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Living and working conditions

Iceland

GENERAL INFORMATION

Area - 103 004,0 km2

Population – 360 390 (2019)

Official Language – Icelandic

REGISTRATION AND RESIDENCE PERMITS

You must fill in Form A-261 (Icelandic)/A-262 (English) at the National Register of Iceland each time you enter the country. An identification number is assigned on first arrival in the country. A contract of employment or an employer's confirmation on Form A-265 (Icelandic)/A-266 (English) must be attached.

EEA/EFTA citizens may stay in Iceland for 3-6 months without registering their legal domicile in Iceland, but must register and receive an assigned ID number on their first arrival. A legal entity in Iceland, for example an employer, an educational institution, company or a government agency must apply for the ID number for the person in question on the form A-263 (Icelandic)/A-264 (English).

EEA/EFTA citizens who intend to stay longer than 3-6 months in Iceland must register a legal domicile in Iceland within 7 days of arrival in the country or when they meet the requirements for a registration of legal residence. The main requirement for a registration of legal residence is to provide proof of minimum resources. Most do so by submitting a contract of employment.

Staying longer than 3-6 months without registering in the National Register is illegal and affects people's rights. Anyone who stays or intends to stay in Iceland for 3-6 months or more must be legally domiciled in Iceland. The right to public services and assistance is usually subject to the person having a registered domicile and it is advisable to register your domicile first if you intend to reside in Iceland.

LOOKING FOR A JOB

There are a number of ways to go about job searching, but it is a good idea to start looking for a job before you move to Iceland. The EURES portal contains all the jobs advertised at the Directorate of Labour in Iceland; EURES jobs are specifically marked by the European flag. On the portal, you may also find detailed information on the living and working conditions in Iceland as well as on the current situation on the country's labour market.

You can also contact a EURES Adviser by sending us an email at This email address is being protected from spambots. You need JavaScript enabled to view it..

Employment agencies [ráðningarþjónustur]: You may register free of charge with one or more private employment agencies. You can find employment agencies and homepages where you can find jobs in Iceland here: https://vinnumalastofnun.is/en/job-search/other-recruitment-agencies

Read the [classified] advertisements in the local newspapers: The two largest newspapers in Iceland are Morgunblaðið (www.mbl.is) and Fréttablaðið (www.visir.is). A special employment section (Atvinna) comes out on Saturdays in Morgunblaðið and Fréttablaðið, but there are often job advertisements on other days. Note that most job advertisements are in Icelandic.

Speculative applications: If you know the industry in which you want to work, you may want to send the relevant companies an application with a CV, call them directly or visit them and ask if there are any positions available. EURES can also help you to find suitable companies.

Contacts: Tell everyone you know in Iceland that you are looking for employment. Word-of-mouth via family and friends often gives good results.

Social media: On Facebook you will find circles/groups where you can apply for access to advertised jobs. Use the words 'starf, störf, vinna, atvinna' [job, jobs, employment, work] to find those groups.

INCOME AND TAXATION

Median of total wages of full-time employees per month in 2017:

Managers

ISK 979 000

Experts

ISK 678 000

Technicians and other qualified workers

ISK 631 000

Office workers

ISK 510 000

Workers in services and sales

ISK 479 000

Tradesmen and qualified labourers

ISK 682 000

Machine operators

ISK 586 000

Unskilled labourers

ISK 467 000

Industrial tradesmen

ISK 733 000

Labourers

ISK 521 000

There are two levels of value added tax, 24% and 11%. The general level is 24%, and applies to all products and services that are not specifically defined by law to be at the 11% level, or that are exempt from VAT. At the 11% level, for example, are food sales, excluding alcohol, accommodation services, books and magazines, hot water, electricity and oil for central heating, CDs, condoms, non-disposable nappies and radio and television usage charges. Certain services are exempt from VAT, for example, health services, services of schools and educational institutions, social services, public transport and hospital transport and artistic activities.

The employer is obliged to deduct local taxes from wages and other payments to employees. The tax deduction consists of local authority tax and income tax payable to the state.

The deductible tax percentage is 36.94% of a (monthly) income up to ISK 927 087 and 46.24% from an income above ISK 927 087. Personal tax credit is ISK 56 447 per month for the year 2019.

Typical monthly deduction from a salary of ISK 583 000 (median wage in Iceland in 2016).

Total wages:

ISK 583 000

Deduction from wages:

 

Pension-fund contribution (4%):

ISK 23 320

Deductible tax percentage level 1 (36.94%):

ISK 206 746

Deductible tax paid (deductible tax - personal tax credit):

ISK 150 269

Union dues (0.7%):

ISK 4 081

Total deduction:

ISK 177 670

   

Paid salary:

ISK 405 330

Other general taxes on individuals

Capital income tax i.e. interest income, dividend, sales profit and rental income is 20%.

A radio broadcasting fee is charged to all persons aged between 16 and 70 with income tax over income limits. The radio broadcasting fee is ISK 17 500 for the year 2019.

Car taxation is calculated on the basis of the CO2 emissions and the weight of the vehicle.

An oil surcharge applies to usable fuel on vehicles. The amount payable is ISK 62.85 per litre of fuel plus 24% value added tax.

A levy for the elderly project fund is applied to all persons aged between 16 and 70 with income tax over income limits. The levy is ISK 10 464.

Couples and partners do not receive a special tax credit, but they can use their spouse's personal allowance if it is not fully utilised.

