G/SCM/N/155/ISL, G/SCM/N/186/ISL  
G/SCM/N/220/ISL, G/SCM/N/253/ISL  
G/SCM/N/284/ISL  
22 November 2017  
(17-6320) Page: 1/119 
Committee on Subsidies and Countervailing Measures  Original: English  
 
SUBSIDIES  
NEW AND FULL NOTIFIC ATION PURSUANT TO AR TICLE XVI:1 OF THE G ATT 1994  
AND ARTICLE 25 OF TH E AGREEMENT ON SUBSI DIES 
AND COUNTERVAILING M EASURES  
Iceland  
The following communication, dated 3 November 2017, is being circulated at the request of the 
Delegation of Iceland.  
 
_______________  
  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 2 - 
 
  TABLE OF CONTENTS  
2005  ................................ ................................ ................................ ................................  7 
1   THE AGRICULTURAL SEC TOR ................................ ................................ .......................  7 
1.1   Agricultural Agreements; Payments to dairy farms, sheep farms and horticulture 
farms  ................................ ................................ ................................ ................................  7 
2   SUPPORT FOR R&D AND TECHNOLOGICAL INNOVA TION  ................................ ............  9 
2.1   Technical Development Fund  ................................ ................................ .........................  9 
2.2   Research Fund  ................................ ................................ ................................ ........... 10 
2.3   Support for R&D in marine aquaculture  ................................ ................................ ......... 10 
3   JOB CREATION INITIAT IVE (PRIOR TO 1996 K NOWN AS FIRM SPECIFI C 
SUBSIDIES AND EXPORT  PROMOTION (CASE 93 -221)).  ................................ ................  11 
4   SUPPORT FOR EMPLOYME NT AND TRAINING  ................................ ............................  12 
4.1   Vocational Training Fund. Support for Vocational Training  ................................ ................ 12 
4.2   Employment Opportunities for Women in Rural Areas  ................................ ...................... 12 
4.3   Employment of Handicapped Persons  ................................ ................................ ............ 13 
5   REGIONAL SUPPORT  ................................ ................................ ................................ . 13 
5.1   Assistance to Employment Development Projects  ................................ ........................... 13 
5.2   Assistance to Local Economic Development  ................................ ................................ ....14 
6   TEMPORARY REPAYMENT OF COSTS OF FILMS PR ODUCTION IN ICELAND  ................  15 
7   RURAL TOURISM  ................................ ................................ ................................ ....... 16 
8   AID TO PROMOTE MARKE TING OF ICELANDIC TO URISM.  ................................ ..........  17 
2006  ................................ ................................ ................................ ..............................  18 
1   THE AGRICULTURAL SEC TOR ................................ ................................ .....................  18 
1.1   Agricultural Agreements; Payments to dairy farms, sheep farms and horticulture 
farms  ................................ ................................ ................................ ............................... 18 
2   SUPPORT FOR R&D AND TECHNOLOGICAL INNOVA TION  ................................ ..........  20 
2.1   Technical Development Fund  ................................ ................................ ........................ 20 
2.2   Research Fund  ................................ ................................ ................................ ........... 20 
2.3   Support for R&D in marine aquaculture  ................................ ................................ ......... 21 
3   JOB CREATION INITIAT IVE (PRIOR TO 1996 K NOWN AS FIRM SPECIFI C 
SUBSIDIES AND EXPORT  PROMOTION (CASE 93 -221)).  ................................ ................  22 
4   SUPPORT FOR EMPLOYME NT AND TRAINING  ................................ ............................  22 
4.1   Vocational Training Fund. Support for Vocational Training  ................................ ................ 22 
4.2   Employment Opportunities for Women in Rural Areas  ................................ ...................... 23 
4.3   Employment of Handicapped Persons  ................................ ................................ ............ 24 
5   REGIONAL SUPPORT  ................................ ................................ ................................ . 24 
5.1   Assistance to Employment Development Projects  ................................ ........................... 24 
5.2   Assistance to Local Economic Development  ................................ ................................ ....25 
6   TEMPORARY REPAYMENT OF COSTS OF FILMS PR ODUCTION IN ICELAND  ................  26 
7   RURAL TOURISM  ................................ ................................ ................................ ....... 27 
8   AID TO  PROMOTE MARKETING OF  ICELANDIC TOURISM.  ................................ ..........  27 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 3 - 
 
  2007  ................................ ................................ ................................ ..............................  29 
1   THE AGRICULTURAL SEC TOR ................................ ................................ .....................  29 
1.1   Agricultural Agreements; Payments to dairy farms, sheep farms and horticulture 
farms  ................................ ................................ ................................ ............................... 29 
2   SUPPORT FOR R&D AND TECHNOLOGICAL INNOVA TION  ................................ ..........  31 
2.1   Technical Development Fund  ................................ ................................ ........................ 31 
2.2   Research Fund  ................................ ................................ ................................ ........... 31 
2.3   Support for R&D in marine aquaculture  ................................ ................................ ......... 32 
3   JOB CREATION INITIAT IVE (PRIOR TO 1996 K NOWN AS FIRM SPECIFI C 
SUBSIDIES AND EXPORT  PROMOTION (CASE 93 -221)).  ................................ ................  33 
4   SUPPORT FOR EMPLOYME NT AND TRAINING  ................................ ............................  33 
4.1   Vocational Training Fund. Support for Vocational Training  ................................ ................ 33 
4.2   Employment Opportunities for Women in Rural Areas  ................................ ...................... 34 
4.3   Employment of Handicapped Persons  ................................ ................................ ............ 35 
5   REGIONAL SUPPORT  ................................ ................................ ................................ . 35 
5.1   Assistance to Employment Development Projects  ................................ ........................... 35 
5.2   Assistance to Local Economic Development  ................................ ................................ ....36 
6   TEMPORARY REPAYMENT OF COSTS OF FILMS PR ODUCTION IN ICELAND  ................  37 
7   RURAL TOURISM  ................................ ................................ ................................ ....... 38 
8   AID TO PROMOTE MARKE TING OF ICELANDIC TO URISM.  ................................ ..........  38 
2008  ................................ ................................ ................................ ..............................  40 
1   THE AGRICULTURAL SEC TOR ................................ ................................ .....................  40 
1.1   Agricultural Agreements; Payments to dairy farms, sheep farms and horticulture 
farms  ................................ ................................ ................................ ............................... 40 
2   SUPPORT FOR R&D AND TECHNOLOGICAL INNOVA TION  ................................ ..........  42 
2.1   Technical Development Fund  ................................ ................................ ........................ 42 
2.2   Research Fund  ................................ ................................ ................................ ........... 42 
2.3   Support for R&D in marine aquaculture  ................................ ................................ ......... 43 
3   JOB CREATION INITIAT IVE (PRIOR TO 1996 K NOWN AS FIRM SPECIFI C 
SUBSIDIES AND EXPORT  PROMOTION (CASE 93 -221)).  ................................ ................  44 
4   SUPPORT FOR EMPLOYME NT AND TRAINING  ................................ ............................  44 
4.1   Vocational Training Fund. Support for Vocational Training  ................................ ................ 44 
4.2   Employment Opportunities for Women in Rural Areas  ................................ ...................... 45 
4.3   Employment of Handicapped Persons  ................................ ................................ ............ 46 
5   REGIONAL SUPPORT  ................................ ................................ ................................ . 46 
5.1   Assistance to Employment Development Projects  ................................ ........................... 46 
5.2   Assistance to Local Economic Development  ................................ ................................ ....47 
6   TEMPORARY REPAYMENT OF COSTS OF FILMS PR ODUCTION IN ICELAND  ................  48 
7   RURAL TOURISM  ................................ ................................ ................................ ....... 49 
8   AID TO PROMOTE MARKE TING OF ICELANDIC TO URISM.  ................................ ..........  49 
2009  ................................ ................................ ................................ ..............................  51 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 4 - 
 
  1   THE AGRICULTURAL SECTOR  ................................ ................................ .....................  51 
1.1   Agricultural Agreements; Payments to dairy farms, sheep farms and horticulture 
farms  ................................ ................................ ................................ ............................... 51 
2   SUPPORT FOR R&D AND TECHNOLOGICAL INNOVA TION  ................................ ..........  53 
2.1   Technical Development Fund  ................................ ................................ ........................ 53 
2.2   Research Fund  ................................ ................................ ................................ ........... 53 
2.3   Support for R&D in marine aquaculture  ................................ ................................ ......... 54 
3   JOB CREATION INITIAT IVE (PRIOR TO 1996 K NOWN AS FIRM SPECIFI C 
SUBSIDIES AND EXPORT  PROMOTION (CASE 93 -221)).  ................................ ................  55 
4   SUPPORT FOR EMPLOYME NT AND TRAINING  ................................ ............................  55 
4.1   Vocational Training Fund. Support for Vocational Training  ................................ ................ 55 
4.2   Employment Opportunities for Women in Rural Areas  ................................ ...................... 56 
4.3   Employment of Handicapped Pe rsons  ................................ ................................ ............ 57 
5   REGIONAL SUPPORT  ................................ ................................ ................................ . 57 
5.1   Assistance to Employment Development Projects  ................................ ........................... 57 
5.2   Assistance to Local Economic Development  ................................ ................................ ....58 
6   TEMPORARY REPAYMENT OF COSTS OF FILMS PR ODUCTION IN ICELAND  ................  59 
7   RURAL TOURISM  ................................ ................................ ................................ ....... 60 
8   AID TO PROMOTE MARKE TING OF ICELANDIC TO URISM.  ................................ ..........  60 
2010  ................................ ................................ ................................ ..............................  62 
1   THE AGRICULTURAL SEC TOR ................................ ................................ .....................  62 
1.1   Agricultural Agreements; Payments to dairy farms, sheep farms and horticulture 
farms  ................................ ................................ ................................ ............................... 62 
2   SUPPORT FOR R&D AND TECHNOLOGICAL INNOVA TION  ................................ ..........  64 
2.1   Technical Development Fund  ................................ ................................ ........................ 64 
2.2   Research Fund  ................................ ................................ ................................ ........... 64 
2.3   Support for R&D in marine aquaculture  ................................ ................................ ......... 65 
3   JOB CREATION INITIAT IVE (PRIOR TO 1996 K NOWN AS FIRM SPECIFI C 
SUBSIDIES AND EXPORT  PROMOTION (CASE 93 -221)).  ................................ ................  66 
4   SUPPORT FOR EMPLOYME NT AND TRAINING  ................................ ............................  66 
4.1   Vocational Training Fund. Support for Vocational Training  ................................ ................ 66 
4.2   Employment Opportunities for Women in Rural Areas  ................................ ...................... 67 
4.3   Vocational Rehabilitation  ................................ ................................ ............................. 68 
4.4   Employment of Handicapped Persons  ................................ ................................ ............ 68 
5   REGIONAL SUPPORT  ................................ ................................ ................................ . 69 
5.1   Assistance to Employment Development Projects  ................................ ........................... 69 
5.2   Assistance to Local Economic Development  ................................ ................................ ....69 
6   TEMPORARY REPAYMENT OF COSTS OF FILMS PR ODUCTION IN ICELAND  ................  70 
7   RURAL TOURISM  ................................ ................................ ................................ ....... 72 
8   AID TO PROMOTE MARKE TING OF ICELANDIC TO URISM.  ................................ ..........  72 
2011  ................................ ................................ ................................ ..............................  73 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 5 - 
 
  1   THE AGRICULTURAL SEC TOR ................................ ................................ .....................  73 
1.1   Agricultural Agreements; Payments to dairy farms, sheep farms and horticulture 
farms  ................................ ................................ ................................ ............................... 73 
2   SUPPORT FOR R&D AND TECHNOLOGICAL INNOVA TION  ................................ ..........  75 
2.1   Technical Development Fund  ................................ ................................ ........................ 75 
2.2   Research Fund  ................................ ................................ ................................ ........... 75 
2.3   Support for R&D in marine aquaculture  ................................ ................................ ......... 76 
3   JOB CREATION INITIAT IVE (PRIOR TO 1996 K NOWN AS FIRM SPECIFI C 
SUBSIDIES AND EXPORT  PROMOTION (CASE 93 -221)).  ................................ ................  77 
4   SUPPORT FOR EMPLOYME NT AND TRAINING  ................................ ............................  77 
4.1   Vocational Training Fund. Support for Vocational Training  ................................ ................ 77 
4.2   Employment Opportunities for Women in Rural Areas  ................................ ...................... 78 
4.3   Vocational Rehabilitation  ................................ ................................ ............................. 79 
4.4   Employment of Handicapped Persons  ................................ ................................ ............ 79 
5   REGIONAL SUPPORT  ................................ ................................ ................................ . 80 
5.1   Assistance to Employment Development Projects  ................................ ........................... 80 
5.2   Assistance to Local Economic Development  ................................ ................................ ....80 
6   TEMPORARY REPAYMENT OF COSTS OF FILMS PR ODUCTION I N ICELAND  ................  81 
7   RURAL TOURISM  ................................ ................................ ................................ ....... 83 
8   AID TO PROMOTE MARKE TING OF ICELANDIC TO URISM.  ................................ ..........  83 
2012  ................................ ................................ ................................ ..............................  84 
1   THE AGRICULTURAL SEC TOR ................................ ................................ .....................  84 
1.1   Agricultural Agreements; Payments to dairy farms, sheep farms and horticulture 
farms  ................................ ................................ ................................ ............................... 84 
2   SUPPORT FOR R&D AND TECHNOLOGICAL INNOVA TION  ................................ ..........  86 
2.1   Technical Development Fund  ................................ ................................ ........................ 86 
2.2   Research Fund  ................................ ................................ ................................ ........... 86 
2.3   Support for R&D in marine aquaculture  ................................ ................................ ......... 87 
3   SUPPORT TO SMALL AND  MEDIUM -SIZED COMPANIES ................................ ..............  88 
3.1   Job Creation Initiative (prior to 1996 known as Firm specific subsidies and export 
promotion (Case 93 -221)).  ................................ ................................ ................................ .88 
3.2   Regional Development Fund  ................................ ................................ ......................... 88 
4   SUPPORT FOR EMPLOYME NT AND TRAINING  ................................ ............................  89 
4.1   Vocational Training Fund. Support for Vocational Training  ................................ ................ 89 
4.2   Employment Opportunities for Women in Rural Areas  ................................ ...................... 90 
4.3   Vocational Rehabilitation  ................................ ................................ ............................. 90 
4.4   Employment of Handicapped Persons  ................................ ................................ ............ 91 
5   REGIONAL SUPPORT  ................................ ................................ ................................ . 91 
5.1   Assistance to Employment Development Projects  ................................ ........................... 91 
5.2   Assistance to Local Economic Development  ................................ ................................ ....92 
6   TEMPORARY REPAYMENT OF COSTS OF FILMS PR ODUCTION IN ICELAND  ................  93 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 6 - 
 
