
- - If the ship docks at a port and it is verifiable that the ship was in distress due to a collision, sea damage, illness, or hostilities.
- - For accommodation for the ship's crew and other personnel on board the ship for work purposes.
Accommodation Tax Amount:
- - Accommodation tax is ISK 1,000 for each sold accommodation unit (cell) per night for accommodation on board a cruise ship within the state's customs area.
- - The tax applies per sold unit, regardless of the number of occupants.
Taxable entities:
- - Cruise ship operators, not used in activities that fall under the law on value added tax (VAT), must pay accommodation tax to the treasury.
- - Operators of cruise ships (not used in activities covered by the law on value added tax (VAT)) can register on the accommodation tax register in their own name.
Imposition of accommodation tax:
- - The accommodation tax settlement period for VAT-exempt cruise ship operators is the time when the ship is within the state's customs area. The due date is on the day of departure from the state‘s customs area.
- - Taxable parties must submit a report to the Tax Office on the number of overnight stays sold during the accounting period and report the payment of the tax to the Treasury Collector, on the due date at the latest. If the due date is on a public holiday or weekend, it will transfer to the following weekday.
- - Reports for accommodation tax must be done in the form issued by the Director of Internal Revenue.
We have obtained official confirmation through email correspondence with the Ministry of Finance and have provided a partial translation of the amendments to the Law on Accommodation Tax, effective as of January 1, 2024. Please note that this translation is not official, and we disclaim responsibility for any inaccuracies. The intention is to offer operators a summary of the sections related to accommodation tax on cruise vessels. Kindly be advised that these details are currently undergoing processing, particularly in the areas of registrations, invoicing, and the implementation of exemptions.
Updates on additional details will be communicated as received from the Ministry of Finance within the next 3-4 weeks.
