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$249/month
$49/month
2% of gross salary / month
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).
Hire in Iceland, and pay employees through our platform or app.
Our Iceland EOR solution is the most affordable on the market.
Fast onboarding in Iceland, hire in as little as 24 hours.
We draft labor contracts compliant with Icelandic labor law.
We administer all mandatory benefits and contributions in Iceland.
It doesn’t stop with Iceland — we are an international EOR
3 months
30 days
Not required by law, please refer to the specific employment agreement.
3 months
30 days
Not required by law, please refer to the specific employment agreement.
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.
Iceland has a range of national public holidays that are celebrated annually. In 2025 these holidays are:
| Date | Holiday name |
|---|---|
| 1 Jan 2025 | New Year’s Day |
| 17 Apr 2025 | Maundy Thursday |
| 18 Apr 2025 | Good Friday |
| 20 Apr 2025 | Easter Sunday |
| 21 Apr 2025 | Easter Monday |
| 24 Apr 2025 | First Day of Summer |
| 1 May 2025 | Labour Day |
| 29 May 2025 | Ascension Day |
| 8 Jun 2025 | Whit Sunday |
| 8 Jun 2025 | Whit Monday |
| 17 Jun 2025 | Icelandic National Day |
| 4 Aug 2025 | Commerce Day |
| 24 Dec 2025 | Christmas Eve |
| 25 Dec 2025 | Christmas Day |
| 26 Dec 2025 | Second Day of Christmas |
| 31 Dec 2025 | New Year’s Eve |
Employees in Iceland are generally entitled to a minimum of 24 days of paid vacation leave annually.
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.
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.
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.
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.
Iceland has a public healthcare system, so employers do not need to nor are expected to provide private medical insurance.
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 |
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 borderless talent with Horizons
With Horizons, you get quick service, transparent pricing, and expert support.
Generally speaking, the terms “Iceland PEO” and “Iceland EOR” are used interchangeably.
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.
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.
Holiday Schedule in Iceland [2025]