  7   RURAL TOURISM  ................................ ................................ ................................ ....... 94 
8   AID TO PROMOTE MARKE TING OF ICELANDIC TO URISM.  ................................ ..........  95 
2013  ................................ ................................ ................................ ..............................  96 
1   THE AGRICULTURAL SECTOR  ................................ ................................ .....................  96 
1.1   Agricultural Agreements; Payments to dairy farms, sheep farms and horticulture 
farms  ................................ ................................ ................................ ............................... 96 
2   SUPPORT FOR R&D AND TECHNOLOGICAL INNOVA TION  ................................ ..........  98 
2.1   Technical Development Fund  ................................ ................................ ........................ 98 
2.2   Research Fund  ................................ ................................ ................................ ........... 98 
2.3   Support for R&D in marine aquaculture  ................................ ................................ ......... 99 
3   SUPPORT TO SMALL AND  MEDIUM -SIZED COMPANIES ................................ ............  100  
3.1   Job Creation Initiative (prior to 1996 known as Firm specific subsidies and export 
promotion (Case 93 -221)).  ................................ ................................ ...............................  100 
3.2   Regional Development Fund  ................................ ................................ .......................  100 
4   SUPPORT FOR EMPLOYME NT AND TRAINING  ................................ ..........................  101  
4.1   Vocational Training Fund. Support for Vocational Training  ................................ ..............  101 
4.2   Employment Opportunities for Women in Rural Areas  ................................ ....................  102 
4.3   Vocational Rehabilitation  ................................ ................................ ...........................  102 
4.4   Employment of Handicapped Persons  ................................ ................................ ..........  103 
5   REGIONAL SUPPORT  ................................ ................................ ...............................  103  
5.1   Assistance to Employment Development Projects  ................................ .........................  103 
5.2   Assistance to Local Economic Development  ................................ ................................ .. 104 
6   TEMPORARY REPAYMENT OF COSTS OF FILMS PR ODUCTION IN ICELAND  ..............  105  
7   RURAL TOURISM  ................................ ................................ ................................ ..... 106  
8   AID TO PROMOTE MARKE TING OF ICELANDIC TO URISM.  ................................ ........  106  
2014  ................................ ................................ ................................ ............................  108  
1   THE AGRICULTURAL S ECTOR  ................................ ................................ ...................  108  
1.1   Agricultural Agreements; Payments to dairy farms, sheep farms and horticulture 
farms  ................................ ................................ ................................ .............................  108 
2   SUPPORT FOR R&D AND TECHNOLOGICAL INNOVA TION  ................................ ........  110  
2.1   Technical Development Fund  ................................ ................................ ......................  110 
2.2   Research Fund  ................................ ................................ ................................ .........  110 
2.3   Support for R&D in marine aquaculture  ................................ ................................ ....... 111 
3   SUPPORT TO SMALL AND  MEDIUM -SIZED COMPANIES ................................ ............  112  
3.1   Job Creation Initiative (prior to 1996 known as Firm specific subsidies and export 
promotion (Case 93 -221)).  ................................ ................................ ...............................  112 
3.2   Regional Development Fund  ................................ ................................ .......................  112 
4   SUPPORT FOR EMPLOYME NT AND TRAINING  ................................ ..........................  113  
4.1   Vocational Training Fund. Support for Vocational Training  ................................ ..............  113 
4.2   Employment Opportunities for Women in Rural Areas  ................................ ....................  114 
4.3   Vocational Rehabilitation  ................................ ................................ ...........................  114 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 7 - 
 
  4.4   Employment of Handicapped Persons  ................................ ................................ ..........  115 
5   REGIONAL SUPPORT  ................................ ................................ ...............................  115  
5.1   Assistance to Employment Development Projects  ................................ .........................  115 
5.2   Assistance to Local Economic Development  ................................ ................................ .. 116 
6   TEMPORARY REPAYMENT OF COSTS OF FILMS PR ODUCTION I N ICELAND  ..............  117  
7   RURAL TOURISM  ................................ ................................ ................................ ..... 118  
8   AID TO  PROMOTE MARKETING OF  ICELANDIC TOURISM.  ................................ ........  118  
9   SCHEME TO SUPPORT IN NOVATION COMPANIES  ................................ ....................  119  
 
2005  
1  THE AGRICULTURAL SEC TOR 
A. NAME OF PROGRAMME  
 
1.1  Agricultural Agreements; Payments to dairy farms, sheep farms and horticulture 
farms  
(Budget items No: 04 -801, 04 -805 & 04 -807).  
 
B. RESPONSIBLE  AUTHORITY  
 
Ministry of Agriculture.  
 
C. POLICY OBJECTIVE  
 
Agricultural policy is implemented in Iceland in pursuit of objectives which include increasing 
efficiency in the agro -food sector, ensuring self -sufficiency for the country's major agricultural 
production; seeking to utilize domestic inputs to the extent possible; increasing overall efficiency 
in the agricultural food sector; utilizing export opportunities to the extent feasible; securing an 
equitable income for farmers; and integrating environment al issues in agricultural policy.  
 
D. FORMS OF SUBSIDY  
 
Agricultural subsidies in Iceland is mostly provided through direct payments, based on payment 
entitlements, which are directly or indirectly coupled with production factors. Direct payments are 
provided to cattle (mainly dairy) and sheep producers, and, on a smaller scale, to certain 
greenhouse producers. Allocations for the Agricultural Agreements in 2005 are made under 
items  04-801, 04 -805 and 04 -807 of the State budget (Ministry of Agriculture).  
 
E. AMOUNT OF SUBSIDY  
 
Items making up the amount of support as measured by total costs in Government Accounts 
for 2005 are listed in table 1.  
 
Table 1 Amount of support in 2005 (Government Accounts); Million ISK  
 
 2005  
Agricultural Productivity Fund  185 
Stockholding costs; sheep meat program  346 
Directs payments to sheep farmers  1,659  
Quality control scheme; sheep farmers  528 
Wool utilization; subsidies  378 
Direct payments to dairy farmers  4,163  
Direct payments to horticulture farmers  200 
Electricity subsidies to horticulture farmers 
(greenhouse)  111 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 8 - 
 
   
F. RULES AND CONDITIONS  
 
Implementation of the agricultural policy revolves around Agricultural Agreements negotiated 
between the Government and the Farmer's Association. Under Act No. 99/1993 on Agricultural 
Produce, the Minister of Fisheries and Agriculture is given the authority to negotiate with the 
Farmer's Association on behalf of the Government on the total support target for milk and total 
support target for sheep meat entitlemen ts and direct payments for horticulture. A government -
chaired committee determines a guaranteed minimum price for milk delivered within production 
quotas at the producer level.  
 
Support is provided for dairy farms, sheep farms and horticulture farms (green house).  
 
1. Dairy farmers  
 
Milk producers receive direct payments from the Government on milk delivered to dairies. The 
annual quantity must be within the allocated supported targets. The amount of monetary support 
is the same for all producers in Iceland.  
 
2. Sheep farmers  
 
Sheep farmers receive direct payments from the Government which are based on support targets 
for sheep meat entitlements, for which they must own 70% live sheep. Additional payments to 
sheep farmers are related to a quality control scheme for lamb meat, based on animal welfare, 
product quality and traceability, and sustainability criteria.  
 
3. Sheep farmers; wool  
 
Sheep farmers receive support from the Government based on quantity and quality of wool 
produced.  
 
4. Horticulture farme rs 
 
Horticulture farmers producing cucumbers, peppers and tomatoes in greenhouses, mainly under 
artificial lighting receive direct payments from the government. The distribution of electricity used 
for artificial lighting is also subsidized to some extent by the Government.  
 
G. DURATION  
 
The time of application of the agricultural agreements between the Government and the Farmer's 
Association was until the end of 2016 when the agreements were renegotiated. The agreements 
were not revisited, in essence, dur ing the years 2006 to 2014.  
 
H. LEGAL BASIS  
 
Act No. 99/1993 on Production, Pricing and Sales of Agricultural Products. The State Budget.  
 
I. TRADE EFFECTS  
 
An assessment of the trade effects of the subsidies is not available. Below, in tables 2, 3 and 4 
there are, however, presented statistics on production and exports of the relevant agricultural 
commodities.  
 
Table 2 Quantity of milk received by dairies and calculated exports by fat -content of milk 
derived products (in 1,000 of litres) for 2005  
 
Year Milk, received by dairies by fat -
content  Exported products by fat -content, 
thereof (%)  
2005 100,768  13% 
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 9 - 
 
  Table 3 Sheep meat production and exports 2005 (in 1,000 kg)  
 
Year Production  Exports, thereof (%)  
2005 8,738  15% 
 
Table 4 Tomato, cucumber and bell pepper production and exports 2005 (in 1,000 kg)  
 
Tomatoes  Cucumbers  Bell peppers   Total exports, thereof 
(%) 
1,508  1,147  126 <1% 
 
2  SUPPORT FOR R&D AND TECHNOLOGICAL INNOVA TION  
2.1  Technical Development Fund  
A. RESPONSIBLE AUTHORITY  
 
The Icelandic Centre for Research (RANNÍS) which is under the supervision of the Ministry of 
Industry and Innovation.  
 
B. POLICY OBJECTIVES  
 
The objective of the Technology Development Fund is to facilitate innovation through supporting 
research and technological development.  
 
C. AMOUNT AND FORM OF STATE AID  
 
The amount of State aid in 2005: ISK 332,4 million.  
 
D. RULES AND CONDITIONS  
 
The role of the fund is to support research and development activities, which aim towards 
innovation in Icelandic industry. The Fund will in general  operate as a competitive fund through 
which firms, research institutes and universities will have the possibility of financing projects that 
support technological development and innovation. The Fund is intended to give support to spin -off 
ventures and in novative firms to secure that economic benefits accrue to society from the scientific 
and technical knowledge and the innovation arising from these new ventures.  
 
The Science and Technology Policy Council attaches high importance to close co -ordination 
between the Research Fund and the Technical Development Fund, as well as co -operation with 
other public funds and venture investors. The Technical Development Fund can take the initiative 
to establish programmes and specific actions prepared in consultation w ith the business 
community, research institutes and universities. Finally, the Technical Development Fund is 
permitted to enter into partnerships with venture capital investors for seed and early risk financing 
toward establishing firms which base their op erations on technological development and research 
and which involves a novelty to the economy.  
 
E. LEGAL BASIS  
 
Act no. 3/2003 on Public Support for Scientific Research, with later amendments.  
 
F. TRADE EFFECTS  
 
The support is granted to a variety of sma ll projects and sectors, therefore it is difficult to present 
statistical data permitting an assessment of trade effects.  
 
G. DURATION  
 
The Technology Development Fund has been operating since 2004. It took over from the 
Technology Fund which expired in 2004.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 10 - 
 
  2.2  Research Fund  
A. RESPONSIBLE AUTHORITY  
 
The Icelandic Centre for Research (RANNÍS) which is under the supervision of the Ministry of 
Culture and Education.  
 
B. POLICY OBJECTIVES  
 
The objective of the Research Fund is to facilitate fundamental resear ch at University institutes or 
other Governmental R&D institutes.  
 
C. AMOUNT AND FORM OF STATE AID  
 
The amount of State aid in 2005: ISK 420,6 million.  
 
D. RULES AND CONDITIONS  
 
Subsidies are granted only on the basis of project applications. The Funds gra nts are for 
fundamental research at Universities and the involvement of private companies is very limited or 
non-existent.  
 
The Research Fund is the most powerful tool of the public sector for reinforcing the research 
community infrastructure through proje ct grants based on applications from scientists, business 
firms and institutions. The Science and Technology Policy Council encourages the Fund to give 
young scientists an opportunity to establish their work and contribute to the further accumulation 
of scientific and technical knowledge.  
 
The Research Fund offers grants in accordance with the priorities set by the Science and 
Technology Policy Council and the grants strategy defined by the Science Board based on a peer 
review evaluation of research project  quality, the competence of the individuals involved and the 
facilities available for completing the project.  
 
E. LEGAL BASIS  
 
Act no. 3/2003 on Public Support for Scientific Research, with later amendments.  
 
F. TRADE EFFECTS  
 
The support is granted to a variety of small projects and sectors, therefore it is difficult to present 
statistical data permitting an assessment of trade effects.  
 
G. DURATION  
 
Research Fund has been operating since 2004. It took over from the Science Fu nd which expired 
in 2004.  
 
2.3  Support for R&D in marine aquaculture  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Fisheries and Agriculture.  
 
B. POLICY OBJECTIVE  
 
To enhance scientific knowledge in marine aquaculture.  
 
C. FORM OF SUPPORT  
 
Grants.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 11 - 
 
  D. AMOUNT OF SUPPO RT 
 
2005: 22.423,1 million ISK  
 
E. RULES AND CONDITIONS  
 
Grants are awarded on the basis of applications evaluated by a special committee.  
 
F. DURATION  
 
There is no time limit, but each programme is decided on for a year at a time.  
 
G. LEGAL BASIS  
 
Act no. 76/1970.  
 
H. TRADE EFFECTS  
 
There is no trade effect due to limited support.  
 
3  JOB CREATION INITIAT IVE (PRIOR TO 1996 K NOWN AS FIRM SPECIFI C SUBSIDIES 
AND EXPORT PROMOTION  (CASE 93 -221)).  
A. RESPONSIBLE AUTHORITY  
 
Innovation Center Iceland which is unde r the supervision of the Ministry of Employment and 
Innovation.  
 
B. POLICY OBJECTIVE  
 
The objective is, to increase the knowledge and competence of entrepreneurs and small and 
medium -sized enterprises such as in managing, financing, product development, ma rketing and 
innovation.  
 
C. FORM OF SUPPORT  
 
Cost items incurred for consultants, product development, marketing and innovation are eligible 
for grants. Support shall in general not cover more than 50% of eligible expenses.  
 
D. AMOUNT OF SUPPORT  
 
2005: ISK  53,4 million.  
 
E. RULES AND CONDITIONS  
 
Firms and individuals having a registered domicile in Iceland can apply for a grant. In accordance 
with the de minimis  rule, individuals who apply for grants according to these rules must declare 
that they have not received a grant from the Government amounts to more than 200,000 EURO 
last 3 years, the grant applied for included.  
 
F. DURATION  
 
There is no time limit, but each programme is decided on for a year at a time.  
 
G. LEGAL BASIS  
 
The Budget item no. 11 -299-1.48. 
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 12 - 
 
  H. TRADE EFFECTS  
 
There are no trade effects of the support due to the general framework of the scheme and limited 
support.  
 