COST OF LIVING

The cost of living is high in Iceland. According to information from Eurostat, Iceland is ranked the 5th highest of 38 countries in Europe, when the living costs of households were compared in 2015. The price of food is high and the price of clothing, electrical appliances and transportation is the highest in the world. However, the price of telecommunications services is just slightly above average and the price of electricity is well below average.

In 2011, the Ministry of Welfare issued the Consumer Criteria for households in Iceland, which has been updated regularly. The criteria show the typical benchmarks that reflect household spending and, on the other hand, basic criteria that give an indication of possible minimum expenditures. The website of the ministry has a calculator for consumption criteria based on family size, residence and other factors, at https://www.velferdarraduneyti.is/neysluvidmid/.

Last updated: July 2019

EDUCATION SYSTEM

The education system is divided into four parts, pre-school, compulsory school, upper secondary school and university.

Attending pre-school is not mandatory. Most pre-schools are run by local authorities, but there are also privately operated pre-schools. Parents apply for a pre-school stay for their child in their municipality or the relevant pre-school. It varies from municipality to municipality when children can enter pre-school, but it is usually between the ages of one and two.

All children aged 6-16 years are required to attend compulsory school in Iceland. Parents or guardians are responsible for registering children at school, and most primary schools are run by local authorities.

Upper secondary education follows compulsory school, but attendance is not mandatory. The duration of the secondary education varies, depending on whether it is an academic programme or vocational education, and a matriculation degree usually takes 3 years. Upper secondary schools are referred to as comprehensive high schools (fjölbrautarskólar), colleges (menntaskólar), trade schools (iðnskólar) or vocational colleges (verkmenntaskólar). Students complete studies either with a matriculation degree in academic subjects, a vocational degree from a trade school or a special degree programme. Some upper secondary schools offer evening classes and distance learning for an older group of students.

Those who have completed a matriculation or equivalent degree can attend university. Some subjects require a special entrance exam. Some universities offer a special graduate programme for those who have not completed a matriculation degree and distance education in certain subjects. University education is completed with an appropriate degree according to level and length of study, i.e. a diploma, a bachelor, masters or doctorate degree. In Iceland, there are seven universities, five of which are operated by the government and two are private universities.

RECOGNITION OF DIPLOMAS AND QUALIFICATIONS

The importance of transparency and mutual recognition of diplomas as a crucial complement to the free movement of workers

The possibility of obtaining recognition of one’s qualifications and competences can play a vital role in the decision to take up work in another EU country. It is therefore necessary to develop a European system that will guarantee the mutual acceptance of professional competences in different Member States. Only such a system will ensure that a lack of recognition of professional qualifications will become an obstacle to workers’ mobility within the EU.

Main principles for the recognition of professional qualifications in the EU

As a basic principle, any EU citizen should be able to freely practice their profession in any Member State. Unfortunately the practical implementation of this principle is often hindered by national requirements for access to certain professions in the host country.

For the purpose of overcoming these differences, the EU has set up a system for the recognition of professional qualifications. Within the terms of this system, a distinction is made between regulated professions (professions for which certain qualifications are legally required) and professions that are not legally regulated in the host Member State.

Steps towards a transparency of qualifications in Europe

The European Union has taken important steps towards the objective of achieving transparency of qualifications in Europe:

  • An increased co-operation in vocational education and training, with the intention to combine all instruments for transparency of certificates and diplomas, in one single, user-friendly tool. This includes, for example, the European CV or Europass Trainings.
  • The development of concrete actions in the field of recognition and quality in vocational education and training.

Going beyond the differences in education and training systems throughout the EU

Education and training systems in the EU Member States still show substantial differences. The last enlargements of the EU, with different educational traditions, have further increased this diversity. This calls for a need to set up common rules to guarantee recognition of competences.

In order to overcome this diversity of national qualification standards, educational methods and training structures, the European Commission has put forward a series of instruments, aimed at ensuring better transparency and recognition of qualifications both for academic and professional purposes.

  1. The European Qualifications Framework

The European Qualifications Framework is a key priority for the European Commission in the process of recognition of professional competences. The main objective of the framework is to create links between the different national qualification systems and guarantee a smooth transfer and recognition of diplomas.

  1. The National Academic Recognition Information Centres (NARICs)

A network of National Academic Recognition Information Centres was established in 1984 at the initiative of the European Commission. The NARICs provide advice on the academic recognition of periods of study abroad. Located in all EU Member States as well as in the countries of the European Economic Area, NARICs play a vital role the process of recognition of qualifications in the EU.

  1. The European Credit Transfer System (ECTS)

The European Credit Transfer System aims at facilitating the recognition of periods of study abroad. Introduced in 1989, it functions by describing an education programme and attaching credits to its components. It is a key complement to the highly acclaimed student mobility programme Erasmus.

  1. Europass

Europass is an instrument for ensuring the transparency of professional skills. It is composed of five standardised documents

  • a CV (Curriculum Vitae),
  • a language passport,
  • certificate supplements,
  • diploma supplements, and
  • a Europass-Mobility document.

The Europass system makes skills and qualifications clearly and easily understood in the different parts of Europe. In every country of the European Union and the European Economic Area, national Europass centres have been established as the primary contact points for people seeking for information about the Europass system.

USEFUL LINKS

www.vinnumalastofnun.is - Labour Office

www.utl.is - Immigration Services

www.government.is - Government of Iceland

www.tr.is - Social Security Institute

 

 

 

 

 

 

 

 

 

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