The land of fire and ice, Iceland offers a blend of majestic landscapes, ethereal natural wonders, and a strong economy that attracts entrepreneurs from all over the world. Known as an egalitarian society with high standards of living, Iceland’s economic framework supports and encourages entrepreneurship. One of the most common forms of businesses in Iceland is a sole proprietorship.
Starting a sole proprietorship in Iceland is a fairly straightforward process. Beneath the northern lights, let’s venture into the process and advantages of setting up a sole proprietorship in this Nordic nation.
Understanding Sole Proprietorship in Iceland
A sole proprietorship in Iceland, also known as ‘einstaklingsfyrirtæki’, is a type of business entity where one individual owns and runs the business. This type of business structure offers easy setup, complete control over business decisions, minimal regulatory requirements, and a simple tax framework.
Setting Up A Sole Proprietorship in Iceland
To set up a sole proprietorship, the applicant must be at least 18 years old, have a legal residence in Iceland, and possess a kennitala (an identification number in Iceland). The registration of a sole proprietorship is done through the Directorate of Internal Revenue.
Initially, the applicant needs to apply for a name for the company which has to be done via the Icelandic Patent Office. Upon approval of the name, applicants need to apply for the kennitala. This unique identification number for the business is issued by Registers Iceland.
Once the name and kennitala are in place, the business owner needs to submit a notification to the internal revenue service about the start of operations. Furthermore, one also needs to notify the Directorate of Labour if the business plans to hire employees.
Taxation for Sole Proprietorship in Iceland
Iceland possesses a relatively straightforward tax system, which is a significant advantage for entrepreneurs. Income from a sole proprietorship is considered as personal income and is subject to a progressive income tax. In addition, VAT is applicable to businesses with turnovers exceeding ISK 2 million annually.
Advantages of Starting a Sole Proprietorship in Iceland
Establishing a sole proprietorship in Iceland comes with diverse benefits. The process is relatively simple, quick, and cost-effective. The owner has complete control over the business and enjoys all profits the company makes.
Moreover, Iceland’s well-educated population, vast technological infrastructure, clean energy resources, and strategic location between Europe and North America make it an attractive location for starting a business. Furthermore, the government has various incentives in place, such as grants and loan guarantees to encourage entrepreneurship.
Iceland, with its sub-arctic charm and booming economy, brings forth abundant opportunities for solo entrepreneurs. Starting a sole proprietorship in this picturesque country could be the first step towards a successful entrepreneurial journey. Resilience, innovation, and ambition are well recognized and nurtured on this island nation, providing a bountiful environment to conduct business.
Suggested related links about Embarking on Entrepreneurship: A Guide to Starting a Sole Proprietorship in Iceland:
Directorate of Internal Revenue, Iceland