4  SUPPORT FOR EMPLOYME NT AND TRAINING  
4.1  Vocational Training Fund. Support for Vocational Training  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Education and Culture.  
 
B. POLICY OBJECTIVE  
 
The main purpose of this programme is to maintain and develop vocational skills, in most cases for 
people already employed.  
 
C. FORM OF STATE AID  
 
Grants.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2005: ISK 183,6 million  
 
E. RULES AND CONDITIONS  
 
Grants to organizations on application to the Vocational Training Fund mainly to make curriculum 
or other teaching materials for the vocational training courses.  
 
F. DURATION  
 
The programme s tarted in 1992. Duration has not been specified.  
 
G. LEGAL BASIS  
 
Budget item no. 02 -451. 
 
4.2  Employment Opportunities for Women in Rural Areas  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Fisheries and Agriculture and the Institute of Regional Development (Byggðas tofnun).  
 
B. POLICY OBJECTIVE  
 
The main purpose of this programme is to create new jobs among women. Areas where high 
unemployment is among women will especially be considered.  
 
C. FORM OF STATE AID  
 
Grants, up to 50% of primary R&D costs, innovation costs and cost of new products, process and 
systems for industrial production. Institute of Regional Development pays the grants and controls 
their disposition.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2005: ISK 24,6 million  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 13 - 
 
  It is difficult to  give exact information on how many jobs have been created or maintained, as 
many of these new jobs are just part time jobs.  
 
E. RULES AND CONDITIONS  
 
Grants to women on application to the Institute of Regional Development mainly to new product 
developing and marketing. The grant can only be given to companies, which are at least 50% 
owned by women or have been established by women.  
 
F. DURATION  
 
The programme started in 1990. Duration has not been specified.  
 
G. LEGAL BASIS  
 
Governmental decision from 1990 . 
 
4.3  Employment of Handicapped Persons  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Welfare.  
 
B. POLICY OBJECTIVE  
 
The main purpose of this programme is to ensure that disabled persons enjoy human rights and 
freedoms on the same basis as others and that they are guaranteed the support necessary to 
enjoy these rights.  
 
C. FORM OF STATE AID  
 
Gross wage State aid to rehabilitation centres.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2005: ISK 202,5 million.  
 
E. RULES AND CONDITIONS  
 
Service institutions for disabled people should be deployed in order to meet their specific needs so 
that they can live independently.  
 
F. DURATION  
 
No time limit, the amounts are decided on in the Budget each year.  
 
G. LEGAL BASIS  
 
Act No. 59/1992 on the Affairs of Disabled Peopl e and the Budget item no. 07 -701.1.30 and 
07-707.1.30.  
 
5  REGIONAL SUPPORT  
5.1  Assistance to Employment Development Projects  
A. RESPONSIBLE AUTHORITY  
 
Institute of Regional Development (Byggðastofnun).  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 14 - 
 
  B. POLICY OBJECTIVE  
 
The objective of the programme is to assist the economic development of the nationally assisted 
areas of Iceland. The assisted projects are small and cover employment development, training and 
innovation.  
 
C. FORM OF STATE AID  
 
Grants, as assistance to Employment Development Projects, which f all within the objectives of Act 
No. 106/1999, on the Institute of Regional Development.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2005: ISK 122,3 million.  
 
E. RULES AND CONDITIONS  
 
The programme is available to individuals, private companies, l ocal development companies and 
municipalities. The subsidies are subject to the conditions laid down in the EFTA Surveillance 
Authority State Aid Guidelines and the Map of Regional Aid approved by the EFTA Surveillance 
Authority.  
 
F. DURATION  
 
The programm e has no time limit, the amount is decided on in the Budget each year.  
 
G. LEGAL BASIS  
 
Article 10 of Act no. 106/1999 on the Institute of Regional Development, the Budget item no. 
04-542. 
 
5.2  Assistance to Local Economic Development  
A. RESPONSIBLE AUTHORITY  
 
Institute of Regional Development (Byggðastofnun).  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to assist local economic development companies and to finance 
venturesome projects within the field of local employment development and innovation.  
 
C. FORM OF STATE AID  
 
Grants to finance venturesome projects within the field of local employment development and 
innovation.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2005: ISK 7,75 million.  
 
E. RULES AND CONDITIONS  
 
According to Act No. 106/1999, on the Institute of Regional Development, the assistance is to be 
in accordance with rules laid down by the Ministry of Employment and Innovation. These rules 
have not yet been issued. The subsidies are subject to the conditions laid down in the EFTA 
Surveillance Authority State Aid Guidelines and the Map of Regional Aid approved by the EFTA 
Surveillance Authority.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 15 - 
 
  F. DURATION  
 
The programme has no time limit, the amounts are decided on in the Budget each year.  
 
G. LEGAL BASIS  
 
Article 12 of Act no. 106/1999 on the Institute of Regional Development, the Budget item 
no. 04-542.1.10.  
 
H. ADDITIONAL INFORMATION  
 
The Institute of Regional Development is authorized according to Article 11 of Act No 106/1999 to 
provide loans and guarantees, in accordanc e with the role of the Institute as stipulated in the Act. 
These loans and guarantees are provided on market terms, with similar interest rates as on the 
open market.  
 
6  TEMPORARY REPAYMENT OF COSTS OF FILMS PR ODUCTION IN ICELAND  
A. RESPONSIBLE AUTHORITY  
 
Icelandic film centre (Kvikmyndamiðstöð Íslands) under the auspice of the Ministry of Industry.  
 
B. POLICY OBJECTIVE  
 
The objective of the Act is to enhance domestic culture and promote the history and nature of 
Iceland by temporarily supporting motion pic tures and television programmes produced in Iceland.  
 
According to the Act authorisation is granted for the reimbursement from the State Treasury of a 
proportion of the production costs incurred in the production of films and television programmes in 
Iceland.  
 
When more than 80% of the total production cost of a motion picture or television programme 
incurs in Iceland, the reimbursement shall be calculated from the total production cost incurring 
within the European Economic Area.  
 
Production costs refers  to all costs incurred in Iceland deductible from the revenues of enterprises 
pursuant to the provisions of the Act on Income and Net Wealth Tax. Payments pertaining to 
employees and contractors are only to be included in production costs if they are verif iable taxable 
in Iceland  
 
C. FORM OF STATE AID  
 
A specific company shall be established in Iceland for the production; an Icelandic branch or 
agency of a company registered in another Member State of the European Economic Area shall be 
considered a specifi c company  
 
D. AMOUNT OF STATE AID  
 
Total expenditure (reimbursement of production cost) in 2005: ISK 125,0 million.  
 
E. RULES AND CONDITIONS  
 
In assessing whether a proportion of the production costs of a motion picture or a television 
programme shall be r eimbursed, the following conditions shall be fulfilled:  
 
a. the production shall be suited for promoting Icelandic culture and the history and nature 
of Iceland;  
b. the production shall be suited for enhancing the experience, knowledge and artistic 
ambition of those involved in the production;  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 16 - 
 
  c. a specific company shall be established in Iceland for the production; an Icelandic branch 
or agency of a company registered in another EEA member state shall be considered a 
specific company;  
d. information on the principal parties involved in the film or television programme shall be 
submitted;  
e. information on domestic parties and their share in the production of the film or television 
programme shall be submitted;  
f. an itemized estimate of the production costs and sources of funding shall be submitted, 
together with confirmation by the funding parties and a declaration by the producer to 
the effect that the production conforms with the aims of the Act No. 43/1999;  
g. information on the content of the proposed film or television p rogramme shall be 
submitted, including a manuscript, synopsis and information about filming locations;  
h. a production plan shall be available (i.e. filming, post -production and marketing plan), 
providing for completion of the production within three years of  receipt of the application 
for reimbursement;  
i. a statement shall be submitted to the effect that the material to be produced is intended 
for general distribution to cinemas or television stations, the content of the film or 
television programme shall not v iolate the Film Censorship and Prohibition of Violent 
Films Act, No. 47/1995, or Article 210 of the Criminal Code, No. 19/1940.  
F. DURATION  
 
The programme is limited to end of year 2021.  
 
G. LEGAL BASIS  
 
Act on Temporary Reimbursements in Respect of Film M aking in Iceland, No. 43/1999, with 
amendments. The Budget item no. 11 -251.  
 
7  RURAL TOURISM  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Transport and Communication.  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to promote rural tourism and assist local  museums, and places 
of historical importance, in attracting tourists.  
 
C. FORM OF STATE AID  
 
Grants to projects.  
 
D. AMOUNT OF STATE AID  
 
Total expenditure allowed in 2005: ISK 245,2 million.  
 
E. DURATION  
 
The programme has no time limit, the amounts are decided on in the Budget each year.  
 
F. LEGAL BASIS  
 
Budget, item no. 10 -651 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 17 - 
 
   
8  AID TO PROMOTE MARKE TING OF ICELANDIC TO URISM.  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Transport and Communication and Icelandic Tourism Board (Ferðamálastofa).  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to promote marketing of Icelandic tourism. Further reference is 
made to a correspondence with the Authority concerning Case No. 47859.  
 
C. FORM OF STATE AID  
 
Grants to projects.  
 
D. AMOUNT OF STATE AID  
 
Total expenditure allowed in 2005: ISK 150,0 million.  
 
E. DURATION  
 
The programme is intended to be temporary, the amounts are decided on in the Budget each year.  
 
F. LEGAL BASIS  
 
Budget, item no. 10 -190.1.44.  
  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 18 - 
 
  2006  
1  THE AGRICULTURAL SEC TOR 
A. NAME OF PROGRAMME  
 
1.1  Agricultural Agreements; Payments to dairy farms, sheep farms and horticulture 
farms  
(Budget items No: 04 -801, 04 -805 & 04 -807).  
 
B. RESPONSIBLE AUTHORITY  
 
Ministry of Agriculture  
 
C. POLICY OBJECTIVE  
 
Agricultural policy is implemented in Iceland in purs uit of objectives which include increasing 
efficiency in the agro -food sector, ensuring self -sufficiency for the country's major agricultural 
production; seeking to utilize domestic inputs to the extent possible; increasing overall efficiency 
in the agricu ltural food sector; utilizing export opportunities to the extent feasible; securing an 
equitable income for farmers; and integrating environmental issues in agricultural policy.  
 
D. FORMS OF SUBSIDY  
 
Agricultural subsidies in Iceland is  mostly provided through direct payments, based on payment 
entitlements, which are directly or indirectly coupled with production factors. Direct payments are 
provided to cattle (mainly dairy) and sheep producers, and, on a smaller scale, to certain 
greenh ouse producers. Allocations for the Agricultural Agreements in 2006 are made under 
items  04-801, 04 -805 and 04 -807 of the State budget (Ministry of Agriculture).  
 
E. AMOUNT OF SUBSIDY  
 
Items making up the amount of support as measured by total costs in Gov ernment Accounts 
for 2006 are listed in table 1.  
 
Table 1 Amount of support in 2006 (Government Accounts); Million ISK  
 
 2006  
Agricultural Productivity Fund  160 
Stockholding costs; sheep meat program  359 
Directs payments to sheep farmers  1,820  
Quality control scheme; sheep farmers  537 
Wool utilization; subsidies  283 
Direct payments to dairy farmers  4,240  
Direct payments to horticulture farmers  195 
Electricity subsidies to horticulture farmers 
(greenhouse)  110 
 
F. RULES AND CONDITIONS  
 
Implementation of the agricultural policy revolves around Agricultural Agreements negotiated 
between the Government and the Farmer's Association. Under Act No. 99/1993 on Agricultural 
Produce, the Minister of Fisheries and Agriculture is given the authorit y to negotiate with the 
Farmer's Association on behalf of the Government on the total support target for milk and total 
support target for sheep meat entitlements and direct payments for horticulture. A government -
chaired committee determines a guaranteed minimum price for milk delivered within production 
quotas at the producer level.  
 
Support is provided for dairy farms, sheep farms and horticulture farms (greenhouse).  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 19 - 
 
  1. Dairy farmers  
 
Milk producers receive direct payments from the Government on milk delivered to dairies. The 
annual quantity must be within the allocated supported targets. The amount of monetary support 
is the same for all producers in Iceland.  
 
2. Sheep farmers  
 
Sheep farmers receive direct payments from the Government which are based on support targets 
for sheep meat entitlements, for which they must own 70% live sheep. Additional payments to 
sheep farmers are related to a quality control scheme for lamb meat, based on animal welfare, 
product quality and traceability, and sustainabilit y criteria.  
 
3. Sheep farmers; wool  
 
Sheep farmers receive support from the Government based on quantity and quality of wool 
produced.  
 
4. Horticulture farmers  
 
Horticulture farmers producing cucumbers, peppers and tomatoes in greenhouses, mainly under 
artificial lighting receive direct payments from the government. The distribution of electricity used 
for artificial lighting is also subsidized to some extent by the Government.  
 
G. DURATION  
 
The time of application of the agricultural agreements between th e Government and the Farmer's 
Association was until the end of 2016 when the agreements were renegotiated. The agreements 
were not revisited, in essence, during the years 2006 to 2014.  
 
H. LEGAL BASIS  
 
Act No. 99/1993 on Agricultural Produce, Pricing and S ales of Agricultural Products. The State 
Budget.  
 
I. TRADE EFFECTS  
 
An assessment of the trade effects of the subsidies is not available. Below, in tables 2, 3 and 4 
there are, however, presented statistics on production and exports of the relevant agricul tural 
commodities.  
 
Table 2 Quantity of milk received by dairies and calculated exports by fat -content of milk 
derived products (in 1,000 of litres) for 2006  
 
Year Milk, received by dairies by fat -
content  Exported products by fat -content, 
thereof (%)  
2006 103,871  2% 
 
Table 3 Sheep meat production and exports 2006 (in 1,000 kg)  
 
Year Production  Exports, thereof (%)  
2006 8,647   14% 
 
Table 4 Tomato, cucumber and bell pepper production and exports 2006 (in 1,000 kg)  
 
Tomatoes  Cucumbers  Bell peppers   Total exports, thereof 
(%) 
1,724  1,124  130 <1% 
 
 
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 20 - 
 
  2  SUPPORT FOR R&D AND TECHNOLOGICAL INNOVA TION  
2.1  Technical Development Fund  
A. RESPONSIBLE AUTHORITY  
 
The Icelandic Centre for Research (RANNÍS) which is under the supervision of the Ministry of 
Industry and Innovation.  
 
B. POLICY OBJECTIVES  
 
The objective of the Technology Development Fund is to facilitate innovation through supporting 
research and technological development.  
 
C. AMOUNT AND FORM OF STATE AID  
 
The amount of State aid in 2006: ISK 482,0 million.  
 
D. RULES AND CONDITIONS  
 
The role of the fund is to support research and development activities, which aim towards 
innovation in Icelandic industry. The Fund will in general operate as a competitive fund through 
which firms, research institutes and unive rsities will have the possibility of financing projects that 
support technological development and innovation. The Fund is intended to give support to spin -off 
ventures and innovative firms to secure that economic benefits accrue to society from the scient ific 
and technical knowledge and the innovation arising from these new ventures.  
 
The Science and Technology Policy Council attaches high importance to close co -ordination 
between the Research Fund and the Technical Development Fund, as well as co -operatio n with 
other public funds and venture investors. The Technical Development Fund can take the initiative 
to establish programmes and specific actions prepared in consultation with the business 
community, research institutes and universities. Finally, the Te chnical Development Fund is 
permitted to enter into partnerships with venture capital investors for seed and early risk financing 
toward establishing firms which base their operations on technological development and research 
and which involves a novelty t o the economy.  
 
E. LEGAL BASIS  
 
Act no. 3/2003 on Public Support for Scientific Research, with later amendments.  
 
F. TRADE EFFECTS  
 
The support is granted to a variety of small projects and sectors, therefore it is difficult to present 
statistical data pe rmitting an assessment of trade effects.  
 
G. DURATION  
 
The Technology Development Fund has been operating since 2004. It took over from the 
Technology Fund which expired in 2004.  
 
2.2  Research Fund  
A. RESPONSIBLE AUTHORITY  
 
The Icelandic Centre for Research (RANNÍS) which is under the supervision of the Ministry of 
Culture and Education.  
 
B. POLICY OBJECTIVES  
 
The objective of the Research Fund is to facilitate fundamental research at University institutes or 
other Governmental R&D institutes.  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 21 - 
 
   
C. AMOUNT AND FORM OF STATE AID  
 
The amount of State aid in 2006: ISK 592,0 million.  
 
D. RULES AND CONDITIONS  
 
Subsidies are granted only on the basis of project applications. The Funds grants are for 
fundamental research at Universities and the involvement of private c ompanies is very limited or 
non-existent.  
 
The Research Fund is the most powerful tool of the public sector for reinforcing the research 
community infrastructure through project grants based on applications from scientists, business 
firms and institutions.  The Science and Technology Policy Council encourages the Fund to give 
young scientists an opportunity to establish their work and contribute to the further accumulation 
of scientific and technical knowledge.  
 
The Research Fund offers grants in accordance with the priorities set by the Science and 
Technology Policy Council and the grants strategy defined by the Science Board based on a peer 
review evaluation of research project quality, the competence of the individuals involved and the 
facilities available  for completing the project.  
 
E. LEGAL BASIS  
 
Act no. 3/2003 on Public Support for Scientific Research, with later amendments.  
 
F. TRADE EFFECTS  
 
The support is granted to a variety of small projects and sectors, therefore it is difficult to present 
statistical data permitting an assessment of trade effects.  
 
G. DURATION  
 
Research Fund has been operating since 2004. It took over from the Science Fu nd which expired 
in 2004.  
 
2.3  Support for R&D in marine aquaculture  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Fisheries and Agriculture.  
 
B. POLICY OBJECTIVE  
 
To enhance scientific knowledge in marine aquaculture.  
 
C. FORM OF SUPPORT  
 
Grants.  
 
D. AMOUNT OF SUPPO RT 
 
2006: 31.800,0 million ISK  
 
E. RULES AND CONDITIONS  
 
Grants are awarded on the basis of applications evaluated by a special committee.  
 
F. DURATION  
 
There is no time limit, but each programme is decided on for a year at a time.  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 22 - 
 
   
G. LEGAL BASIS  
 
Act no. 76/1970.  
 
H. TRADE EFFECTS  
 
There is no trade effect due to limited support.  
 
3  JOB CREATION INITIAT IVE (PRIOR TO 1996 K NOWN AS FIRM SPECIFI C SUBSIDIES 
AND EXPORT PROMOTION  (CASE 93 -221)).  
A. RESPONSIBLE AUTHORITY  
 
Innovation Center Iceland which is  under the supervision of the Ministry of Employment and 
Innovation.  
 
B. POLICY OBJECTIVE  
 
The objective is, to increase the knowledge and competence of entrepreneurs and small and 
medium -sized enterprises such as in managing, financing, product developmen t, marketing and 
innovation.  
 
C. FORM OF SUPPORT  
 
Cost items incurred for consultants, product development, marketing and innovation are eligible 
for grants. Support shall in general not cover more than 50% of eligible expenses.  
 
D. AMOUNT OF SUPPORT  
 
2006: ISK 50,0 million.  
 
E. RULES AND CONDITIONS  
 
Firms and individuals having a registered domicile in Iceland can apply for a grant. In accordance 
with the de minimis  rule, individuals who apply for grants according to these rules must declare 
that they have not received a grant from the Government amounts to more than 200,000 EURO 
last 3 years, the grant applied for included.  
 
F. DURATION  
 
There is no time limit, but  each programme is decided on for a year at a time.  
 
G. LEGAL BASIS  
 
The Budget item no. 11 -299-1.48. 
 
H. TRADE EFFECTS  
 
There are no trade effects of the support due to the general framework of the scheme and limited 
support.  
 
4  SUPPORT FOR EMPLOYME NT AND TRAINING  
4.1  Vocational Training Fund. Support for Vocational Training  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Education and Culture.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 23 - 
 
  B. POLICY OBJECTIVE  
 
The main purpose of this programme is to maintain and develop vocational skills, in most cases for 
people already employed.  
 
C. FORM OF STATE AID  
 
Grants.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2006: ISK 644,6 million  
 
E. RULES AND CONDITIONS  
 
Grants to organizations on application to the Vocational Training Fund mainly to make curriculum 
or other teaching materials for the vocational training courses.  
 
F. DURATION  
 
The programme started in 1992. Duration has not been specified.  
 
G. LEGAL BASIS  
 
Act No. 19/1992 (Lög um starfsmenntun í atvinnulífi) and he Budget item no. 02 -451. 
 
4.2  Employment Opp ortunities for Women in Rural Areas  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Fisheries and Agriculture and the Institute of Regional Development (Byggðastofnun).  
 
B. POLICY OBJECTIVE  
 
The main purpose of this programme is to create new jobs among women. Area s where high 
unemployment is among women will especially be considered.  
 
C. FORM OF STATE AID  
 
Grants, up to 50% of primary R&D costs, innovation costs and cost of new products, process and 
systems for industrial production.  Institute of Regional Development pays the grants and controls 
their disposition.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2006: ISK 0 million  
 
It is difficult to give exact information on how many jobs have been created or maintained, as 
many  of these new jobs are just part time jobs.  
 
E. RULES AND CONDITIONS  
 
Grants to women on application to the Institute of Regional Development mainly to new product 
developing and marketing. The grant can only be given to companies, which are at least 50% 
owned by women or have been established by women.  
 
F. DURATION  
 
The programme started in 1990. Duration has not been specified.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 24 - 
 
  G. LEGAL BASIS  
 
Governmental decision from 1990.  
 
4.3  Employment of Handicapped Persons  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Welfa re. 
 
B. POLICY OBJECTIVE  
 
The main purpose of this programme is to ensure that disabled persons enjoy human rights and 
freedoms on the same basis as others and that they are guaranteed the support necessary to 
enjoy these rights.  
 
C. FORM OF STATE AID  
 
Gross wage State aid to rehabilitation centres.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2006: ISK 55,4 million.  
 
E. RULES AND CONDITIONS  
 
Service institutions for disabled people should be deployed in order to meet their specific needs so 
that they can live independently.  
 
F. DURATION  
 
No time limit, the amounts are decided on in the Budget each year.  
 
G. LEGAL BASIS  
 
Act No. 59/1992 on the Affairs of Disabled People and the Budget item no. 07 -701.1.30 and 
07-707.1.30.  
 
5  REGIONAL SUPPORT  
5.1  Assista nce to Employment Development Projects  
A. RESPONSIBLE AUTHORITY  
 
Institute of Regional Development (Byggðastofnun).  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to assist the economic development of the nationally assisted 
areas of Iceland. The  assisted projects are small and cover employment development, training and 
innovation.  
 
C. FORM OF STATE AID  
 
Grants, as assistance to Employment Development Projects, which fall within the objectives of Act 
No. 106/1999, on the Institute of Regional Deve lopment.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2006: ISK 134,8 million.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 25 - 
 
  E. RULES AND CONDITIONS  
 
The programme is available to individuals, private companies, local development companies and 
municipalities. The subsidies are subject to the conditions laid down in the EFTA Surveillance 
Authority State Aid Guidelines and the Map of Regional Aid approved by the EFTA Surveillance 
Authority.  
 
F. DURATION  
 
The programme has no time limit, the amount is decided on in the Budget each year.  
 
G. LEGAL  BASIS  
 
Article 10 of Act no. 106/1999 on the Institute of Regional Development, the Budget item 
no. 04-542. 
 
5.2  Assistance to Local Economic Development  
A. RESPONSIBLE AUTHORITY  
 
Institute of Regional Development (Byggðastofnun).  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to assist local economic development companies and to finance 
venturesome projects within the field of local employment development and innovation.  
 
C. FORM OF STATE AID  
 
Grants to finance venturesome projects within the field  of local employment development and 
innovation.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2006: ISK 34,5 million.  
 
E. RULES AND CONDITIONS  
 
According to Act No. 106/1999, on the Institute of Regional Development, the assistance is to be 
in acco rdance with rules laid down by the Ministry of Employment and Innovation. These rules 
have not yet been issued. The subsidies are subject to the conditions laid down in the EFTA 
Surveillance Authority State Aid Guidelines and the Map of Regional Aid approv ed by the EFTA 
Surveillance Authority.  
 
F. DURATION  
 
The programme has no time limit, the amounts are decided on in the Budget each year.  
 
G. LEGAL BASIS  
 
Article 12 of Act no. 106/1999 on the Institute of Regional Development, the Budget item 
no. 04-542.1 .10. 
 
H. ADDITIONAL INFORMATION  
 
The Institute of Regional Development is authorized according to Article 11 of Act No 106/1999 to 
provide loans and guarantees, in accordance with the role of the Institute as stipulated in the Act. 
These loans and guarante es are provided on market terms, with similar interest rates as on the 
open market.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 26 - 
 
  6  TEMPORARY REPAYMENT OF COSTS OF FILMS PR ODUCTION IN ICELAND  
A. RESPONSIBLE AUTHORITY  
 
Icelandic film centre (Kvikmyndamiðstöð Íslands) under the auspice of the Ministry of  Industry.  
 
B. POLICY OBJECTIVE  
 
The objective of the Act is to enhance domestic culture and promote the history and nature of 
Iceland by temporarily supporting motion pictures and television programmes produced in Iceland.  
 
According to the Act authorisa tion is granted for the reimbursement from the State Treasury of a 
proportion of the production costs incurred in the production of films and television programmes in 
Iceland.  
 
When more than 80% of the total production cost of a motion picture or televis ion programme 
incurs in Iceland, the reimbursement shall be calculated from the total production cost incurring 
within the European Economic Area.  
 
Production costs refers to all costs incurred in Iceland deductible from the revenues of enterprises 
pursuan t to the provisions of the Act on Income and Net Wealth Tax. Payments pertaining to 
employees and contractors are only to be included in production costs if they are verifiable taxable 
in Iceland  
 
C. FORM OF STATE AID  
 
A specific company shall be establish ed in Iceland for the production; an Icelandic branch or 
agency of a company registered in another Member State of the European Economic Area shall be 
considered a specific company  
 
D. AMOUNT OF STATE AID  
 
Total expenditure (reimbursement of production cos t) in 2006: ISK 75,0 million.  
 
E. RULES AND CONDITIONS  
 
In assessing whether a proportion of the production costs of a motion picture or a television 
programme shall be reimbursed, the following conditions shall be fulfilled:  
 
a. the production shall be suite d for promoting Icelandic culture and the history and nature 
of Iceland;  
b. the production shall be suited for enhancing the experience, knowledge and artistic 
ambition of those involved in the production;  
c. a specific company shall be established in Iceland fo r the production; an Icelandic branch 
or agency of a company registered in another EEA member state shall be considered a 
specific company;  
d. information on the principal parties involved in the film or television programme shall be 
submitted;  
e. information o n domestic parties and their share in the production of the film or television 
programme shall be submitted;  
f. an itemized estimate of the production costs and sources of funding shall be submitted, 
together with confirmation by the funding parties and a declaration by the producer to 
the effect that the production conforms with the aims of the Act No. 43/1999;  
g. information on the content of the proposed film or television programme shall be 
submitted, including a manuscript, synopsis and information about filming locations;  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 27 - 
 
  h. a production plan shall be available (i.e. filming, post -production and marketing plan), 
providing for completion of the production within three years of receipt of the application 
for reimbursement;  
i. a statement shall be submitted to the  effect that the material to be produced is intended 
for general distribution to cinemas or television stations, the content of the film or 
television programme shall not violate the Film Censorship and Prohibition of Violent 
Films Act, No. 47/1995, or Art icle 210 of the Criminal Code, No. 19/1940.  
F. DURATION  
 
The programme is limited to end of year 2021.  
 
G. LEGAL BASIS  
 
Act on Temporary Reimbursements in Respect of Film Making in Iceland, No. 43/1999, with 
amendments. The Budget item no. 11 -251.  
 
7  RURAL TOURISM  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Transport and Communication.  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to promote rural tourism and assist local museums, and places 
of historical importance, in attracting tourists.  
 
C. FORM OF S TATE AID  
 
Grants to projects.  
 
D. AMOUNT OF STATE AID  
 
Total expenditure allowed in 2006: ISK 264,7million.  
 
E. DURATION  
 
The programme has no time limit, the amounts are decided on in the Budget each year.  
 
F. LEGAL BASIS  
 
Budget, item no. 10 -651 
 
8  AID TO PROMOTE MARKETING OF  ICELANDIC TOURISM.  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Transport and Communication and Icelandic Tourism Board (Ferðamálastofa).  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to promote marketing of Icelandic tourism. Furth er reference is 
made to a correspondence with the Authority concerning Case No. 47859.  
 
C. FORM OF STATE AID  
 
Grants to projects.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 28 - 
 
  D. AMOUNT OF STATE AID  
 
Total expenditure allowed in 2006: ISK 150,0 million.  
 
E. DURATION  
 
The programme is intended to be t emporary, the amounts are decided on in the Budget each year.  
 
F. LEGAL BASIS  
 
Budget, item no. 10 -190. 1.44.  
  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 29 - 
 
  2007  
1  THE AGRICULTURAL SEC TOR 
A. NAME OF PROGRAMME  
 
1.1  Agricultural Agreements; Payments to dairy farms, sheep farms and horticulture 
farms  
(Budget items No: 04 -801, 04 -805 & 04 -807).  
 
B. RESPONSIBLE AUTHORITY  
 
Ministry of Agriculture  
 
C. POLICY OBJECTIVE  
 
Agricultural policy is implemented in Iceland in pursuit of objectives which include increasing 
efficiency in the agro -food sector, ensuring self -sufficiency for the country's major agricultural 
production; seeking to utilize domestic inputs to the extent possible; increasing overall efficiency 
in the agricultural food sector; utilizing export opportunities to the extent feasible; securing an 
equitab le income for farmers; and integrating environmental issues in agricultural policy.  
 
D. FORMS OF SUBSIDY  
 
Agricultural subsidies in Iceland is mostly provided through direct payments, based on payment 
entitlements, which are directly or indirectly coupled with production factors. Direct payments are 
provided to cattle (mainly dairy) and sheep producers, and, on a smaller scale, to certain 
greenhouse producers. Allocations for the Agricultural Agreements in 2007 are made under 
items  04-801, 04 -805 and 04 -807 of the State budget (Ministry of Agriculture).  
 
E. AMOUNT OF SUBSIDY  
 
Items making up the amount of support as measured by total costs in Government Accounts for 
2007 are listed in table 1.  
 
Table 1 Amount of support in 2007 (Government Accounts); Million  ISK 
 
 2007 
Agricultural Productivity Fund  157 
Stockholding costs; sheep meat program  273 
Directs payments to sheep farmers  1,826  
Quality control scheme; sheep farmers  689 
Wool utilization; subsidies  293 
Direct payments to dairy farmers  4,137  
Direct  payments to horticulture farmers  204 
Electricity subsidies to horticulture farmers 
(greenhouse)  150 
 
F. RULES AND CONDITIONS  
 
Implementation of the agricultural policy revolves around Agricultural Agreements negotiated 
between the Government and the Far mer's Association. Under Act No. 99/1993 on Agricultural 
Produce, the Minister of Fisheries and Agriculture is given the authority to negotiate with the 
Farmer's Association on behalf of the Government on the total support target for milk and total 
support  target for sheep meat entitlements and direct payments for horticulture. A government -
chaired committee determines a guaranteed minimum price for milk delivered within production 
quotas at the producer level.  
 
Support is provided for dairy farms, sheep fa rms and horticulture farms (greenhouse).  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 30 - 
 
  1. Dairy farmers  
 
Milk producers receive direct payments from the Government on milk delivered to dairies. The 
annual quantity must be within the allocated supported targets. The amount of monetary support 
is the same for all producers in Iceland.  
 
2. Sheep farmers  
 
Sheep farmers receive direct payments from the Government which are based on support targets 
for sheep meat entitlements, for which they must own 70% live sheep. Additional payments to 
sheep farmers are  related to a quality control scheme for lamb meat, based on animal welfare, 
product quality and traceability, and sustainability criteria.  
 
3. Sheep farmers; wool  
 
Sheep farmers receive support from the Government based on quantity and quality of wool 
produced.  
 
4. Horticulture farmers  
 
Horticulture farmers producing cucumbers, peppers and tomatoes in greenhouses, mainly under 
artificial lighting receive direct payments from the government. The distribution of electricity used 
for artificial lighting is a lso subsidized to some extent by the Government.  
 
G. DURATION  
 
The time of application of the agricultural agreements between the Government and the Farmer's 
Association was until the end of 2016 when the agreements were renegotiated. The agreements 
were not revisited, in essence, during the years 2006 to 2014.  
 
H. LEGAL BASIS  
 
Act No. 99/1993 on Agricultural Produce, Pricing and Sales of Agricultural Products. The State 
Budget.  
 
I. TRADE EFFECTS  
 
An assessment of the trade effects of the subsidies is not available. Below, in tables 2, 3 and 4 
there are, however, presented statistics on production and exports of the relevant agricultural 
commodities.  
 
Table 2 Quantity of milk received by dairies and calculated exports by fat -content of milk 
derived products  (in 1,000 of litres) for 2007  
 
Year Milk, received by dairies by fat -
content  Exported products by fat -content, 
thereof (%)  
2007 108,695  13% 
 
Table 3 Sheep meat production and exports 2007 (in 1,000 kg)  
 
Year Production  Exports, thereof (%)  
2007 8,644  12% 
 
Table 4 Tomato, cucumber and bell pepper production and exports 2007 (in 1,000 kg)  
 
Tomatoes  Cucumbers  Bell peppers   Total exports, thereof 
(%) 
1,603  1,343  147 <1% 
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 31 - 
 
  2  SUPPORT FOR R&D AND TECHNOLOGICAL INNOVA TION  
2.1  Technical Development Fund  
A. RESPONSIBLE AUTHORITY  
 
The Icelandic Centre for Research (RANNÍS) which is under the supervision of the Ministry of 
Industry and Innovation.  
 
B. POLICY OBJECTIVES  
 
The objective of the Technology Development Fund is to facilitate innovation through support ing 
research and technological development.  
 
C. AMOUNT AND FORM OF STATE AID  
 
The amount of State aid in 2007: ISK 482,0 million.  
 
D. RULES AND CONDITIONS  
 
The role of the fund is to support research and development activities, which aim towards 
innovation  in Icelandic industry. The Fund will in general operate as a competitive fund through 
which firms, research institutes and universities will have the possibility of financing projects that 
support technological development and innovation. The Fund is inte nded to give support to spin -off 
ventures and innovative firms to secure that economic benefits accrue to society from the scientific 
and technical knowledge and the innovation arising from these new ventures.  
 
The Science and Technology Policy Council att aches high importance to close co -ordination 
between the Research Fund and the Technical Development Fund, as well as co -operation with 
other public funds and venture investors. The Technical Development Fund can take the initiative 
to establish programmes  and specific actions prepared in consultation with the business 
community, research institutes and universities. Finally, the Technical Development Fund is 
permitted to enter into partnerships with venture capital investors for seed and early risk financi ng 
toward establishing firms which base their operations on technological development and research 
and which involves a novelty to the economy.  
 
E. LEGAL BASIS  
 
Act no. 3/2003 on Public Support for Scientific Research, with later amendments.  
 
F. TRADE EFF ECTS 
 
The support is granted to a variety of small projects and sectors, therefore it is difficult to present 
statistical data permitting an assessment of trade effects.  
 
G. DURATION  
 
The Technology Development Fund has been operating since 2004. It took over from the 
Technology Fund which expired in 2004.  
 
2.2  Research Fund  
A. RESPONSIBLE AUTHORITY  
 
The Icelandic Centre for Research (RANNÍS) which is under the supervision of the Ministry of 
Culture and Education.  
 
B. POLICY OBJECTIVES  
 
The objective of the Research Fund is to facilitate fundamental research at University institutes or 
other Governmental R&D institutes.  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 32 - 
 
   
C. AMOUNT AND FORM OF STATE AID  
 
The amount of State aid in 2007: ISK 592,0 million.  
 
D. RULES AND CONDITIONS  
 
Subsidies are granted only on  the basis of project applications. The Funds grants are for 
fundamental research at Universities and the involvement of private companies is very limited or 
non-existent.  
 
The Research Fund is the most powerful tool of the public sector for reinforcing th e research 
community infrastructure through project grants based on applications from scientists, business 
firms and institutions. The Science and Technology Policy Council encourages the Fund to give 
young scientists an opportunity to establish their work  and contribute to the further accumulation 
of scientific and technical knowledge.  
 
The Research Fund offers grants in accordance with the priorities set by the Science and 
Technology Policy Council and the grants strategy defined by the Science Board base d on a peer 
review evaluation of research project quality, the competence of the individuals involved and the 
facilities available for completing the project.  
 
E. LEGAL BASIS  
 
Act no. 3/2003 on Public Support for Scientific Research, with later amendments . 
 
F. TRADE EFFECTS  
 
The support is granted to a variety of small projects and sectors, therefore it is difficult to present 
statistical data permitting an assessment of trade effects.  
 
G. DURATION  
 
Research Fund has been operating since 2004. It took over from the Science Fund which expired 
in 2004.  
 
2.3  Support for R&D in marine aquaculture  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Fisheries and Agriculture.  
 
B. POLICY OBJECTIVE  
 
To enhance scientific know ledge in marine aquaculture.  
 
C. FORM OF SUPPORT  
 
Grants.  
 
D. AMOUNT OF SUPPORT  
 
2007: 31.800,0 million ISK  
 
E. RULES AND CONDITIONS  
 
Grants are awarded on the basis of applications evaluated by a special committee.  
 
F. DURATION  
 
There is no time limit, but each programme is decided on for a year at a time.  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 33 - 
 
   
G. LEGAL BASIS  
 
Act no. 76/1970.  
 
H. TRADE EFFECTS  
 
There is no trade effect due to limited support.  
 
3  JOB CREATION INITIAT IVE (PRIOR TO 1996 K NOWN AS FIRM SPECIFI C SUBSIDIES 
AND EXPORT PROMOTION  (CASE 93 -221)).  
A. RESPONSIBLE AUTHORITY  
 
Innovation Center Iceland which is under the supervision of the Ministry of Employment and 
Innovation.  
 
B. POLICY OBJECTIVE  
 
The objective is, to increase the knowledge and competence of entrep reneurs and small and 
medium -sized enterprises such as in managing, financing, product development, marketing and 
innovation.  
 
C. FORM OF SUPPORT  
 
Cost items incurred for consultants, product development, marketing and innovation are eligible 
for grants. S upport shall in general not cover more than 50% of eligible expenses.  
 
D. AMOUNT OF SUPPORT  
 
2007: ISK 50,0 million.  
 
E. RULES AND CONDITIONS  
 
Firms and individuals having a registered domicile in Iceland can apply for a grant. In accordance 
with the de minimis  rule, individuals who apply for grants according to these rules must declare 
that they have not received a grant from the Government amounts to more than 200,000 EURO 
last 3 years, the grant applied for included.  
 
F. DURATION  
 
There is no time lim it, but each programme is decided on for a year at a time.  
 
G. LEGAL BASIS  
 
The Budget item no. 11 -299-1.48. 
 
H. TRADE EFFECTS  
 
There are no trade effects of the support due to the general framework of the scheme and limited 
support.  
 
4  SUPPORT FOR EMPLOYMENT AND TRAIN ING 
4.1  Vocational Training Fund. Support for Vocational Training  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Education and Culture.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 34 - 
 
  B. POLICY OBJECTIVE  
 
The main purpose of this programme is to maintain and develop vocational skills, in most ca ses for 
people already employed.  
 
C. FORM OF STATE AID  
 
Grants.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2007: ISK 644,6 million  
 
E. RULES AND CONDITIONS  
 
Grants to organizations on application to the Vocational Training Fund mainly to make curriculum 
or other teaching materials for the vocational training courses.  
 
F. DURATION  
 
The programme started in 1992. Duration has not been specified.  
 
G. LEGAL BASIS  
 
Act No. 19/1992 (Lög um starfsmenntun í atvinnulífi) and he Budget item no. 02 -451. 
 
4.2  Employment Opportunities for Women in Rural Areas  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Fisheries and Agriculture and the Institute of Regional Development (Byggðastofnun).  
 
B. POLICY OBJECTIVE  
 
The main purpose of this programme is to create new jobs amo ng women. Areas where high 
unemployment is among women will especially be considered.  
 
C. FORM OF STATE AID  
 
Grants, up to 50% of primary R&D costs, innovation costs and cost of new products, process and 
systems for industrial production. Institute of Reg ional Development pays the grants and controls 
their disposition.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2007: ISK 0 million  
 
It is difficult to give exact information on how many jobs have been created or maintained, as 
many of these new jobs are just part time jobs.  
 
E. RULES AND CONDITIONS  
 
Grants to women on application to the Institute of Regional Development mainly to new product 
developing and marketing. The grant can only be given to companies, which are at least 50% 
owned by women or have been established by women.  
 
F. DURATION  
 
The programme started in 1990. Duration has not been specified.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 35 - 
 
  G. LEGAL BASIS  
 
Governmental decision from 1990.  
 
4.3  Employment of Handicapped Persons  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Welfare.  
 
B. POLICY  OBJECTIVE  
 
The main purpose of this programme is to ensure that disabled persons enjoy human rights and 
freedoms on the same basis as others and that they are guaranteed the support necessary to 
enjoy these rights.  
 
C. FORM OF STATE AID  
 
Gross wage State aid to rehabilitation centres.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2007: ISK 55,4 million.  
 
E. RULES AND CONDITIONS  
 
Service institutions for disabled people should be deployed in order to meet their specific needs so 
that they can live in dependently.  
 
F. DURATION  
 
No time limit, the amounts are decided on in the Budget each year.  
 
G. LEGAL BASIS  
 
Act No. 59/1992 on the Affairs of Disabled People and the Budget item no. 07 -701.1.30 and 
07-707.1.30.  
 
5  REGIONAL SUPPORT  
5.1  Assistance to Employment  Development Projects  
A. RESPONSIBLE AUTHORITY  
 
Institute of Regional Development (Byggðastofnun).  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to assist the economic development of the nationally assisted 
areas of Iceland. The assisted project s are small and cover employment development, training and 
innovation.  
 
C. FORM OF STATE AID  
 
Grants, as assistance to Employment Development Projects, which fall within the objectives of Act 
No. 106/1999, on the Institute of Regional Development.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2007: ISK 139,4 million.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 36 - 
 
  E. RULES AND CONDITIONS  
 
The programme is available to individuals, private companies, local development companies and 
municipalities. The subsidies are subject to the conditions la id down in the EFTA Surveillance 
Authority State Aid Guidelines and the Map of Regional Aid approved by the EFTA Surveillance 
Authority.  
 
F. DURATION  
 
The programme has no time limit, the amount is decided on in the Budget each year.  
 
G. LEGAL BASIS  
 
Article 10 of Act no. 106/1999 on the Institute of Regional Development, the Budget item 
no. 04-542. 
 
5.2  Assistance to Local Economic Development  
A. RESPONSIBLE AUTHORITY  
 
Institute of Regional Development (Byggðastofnun).  
 
B. POLICY OBJECTIVE  
 
The objective of t he programme is to assist local economic development companies and to finance 
venturesome projects within the field of local employment development and innovation.  
 
C. FORM OF STATE AID  
 
Grants to finance venturesome projects within the field of local employment development and 
innovation.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2007: ISK 23,3 million.  
 
E. RULES AND CONDITIONS  
 
According to Act No. 106/1999, on the Institute of Regional Development, the assistance is to be 
in accordance wit h rules laid down by the Ministry of Employment and Innovation. These rules 
have not yet been issued. The subsidies are subject to the conditions laid down in the EFTA 
Surveillance Authority State Aid Guidelines and the Map of Regional Aid approved by the EFTA 
Surveillance Authority.  
 
F. DURATION  
 
The programme has no time limit, the amounts are decided on in the Budget each year.  
 
G. LEGAL BASIS  
 
Article 12 of Act no. 106/1999 on the Institute of Regional Development, the Budget item 
no. 04-542.1.10.  
 
H. ADDITIONAL INFORMATION  
 
The Institute of Regional Development is authorized according to Article 11 of Act No 106/1999 to 
provide loans and guarantees, in accordance with the role of the Institute as stipulated in the Act. 
These loans and guarantees are pro vided on market terms, with similar interest rates as on the 
open market.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 37 - 
 
  6  TEMPORARY REPAYMENT OF COSTS OF FILMS PR ODUCTION IN ICELAND  
A. RESPONSIBLE AUTHORITY  
 
Icelandic film centre (Kvikmyndamiðstöð Íslands) under the auspice of the Ministry of Industry.  
 
B. POLICY OBJECTIVE  
 
The objective of the Act is to enhance domestic culture and promote the history and nature of 
Iceland by temporarily supporting motion pictures and television programmes produced in Iceland.  
 
According to the Act authorisation is granted for the reimbursement from the State Treasury of a 
proportion of the production costs incurred in the production of films and television programmes in 
Iceland.  
 
When more than 80% of the total production cost of a motion picture or television programme 
incurs in Iceland, the reimbursement shall be calculated from the total production cost incurring 
within the European Economic Area.  
 
Production costs refers to all costs incurred in Iceland deductible from the r evenues of enterprises 
pursuant to the provisions of the Act on Income and Net Wealth Tax. Payments pertaining to 
employees and contractors are only to be included in production costs if they are verifiable taxable 
in Iceland  
 
C. FORM OF STATE AID  
 
A speci fic company shall be established in Iceland for the production; an Icelandic branch or 
agency of a company registered in another Member State of the European Economic Area shall be 
considered a specific company  
 
D. AMOUNT OF STATE AID  
 
Total expenditure (r eimbursement of production cost) in 2007: ISK 75,0 million.  
 
E. RULES AND CONDITIONS  
 
In assessing whether a proportion of the production costs of a motion picture or a television 
programme shall be reimbursed, the following conditions shall be fulfilled:  
 
a. the production shall be suited for promoting Icelandic culture and the history and nature 
of Iceland;  
b. the production shall be suited for enhancing the experience, knowledge and artistic 
ambition of those involved in the production;  
c. a specific company shall be established in Iceland for the production; an Icelandic branch 
or agency of a company registered in another EEA member state shall be considered a 
specific company;  
d. information on the principal parties involved in the film or television programme shall be 
submitted;  
e. information on domestic parties and their share in the production of the film or television 
programme shall be submitted;  
f. an itemized estimate of the production costs and sources of funding shall be submitted, 
together with confirmatio n by the funding parties and a declaration by the producer to 
the effect that the production conforms with the aims of the Act No. 43/1999;  
g. information on the content of the proposed film or television programme shall be 
submitted, including a manuscript, synopsis and information about filming locations;  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 38 - 
 
  h. a production plan shall be available (i.e. filming, post -production and marketing plan), 
providing for completion of the production within three years of receipt of the application 
for reimbursement;  
i. a statement shall be submitted to the effect that the material to be produced is intended 
for general distribution to cinemas or television stations, the content of the film or 
television programme shall not violate the Film Censorship and Prohibition of Vi olent 
Films Act, No. 47/1995, or Article 210 of the Criminal Code, No. 19/1940.  
F. DURATION  
 
The programme is limited to end of year 2021.  
 
G. LEGAL BASIS  
 
Act on Temporary Reimbursements in Respect of Film Making in Iceland, No. 43/1999, with 
amendments. The Budget item no. 11 -251.  
 
7  RURAL TOURISM  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Transport and Communication.  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to promote rural tourism and assist local museums, and places 
of historical importance, i n attracting tourists.  
 
C. FORM OF STATE AID  
 
Grants to projects.  
 
D. AMOUNT OF STATE AID  
 
Total expenditure allowed in 2007: ISK 346,0 million.  
 
E. DURATION  
 
The programme has no time limit, the amounts are decided on in the Budget each year.  
 
F. LEGAL BASIS  
 
Budget, item no. 10 -651. 
 
8  AID TO PROMOTE MARKE TING OF ICELANDIC TO URISM.  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Transport and Communication and Icelandic Tourism Board (Ferðamálastofa).  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to promo te marketing of Icelandic tourism. Further reference is 
made to a correspondence with the Authority concerning Case No. 47859.  
 
C. FORM OF STATE AID  
 
Grants to projects.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 39 - 
 
  D. AMOUNT OF STATE AID  
 
Total expenditure allowed in 2007: ISK 30,0 million.  
 
E. DURA TION 
 
The programme is intended to be temporary, the amounts are decided on in the Budget each year.  
 
F. LEGAL BASIS  
 
Budget, item no. 10 -190.1.44.  
  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 40 - 
 
  2008  
1  THE AGRICULTURAL SEC TOR 
A. NAME OF PROGRAMME  
 
1.1  Agricultural Agreements; Payments to dairy farms, sheep  farms and horticulture 
farms  
(Budget items No: 04 -801, 04 -805 & 04 -807).  
 
B. RESPONSIBLE AUTHORITY  
 
Ministry of Fisheries and Agriculture  
 
C. POLICY OBJECTIVE  
 
Agricultural policy is implemented in Iceland in pursuit of objectives which include increasing  
efficiency in the agro -food sector, ensuring self -sufficiency for the country's major agricultural 
production; seeking to utilize domestic inputs to the extent possible; increasing overall efficiency 
in the agricultural food sector; utilizing export oppor tunities to the extent feasible; securing an 
equitable income for farmers; and integrating environmental issues in agricultural policy.  
 
D. FORMS OF SUBSIDY  
 
Agricultural subsidies in Iceland is mostly provided through direct payments, based on payment 
entitlements, which are directly or indirectly coupled with production factors. Direct payments are 
provided to cattle (mainly dairy) and sheep producers, and, on a smaller scale, to certain 
greenhouse producers. Allocations for the Agricultural Agreements in  2008 are made under 
items  04-801, 04 -805 and 04 -807 of the State budget (Ministry of Fisheries and Agriculture).  
 
E. AMOUNT OF SUBSIDY  
 
Items making up the amount of support as measured by total costs in Government Accounts 
for 2008 are listed in table 1.  
 
Table 1 Amount of support in 2008 (Government Accounts); Million ISK  
 
 2008  
Agricultural Productivity Fund  160 
Stockholding costs; sheep meat program  389 
Directs payments to sheep farmers  2,042  
Quality control scheme; sheep farmers  1,039  
Wool utilization; subsidies  348 
Direct payments to dairy farmers  4,366  
Direct payments to horticulture farmers  246 
Electricity subsidies to horticulture farmers 
(greenhouse)  179 
 
F. RULES AND CONDITIONS  
 
Implementation of the agricultural policy revolves ar ound Agricultural Agreements negotiated 
between the Government and the Farmer's Association. Under Act No. 99/1993 on Agricultural 
Produce, the Minister of Fisheries and Agriculture is given the authority to negotiate with the 
Farmer's Association on behal f of the Government on the total support target for milk and total 
support target for sheep meat entitlements and direct payments for horticulture. A government -
chaired committee determines a guaranteed minimum price for milk delivered within production 
quotas at the producer level.  
 
Support is provided for dairy farms, sheep farms and horticulture farms (greenhouse).  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 41 - 
 
  1. Dairy farmers  
 
Milk producers receive direct payments from the Government on milk delivered to dairies. The 
annual quantity must be within the allocated supported targets. The amount of monetary support 
is the same for all producers in Iceland.  
 
2. Sheep farmers  
 
Sheep farmers receive direct payments from the Government which are based on support targets 
for sheep meat entitlements, fo r which they must own 70% live sheep. Additional payments to 
sheep farmers are related to a quality control scheme for lamb meat, based on animal welfare, 
product quality and traceability, and sustainability criteria.  
 
3. Sheep farmers; wool  
 
Sheep farmers  receive support from the Government based on quantity and quality of wool 
produced.  
 
4. Horticulture farmers  
 
Horticulture farmers producing cucumbers, peppers and tomatoes in greenhouses, mainly under 
artificial lighting receive direct payments from the  government. The distribution of electricity used 
for artificial lighting is also subsidized to some extent by the Government.  
 
G. DURATION  
 
The time of application of the agricultural agreements between the Government and the Farmer's 
Association was unt il the end of 2016 when the agreements were renegotiated. The agreements 
were not revisited, in essence, during the years 2006 to 2014.  
 
H. LEGAL BASIS  
 
Act No. 99/1993 on Agricultural Produce, Pricing and Sales of Agricultural Products. The State 
Budget.  
 
I. TRADE EFFECTS  
 
An assessment of the trade effects of the subsidies is not available. Below, in tables 2, 3 and 4 
there are, however, presented statistics on production and exports of the relevant agricultural 
commodities.  
 
Table 2 Quantity of milk received by dairies and calculated exports by fat -content of milk 
derived products (in 1,000 of litres) for 2008  
 
Year Milk, received by dairies by fat -
content  Exported products by fat -content, 
thereof (%)  
2008 112,297  17% 
 
Table 3 Sheep meat production and exports 2008 (in 1,000 kg)  
 
Year Production  Exports, thereof (%)  
2008 8,930  17% 
 
Table 4 Tomato, cucumber and bell pepper production and exports 2008 (in 1,000 kg)  
 
Tomatoes  Cucumbers  Bell peppers   Total exports, thereof 
(%) 
1,481  1,516  170 <1% 
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 42 - 
 
  2  SUPPORT FOR R&D AND TECHNOLOGICAL INNOVA TION  
2.1  Technical Development Fund  
A. RESPONSIBLE AUTHORITY  
 
The Icelandic Centre for Research (RANNÍS) which is under the supervision of the Ministry of 
Industry and Innovation.  
 
B. POLICY OBJECTIVES  
 
The objective of the Technology Development Fund is to facilitate innovation through supporting 
research and technological development.  
 
C. AMOUNT AND FORM OF STATE AID  
 
The amount of State aid in 2008: ISK 651,1 million.  
 
D. RULES AND CONDITIONS  
 
The role of the fund is t o support research and development activities, which aim towards 
innovation in Icelandic industry. The Fund will in general operate as a competitive fund through 
which firms, research institutes and universities will have the possibility of financing proje cts that 
support technological development and innovation. The Fund is intended to give support to spin -off 
ventures and innovative firms to secure that economic benefits accrue to society from the scientific 
and technical knowledge and the innovation aris ing from these new ventures.  
 
The Science and Technology Policy Council attaches high importance to close co -ordination 
between the Research Fund and the Technical Development Fund, as well as co -operation with 
other public funds and venture investors. The  Technical Development Fund can take the initiative 
to establish programmes and specific actions prepared in consultation with the business 
community, research institutes and universities. Finally, the Technical Development Fund is 
permitted to enter into partnerships with venture capital investors for seed and early risk financing 
toward establishing firms which base their operations on technological development and research 
and which involves a novelty to the economy.  
 
E. LEGAL BASIS  
 
Act no. 3/2003 on Public Support for Scientific Research, with later amendments.  
 
F. TRADE EFFECTS  
 
The support is granted to a variety of small projects and sectors, therefore it is difficult to present 
statistical data permitting an assessment of trade effects.  
 
G. DURAT ION 
 
The Technology Development Fund has been operating since 2004. It took over from the 
Technology Fund which expired in 2004.  
 
2.2  Research Fund  
A. RESPONSIBLE AUTHORITY  
 
The Icelandic Centre for Research (RANNÍS) which is under the supervision of the Ministry of 
Culture and Education.  
 
B. POLICY OBJECTIVES  
 
The objective of the Research Fund is to facilitate fundamental research at University institutes or 
other Governmental R&D institutes.  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 43 - 
 
   
C. AMOUNT AND FORM OF STATE AID  
 
The amount of State aid in 2 008: ISK 303,4 million.  
 
D. RULES AND CONDITIONS  
 
Subsidies are granted only on the basis of project applications. The Funds grants are for 
fundamental research at Universities and the involvement of private companies is very limited or 
non-existent.  
 
The Research Fund is the most powerful tool of the public sector for reinforcing the research 
community infrastructure through project grants based on applications from scientists, business 
firms and institutions. The Science and Technology Policy Council enco urages the Fund to give 
young scientists an opportunity to establish their work and contribute to the further accumulation 
of scientific and technical knowledge.  
 
The Research Fund offers grants in accordance with the priorities set by the Science and 
Technology Policy Council and the grants strategy defined by the Science Board based on a peer 
review evaluation of research project quality, the competence of the individuals involved and the 
facilities available for completing the project.  
 
E. LEGAL BASIS  
 
Act no. 3/2003 on Public Support for Scientific Research, with later amendments.  
 
F. TRADE EFFECTS  
 
The support is granted to a variety of small projects and sectors, therefore it is difficult to present 
statistical data permitting an assessment of trade effects.  
 
G. DURATION  
 
Research Fund has been operating since 2004. It took over from the Science Fu nd which expired in 
2004.  
 
2.3  Support for R&D in marine aquaculture  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Fisheries and Agriculture.  
 
B. POLICY OBJECTIVE  
 
To enhance scientific knowledge in marine aquaculture.  
 
C. FORM OF SUPPORT  
 
Grants.  
 
D. AMOUNT OF SUPPO RT 
 
2008: 20.093,1 million ISK  
 
E. RULES AND CONDITIONS  
 
Grants are awarded on the basis of applications evaluated by a special committee.  
 
F. DURATION  
 
There is no time limit, but each programme is decided on for a year at a time.  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 44 - 
 
   
G. LEGAL BASIS  
 
Act no. 72/2008 on the Directorate of Fisheries.  
 
H. TRADE EFFECTS  
 
There is no trade effect due to limited support.  
 
3  JOB CREATION INITIAT IVE (PRIOR TO 1996 K NOWN AS FIRM SPECIFI C SUBSIDIES 
AND EXPORT PROMOTION  (CASE 93 -221)).  
A. RESPONSIBLE AUTHORITY  
 
Innovation Center Iceland which is under the supervision of the Ministry of Employment and 
Innovation.  
 
B. POLICY OBJECTIVE  
 
The objective is, to increase the knowledge and competence of entrepreneurs and small and 
medium -sized enterprises such as in managin g, financing, product development, marketing and 
innovation.  
 
C. FORM OF SUPPORT  
 
Cost items incurred for consultants, product development, marketing and innovation are eligible 
for grants. Support shall in general not cover more than 50% of eligible expen ses. 
 
D. AMOUNT OF SUPPORT  
 
2008: ISK 75,0 million.  
 
E. RULES AND CONDITIONS  
 
Firms and individuals having a registered domicile in Iceland can apply for a grant. In accordance 
with the de minimis  rule, individuals who apply for grants according to these rules must declare 
that they have not received a grant from the Government amounts to more than 200,000 EURO 
last 3 years, the grant applied for included.  
 
F. DURATION  
 
There is no time limit, but  each programme is decided on for a year at a time.  
 
G. LEGAL BASIS  
 
The Budget item no. 11 -299-1.48. 
 
H. TRADE EFFECTS  
 
There are no trade effects of the support due to the general framework of the scheme and limited 
support.  
 
4  SUPPORT FOR EMPLOYME NT AND TRAINING  
4.1  Vocational Training Fund. Support for Vocational Training  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Education and Culture.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 45 - 
 
  B. POLICY OBJECTIVE  
 
The main purpose of this programme is to maintain and develop vocational skills, in most cases for 
people already employed.  
 
C. FORM OF STATE AID  
 
Grants.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2008: ISK 1.005,9 million  
 
E. RULES AND CONDITIONS  
 
Grants to organizations on application to the Vocational Training Fund mainly to make curriculum 
or other teaching materials for the vocational training courses.  
 
F. DURATION  
 
The programme started in 1992. Duration has not been specified.  
 
G. LEGAL BASIS  
 
Adult Education Act No. 19/1992 and he Budget item no. 02 -451. 
 
4.2  Employment Opportunities for Women in Rural Areas  
H. RESPONSIBLE AUTHORITY  
 
Ministry of Fisheries and Agriculture and the Institute of Regional Development (Byggðastofnun).  
 
I. POLICY OBJECTIVE  
 
The main purpose of this programme is to create new jobs among women. Areas where high 
unemploy ment is among women will especially be considered.  
 
J. FORM OF STATE AID  
 
Grants, up to 50% of primary R&D costs, innovation costs and cost of new products, process and 
systems for industrial production. Institute of Regional Development pays the grants a nd controls 
their disposition.  
 
K. AMOUNT OF STATE AID  
 
Actual total expenditure in 2008: ISK 0 million  
 
It is difficult to give exact information on how many jobs have been created or maintained, as 
many of these new jobs are just part time jobs.  
 
L. RULES AND CONDITIONS  
 
Grants to women on application to the Institute of Regional Development mainly to new product 
developing and marketing. The grant can only be given to companies, which are at least 50% 
owned by women or have been established by women.  
 
M. DURATION  
 
The programme started in 1990. Duration has not been specified.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 46 - 
 
  N. LEGAL BASIS  
 
Governmental decision from 1990.  
 
4.3  Employment of Handicapped Persons  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Welfare.  
 
B. POLICY OBJECTIVE  
 
The main purpose of th is programme is to ensure that disabled persons enjoy human rights and 
freedoms on the same basis as others and that they are guaranteed the support necessary to 
enjoy these rights.  
 
C. FORM OF STATE AID  
 
Gross wage State aid to rehabilitation centres.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2008: ISK 59,1 million.  
 
E. RULES AND CONDITIONS  
 
Service institutions for disabled people should be deployed in order to meet their specific needs so 
that they can live independently.  
 
F. DURATION  
 
No time  limit, the amounts are decided on in the Budget each year.  
 
G. LEGAL BASIS  
Act No. 59/1992 on the Affairs of Disabled People and the Budget item no. 07 -701.1.30 and 
07-707.1.30.  
 
5  REGIONAL SUPPORT  
5.1  Assistance to Employment Development Projects  
A. RESPONSIB LE AUTHORITY  
 
Institute of Regional Development (Byggðastofnun).  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to assist the economic development of the nationally assisted 
areas of Iceland. The assisted projects are small and cover employment de velopment, training and 
innovation.  
 
C. FORM OF STATE AID  
 
Grants, as assistance to Employment Development Projects, which fall within the objectives of Act 
No. 106/1999, on the Institute of Regional Development.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2008: ISK 173,2 million.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 47 - 
 
  E. RULES AND CONDITIONS  
 
The programme is available to individuals, private companies, local development companies and 
municipalities. The subsidies are subject to the conditions laid down in the EFTA Surveillance 
Authority State Aid Guidelines and the Map of Regional Aid approved by the EFTA Surveillance 
Authority.  
 
F. DURATION  
 
The programme has no time limit, the amount is decided on in the Budget each year.  
 
G. LEGAL BASIS  
 
Article 10 of Act no. 106/1999 on the I nstitute of Regional Development, the Budget item 
no. 04-542. 
 
5.2  Assistance to Local Economic Development  
A. RESPONSIBLE AUTHORITY  
 
Institute of Regional Development (Byggðastofnun).  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to assist local ec onomic development companies and to finance 
venturesome projects within the field of local employment development and innovation.  
 
C. FORM OF STATE AID  
 
Grants to finance venturesome projects within the field of local employment development and 
innovation.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2008: ISK 106,5 million.  
 
E. RULES AND CONDITIONS  
 
According to Act No. 106/1999, on the Institute of Regional Development, the assistance is to be 
in accordance with rules laid down by the Ministry of Employment and Innovation. These rules 
have not yet been issued. The subsidies are subject to the conditions laid down in the EFTA 
Surveillance Authority State Aid Guidelines and the Map of Regional Aid approved by the EFTA 
Surveillance Authority.  
 
F. DURA TION 
 
The programme has no time limit, the amounts are decided on in the Budget each year.  
 
G. LEGAL BASIS  
 
Article 12 of Act no. 106/1999 on the Institute of Regional Development, the Budget item 
no. 04-542.1.10.  
 
H. ADDITIONAL INFORMATION  
 
The Institute of Regional Development is authorized according to Article 11 of Act No 106/1999 to 
provide loans and guarantees, in accordance with the role of the Institute as stipulated in the Act. 
These loans and guarantees are provided on market terms, with similar i nterest rates as on the 
open market.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 48 - 
 
  6  TEMPORARY REPAYMENT OF COSTS OF FILMS PR ODUCTION IN ICELAND  
A. RESPONSIBLE AUTHORITY  
 
Icelandic film centre (Kvikmyndamiðstöð Íslands) under the auspice of the Ministry of Industry.  
 
B. POLICY OBJECTIVE  
 
The objective of the Act is to enhance domestic culture and promote the history and nature of 
Iceland by temporarily supporting motion pictures and television programmes produced in Iceland.  
 
According to the Act authorisation is granted for the reimburse ment from the State Treasury of a 
proportion of the production costs incurred in the production of films and television programmes in 
Iceland.  
 
When more than 80% of the total production cost of a motion picture or television programme 
incurs in Iceland, the reimbursement shall be calculated from the total production cost incurring 
within the European Economic Area.  
 
Production costs refers to all costs incurred in Iceland deductible from the revenues of enterprises 
pursuant to the provisions of the Act on  Income and Net Wealth Tax. Payments pertaining to 
employees and contractors are only to be included in production costs if they are verifiable taxable 
in Iceland  
 
C. FORM OF STATE AID  
 
A specific company shall be established in Iceland for the production;  an Icelandic branch or 
agency of a company registered in another Member State of the European Economic Area shall be 
considered a specific company  
 
D. AMOUNT OF STATE AID  
 
Total expenditure (reimbursement of production cost) in 2008: ISK 75,0 million.  
 
E. RULES AND CONDITIONS  
 
In assessing whether a proportion of the production costs of a motion picture or a television 
programme shall be reimbursed, the following conditions shall be fulfilled:  
 
a. the production shall be suited for promoting Icelandic culture  and the history and nature 
of Iceland;  
b. the production shall be suited for enhancing the experience, knowledge and artistic 
ambition of those involved in the production;  
c. a specific company shall be established in Iceland for the production; an Icelandic br anch 
or agency of a company registered in another EEA member state shall be considered a 
specific company;  
d. information on the principal parties involved in the film or television programme shall be 
submitted;  
e. information on domestic parties and their shar e in the production of the film or television 
programme shall be submitted;  
f. an itemized estimate of the production costs and sources of funding shall be submitted, 
together with confirmation by the funding parties and a declaration by the producer to 
the effect that the production conforms with the aims of the Act No.  43/1999;  
g. information on the content of the proposed film or television programme shall be 
submitted, including a manuscript, synopsis and information about filming locations;  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 49 - 
 
  h. a production plan  shall be available (i.e. filming, post -production and marketing plan), 
providing for completion of the production within three years of receipt of the application 
for reimbursement;  
i. a statement shall be submitted to the effect that the material to be prod uced is intended 
for general distribution to cinemas or television stations, the content of the film or 
television programme shall not violate the Film Censorship and Prohibition of Violent 
Films Act, No. 47/1995, or Article 210 of the Criminal Code, No. 1 9/1940.  
F. DURATION  
 
The programme is limited to end of year 2021.  
 
G. LEGAL BASIS  
 
Act on Temporary Reimbursements in Respect of Film Making in Iceland, No. 43/1999, with 
amendments. The Budget item no. 11 -251.  
 
7  RURAL TOURISM  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Transport and Communication.  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to promote rural tourism and assist local museums, and places 
of historical importance, in attracting tourists.  
 
C. FORM OF STATE AID  
 
Grants to projects.  
 
D. AMOUNT OF STATE AID  
 
Total expenditure allowed in 2008: ISK 390,8 million.  
 
E. DURATION  
 
The programme has no time limit, the amounts are decided on in the Budget each year.  
 
F. LEGAL BASIS  
 
Budget, item no. 11 -501. 
 
8  AID TO PROMOTE MARKE TING OF ICELANDIC TOURISM.  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Transport and Communication and Icelandic Tourism Board (Ferðamálastofa).  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to promote marketing of Icelandic tourism. Further reference is 
made to a corre spondence with the Authority concerning Case No. 47859.  
 
C. FORM OF STATE AID  
 
Grants to projects.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 50 - 
 
  D. AMOUNT OF STATE AID  
 
Total expenditure allowed in 2008: ISK 30,0 million.  
 
E. DURATION  
 
The programme is intended to be temporary, the amounts are decide d on in the Budget each year.  
 
F. LEGAL BASIS  
 
Budget, item no. 11 -599.1.44.  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 51 - 
 
  2009  
1  THE AGRICULTURAL SEC TOR 
A. NAME OF PROGRAMME  
 
1.1  Agricultural Agreements; Payments to dairy farms, sheep farms and horticulture 
farms  
(Budget items No: 04 -801, 04 -805 & 04-807).  
 
B. RESPONSIBLE AUTHORITY  
 
Ministry of Fisheries and Agriculture  
 
C. POLICY OBJECTIVE  
 
Agricultural policy is implemented in Iceland in pursuit of objectives which include increasing 
efficiency in the agro -food sector, ensuring self -sufficiency for the country's major agricultural 
production; seeking to utilize domestic inputs to the extent possible; increasing overall efficiency 
in the agricultural food sector; utilizing export opportunities to the extent feasible; securing an 
equitable income f or farmers; and integrating environmental issues in agricultural policy.  
 
D. FORMS OF SUBSIDY  
 
Agricultural subsidies in Iceland is mostly provided through direct payments, based on payment 
entitlements, which are directly or indirectly coupled with produc tion factors. Direct payments are 
provided to cattle (mainly dairy) and sheep producers, and, on a smaller scale, to certain 
greenhouse producers. Allocations for the Agricultural Agreements in 2009 are made under 
items  04-801, 04 -805 and 04 -807 of the Sta te budget (Ministry of Fisheries and Agriculture).  
 
E. AMOUNT OF SUBSIDY  
 
Items making up the amount of support as measured by total costs in Government Accounts 
for 2009 are listed in table 1.  
 
Table 1 Amount of support in 2009 (Government Accounts); Mill ion ISK  
 
 2009  
Agricultural Productivity Fund  159 
Stockholding costs; sheep meat program  340 
Directs payments to sheep farmers  2,141  
Quality control scheme; sheep farmers  1,088  
Wool utilization; subsidies  364 
Direct payments to dairy farmers  4,589  
Direct payments to horticulture farmers  247 
Electricity subsidies to horticulture farmers 
(greenhouse)  153 
 
F. RULES AND CONDITIONS  
 
Implementation of the agricultural policy revolves around Agricultural Agreements negotiated 
between the Government and t he Farmer's Association. Under Act No. 99/1993 on Agricultural 
Produce, the Minister of Fisheries and Agriculture is given the authority to negotiate with the 
Farmer's Association on behalf of the Government on the total support target for milk and total 
support target for sheep meat entitlements and direct payments for horticulture. A government -
chaired committee determines a guaranteed minimum price for milk delivered within production 
quotas at the producer level.  
 
Support is provided for dairy farms, sh eep farms and horticulture farms (greenhouse).  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 52 - 
 
  1. Dairy farmers  
 
Milk producers receive direct payments from the Government on milk delivered to dairies. The 
annual quantity must be within the allocated supported targets. The amount of monetary support 
is the same for all producers in Iceland.  
 
2. Sheep farmers  
 
Sheep farmers receive direct payments from the Government which are based on support targets 
for sheep meat entitlements, for which they must own 70% live sheep. Additional payments to 
sheep farmer s are related to a quality control scheme for lamb meat, based on animal welfare, 
product quality and traceability, and sustainability criteria.  
 
3. Sheep farmers; wool  
 
Sheep farmers receive support from the Government based on quantity and quality of wool 
produced.  
 
4. Horticulture farmers  
 
Horticulture farmers producing cucumbers, peppers and tomatoes in greenhouses, mainly under 
artificial lighting receive direct paym ents from the government. The distribution of electricity used 
for artificial lighting is also subsidized to some extent by the Government.  
 
G. DURATION  
 
The time of application of the agricultural agreements between the Government and the Farmer's 
Associ ation was until the end of 2016 when the agreements were renegotiated. The agreements 
were not revisited, in essence, during the years 2006 to 2014.  
 
H. LEGAL BASIS  
 
Act No. 99/1993 on Agricultural Produce, Pricing and Sales of Agricultural Products. The S tate 
Budget.  
 
I. TRADE EFFECTS  
 
An assessment of the trade effects of the subsidies is not available. Below, in tables 2, 3 and 4 
there are, however, presented statistics on production and exports of the relevant agricultural 
commodities.  
 
Table 2 Quantity  of milk received by dairies and calculated exports by fat -content of milk 
derived products (in 1,000 of litres) for 2009  
 
Year Milk, received by dairies by fat - 
content  Exported products by fat -content, 
thereof (%)  
2009  115,579  13% 
 
Table 3 Sheep meat production and exports 2009 (in 1,000 kg)  
 
Year Production  Exports, thereof (%)  
2009 8,841  27% 
 
Table 4 Tomato, cucumber and bell pepper production and exports 2009 (in 1,000 kg)  
 
Tomatoes  Cucumbers  Bell peppers   Total exports, thereof 
(%) 
1,481  1,452  177 <1% G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 53 - 
 
  2  SUPPORT FOR R&D AND TECHNOLOGICAL INNOVA TION  
2.1  Technical Development Fund  
A. RESPONSIBLE AUTHORITY  
 
The Icelandic Centre for Research (RANNÍS) which is under the supervision of the Ministry of 
Industry and Innovation.  
 
B. POLICY OBJECTIVES  
 
The objective of the Technology Development Fund is to facilitate innovation through supporting 
research and technological development.  
 
C. AMOUNT AND FORM OF STATE AID  
 
The amount of State aid in 2009: ISK 826,0 million.  
 
D. RULES AND CONDITIONS  
 
The role of the fund is to support research and development activities, which aim towards 
innovation in Icelandic industry. The Fund will in general operate as a competitive fund through 
which firms, research institutes and universities will have the possibility of fi nancing projects that 
support technological development and innovation. The Fund is intended to give support to spin -off 
ventures and innovative firms to secure that economic benefits accrue to society from the scientific 
and technical knowledge and the in novation arising from these new ventures.  
 
The Science and Technology Policy Council attaches high importance to close co -ordination 
between the Research Fund and the Technical Development Fund, as well as co -operation with 
other public funds and venture i nvestors. The Technical Development Fund can take the initiative 
to establish programmes and specific actions prepared in consultation with the business 
community, research institutes and universities. Finally, the Technical Development Fund is 
permitted t o enter into partnerships with venture capital investors for seed and early risk financing 
toward establishing firms which base their operations on technological development and research 
and which involves a novelty to the economy.  
 
E. LEGAL BASIS  
 
Act no . 3/2003 on Public Support for Scientific Research, with later amendments.  
 
F. TRADE EFFECTS  
 
The support is granted to a variety of small projects and sectors, therefore it is difficult to present 
statistical data permitting an assessment of trade effects .  
 
G. DURATION  
 
The Technology Development Fund has been operating since 2004. It took over from the 
Technology Fund which expired in 2004.  
 
2.2  Research Fund  
A. RESPONSIBLE AUTHORITY  
 
The Icelandic Centre for Research (RANNÍS) which is under the supervision of the Ministry of 
Culture and Education.  
 
B. POLICY OBJECTIVES  
 
The objective of the Research Fund is to facilitate fundamental research at University institutes or 
other Governmental R&D institutes.  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 54 - 
 
   
C. AMOUNT AND FORM OF STATE AID  
 
The amount of State a id in 2009: ISK 771,0 million.  
 
D. RULES AND CONDITIONS  
 
Subsidies are granted only on the basis of project applications. The Funds grants are for 
fundamental research at Universities and the involvement of private companies is very limited or 
non-existent . 
 
The Research Fund is the most powerful tool of the public sector for reinforcing the research 
community infrastructure through project grants based on applications from scientists, business 
firms and institutions. The Science and Technology Policy Counc il encourages the Fund to give 
young scientists an opportunity to establish their work and contribute to the further accumulation 
of scientific and technical knowledge.  
 
The Research Fund offers grants in accordance with the priorities set by the Science a nd 
Technology Policy Council and the grants strategy defined by the Science Board based on a peer 
review evaluation of research project quality, the competence of the individuals involved and the 
facilities available for completing the project.  
 
E. LEGAL BASIS  
 
Act no. 3/2003 on Public Support for Scientific Research, with later amendments.  
 
F. TRADE EFFECTS  
 
The support is granted to a variety of small projects and sectors, therefore it is difficult to present 
statistical data permitting an assessment of trade effects.  
 
G. DURATION  
 
Research Fund has been operating since 2004. It took over from the Science Fund which expired 
in 2004.  
 
2.3  Support for R&D in marine aquaculture  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Fisheries and Agriculture.  
 
B. POLICY OBJECTIVE  
 
To enhance scientific knowledge in marine aquaculture.  
 
C. FORM OF SUPPORT  
 
Grants.  
 
D. AMOUNT OF SUPPORT  
 
2009: 26.675,0 million ISK  
 
E. RULES AND CONDITIONS  
 
Grants are awarded on the basis of applications evaluated by a special committee.  
 
F. DURATION  
 
There is no time limit, but each programme is decided on for a year at a time.  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 55 - 
 
   
G. LEGAL BASIS  
 
Act no. 72/2008 on the Directorate of Fisheries.  
 
H. TRADE EFFECTS  
 
There is no trade effect due to limited support.  
 
3  JOB CREATION INITIAT IVE (PRIOR TO 1996 KNOWN  AS FIRM SPECIFIC SUB SIDIES 
AND EXPORT PROMOTION  (CASE 93 -221)).  
A. RESPONSIBLE AUTHORITY  
 
Innovation Center Iceland which is under the supervision of the Ministry of Employment and 
Innovation.  
 
B. POLICY OBJECTIVE  
 
The objective is, to  increase the knowledge and competence of entrepreneurs and small and 
medium -sized enterprises such as in managing, financing, product development, marketing and 
innovation.  
 
C. FORM OF SUPPORT  
 
Cost items incurred for consultants, product development, mar keting and innovation are eligible 
for grants. Support shall in general not cover more than 50% of eligible expenses.  
 
D. AMOUNT OF SUPPORT  
 
2009: ISK 80,0 million.  
 
E. RULES AND CONDITIONS  
 
Firms and individuals having a registered domicile in Iceland can  apply for a grant. In accordance 
with the de minimis  rule, individuals who apply for grants according to these rules must declare 
that they have not received a grant from the Government amounts to more than 200,000 EURO 
last 3 years, the grant applied for  included.  
 
F. DURATION  
 
There is no time limit, but each programme is decided on for a year at a time.  
 
G. LEGAL BASIS  
 
The Budget item no. 11 -299-1.48. 
 
H. TRADE EFFECTS  
 
There are no trade effects of the support due to the general framework of the scheme and limited 
support.  
 
4  SUPPORT FOR EMPLOYME NT AND TRAINING  
4.1  Vocational Training Fund. Support for Vocational Training  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Education and Culture.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 56 - 
 
  B. POLICY OBJECTIVE  
 
The main purpose of this programme is to maintain and develop vocational skills, in most cases for 
people already employed.  
 
C. FORM OF STATE AID  
 
Grants.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2009: ISK 644,6 million  
 
E. RULES AND CONDITIONS  
 
Grants to organizations on application to the Vocational Training Fund mainly to make curriculum 
or other teaching materials for the vocational training courses.  
 
F. DURATION  
 
The programme started in 1992. Duration has not been specified.  
 
G. LEGAL BASIS  
 
Budget item no. 02 -451. 
 
4.2  Employment Opportuni ties for Women in Rural Areas  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Fisheries and Agriculture and the Institute of Regional Development (Byggðastofnun).  
 
B. POLICY OBJECTIVE  
 
The main purpose of this programme is to create new jobs among women. Areas wher e high 
unemployment is among women will especially be considered.  
 
C. FORM OF STATE AID  
 
Grants, up to 50% of primary R&D costs, innovation costs and cost of new products, process and 
systems for industrial production. Institute of Regional Development pa ys the grants and controls 
their disposition.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2009: ISK 0 million  
 
It is difficult to give exact information on how many jobs have been created or maintained, as 
many of these new jobs are just part time  jobs. 
 
E. RULES AND CONDITIONS  
 
Grants to women on application to the Institute of Regional Development mainly to new product 
developing and marketing. The grant can only be given to companies, which are at least 50% 
owned by women or have been establishe d by women.  
 
F. DURATION  
 
The programme started in 1990. Duration has not been specified.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 57 - 
 
  G. LEGAL BASIS  
 
Governmental decision from 1990.  
 
4.3  Employment of Handicapped Persons  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Welfare.  
 
B. POLICY OBJECTIVE  
 
The main purpose of this programme is to ensure that disabled persons enjoy human rights and 
freedoms on the same basis as others and that they are guaranteed the support necessary to 
enjoy these rights.  
 
C. FORM OF STATE AID  
 
Gross wage State aid to rehabilitation  centres.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2009: ISK 64,8 million.  
 
E. RULES AND CONDITIONS  
 
Service institutions for disabled people should be deployed in order to meet their specific needs so 
that they can live independently.  
 
F. DURA TION 
 
No time limit, the amounts are decided on in the Budget each year.  
 
G. LEGAL BASIS  
 
Act No. 59/1992 on the Affairs of Disabled People and the Budget item no. 07 -701.1.30 
and 07-707.1.30.  
 
5  REGIONAL SUPPORT  
5.1  Assistance to Employment Development Projects   
A. RESPONSIBLE AUTHORITY  
 
Institute of Regional Development (Byggðastofnun).  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to assist the economic development of the nationally assisted 
areas of Iceland. The assisted projects are small and cover  employment development, training and 
innovation.  
 
C. FORM OF STATE AID  
 
Grants, as assistance to Employment Development Projects, which fall within the objectives of Act 
No. 106/1999, on the Institute of Regional Development.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2009: ISK 164,7 million.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 58 - 
 
  E. RULES AND CONDITIONS  
 
The programme is available to individuals, private companies, local development companies and 
municipalities. The subsidies are subject to the conditions laid down in the EFTA S urveillance 
Authority State Aid Guidelines and the Map of Regional Aid approved by the EFTA Surveillance 
Authority.  
 
F. DURATION  
 
The programme has no time limit, the amount is decided on in the Budget each year.  
 
G. LEGAL BASIS  
 
Article 10 of Act no. 106/ 1999 on the Institute of Regional Development, the Budget item 
no. 04-542. 
 
5.2  Assistance to Local Economic Development  
A. RESPONSIBLE AUTHORITY  
 
Institute of Regional Development (Byggðastofnun).  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to as sist local economic development companies and to finance 
venturesome projects within the field of local employment development and innovation.  
 
C. FORM OF STATE AID  
 
Grants to finance venturesome projects within the field of local employment development and 
innovation.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2009: ISK 49,4 million.  
 
E. RULES AND CONDITIONS  
 
According to Act No. 106/1999, on the Institute of Regional Development, the assistance is to be 
in accordance with rules laid down by th e Ministry of Employment and Innovation. These rules 
have not yet been issued. The subsidies are subject to the conditions laid down in the EFTA 
Surveillance Authority State Aid Guidelines and the Map of Regional Aid approved by the EFTA 
Surveillance Autho rity. 
 
F. DURATION  
 
The programme has no time limit, the amounts are decided on in the Budget each year.  
 
G. LEGAL BASIS  
 
Article 12 of Act no. 106/1999 on the Institute of Regional Development, the Budget item 
no. 04-542.1.10.  
 
H. ADDITIONAL INFORMATION  
 
The Institute of Regional Development is authorized according to Article 11 of Act No 106/1999 to 
provide loans and guarantees, in accordance with the role of the Institute as stipulated in the Act. 
These loans and guarantees are provided on market terms, with similar interest rates as on the 
open market.  
 
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 59 - 
 
  6  TEMPORARY REPAYMENT OF COSTS OF FILMS PR ODUCTION IN ICELAND  
A. RESPONSIBLE AUTHORITY  
 
Icelandic film centre (Kvikmyndamiðstöð Íslands) under the auspice of the Ministry of Industry.  
 
B. POLICY OBJECTIVE  
 
The objective of the Act is to enhance domestic culture and promote the history and nature of 
Iceland by temporarily supporting motion pictures and television programmes produced in Iceland.  
 
According to the Act authorisation is granted for the reimburs ement from the State Treasury of a 
proportion of the production costs incurred in the production of films and television programmes in 
Iceland.  
 
When more than 80% of the total production cost of a motion picture or television programme 
incurs in Iceland,  the reimbursement shall be calculated from the total production cost incurring 
within the European Economic Area.  
 
Production costs refers to all costs incurred in Iceland deductible from the revenues of enterprises 
pursuant to the provisions of the Act o n Income and Net Wealth Tax. Payments pertaining to 
employees and contractors are only to be included in production costs if they are verifiable taxable 
in Iceland  
 
C. FORM OF STATE AID  
 
A specific company shall be established in Iceland for the production ; an Icelandic branch or 
agency of a company registered in another Member State of the European Economic Area shall be 
considered a specific company  
 
D. AMOUNT OF STATE AID  
 
Total expenditure (reimbursement of production cost) in 2009: ISK 125,0 million.  
 
E. RULES AND CONDITIONS  
 
In assessing whether a proportion of the production costs of a motion picture or a television 
programme shall be reimbursed, the following conditions shall be fulfilled:  
 
a. the production shall be suited for promoting Icelandic cultu re and the history and nature 
of Iceland;  
b. the production shall be suited for enhancing the experience, knowledge and artistic 
ambition of those involved in the production;  
c. a specific company shall be established in Iceland for the production; an Icelandic branch 
or agency of a company registered in another EEA member state shall be considered a 
specific company;  
d. information on the principal parties involved in the film or television programme shall be 
submitted;  
e. information on domestic parties and their sh are in the production of the film or television 
programme shall be submitted;  
f. an itemized estimate of the production costs and sources of funding shall be submitted, 
together with confirmation by the funding parties and a declaration by the producer to 
the effect that the production conforms with the aims of the Act No. 43/1999;  
g. information on the content of the proposed film or television programme shall be 
submitted, including a manuscript, synopsis and information about filming locations;  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 60 - 
 
  h. a production plan shall be available (i.e. filming, post -production and marketing plan), 
providing for completion of the production within three years of receipt of the application 
for reimbursement;  
i. a statement shall be submitted to the effect that the material to be produced is intended 
for general distribution to cinemas or television stations, the content of the film or 
television programme shall not violate the Film Censorship and Prohibition of Violent 
Films Act, No. 47/1995, or Article 210 of the Criminal Code, N o. 19/1940.  
F. DURATION  
 
The programme is limited to end of year 2021.  
 
G. LEGAL BASIS  
 
Act on Temporary Reimbursements in Respect of Film Making in Iceland, No. 43/1999, with 
amendments. The Budget item no. 11 -251.  
 
7  RURAL TOURISM  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Transport and Communication.  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to promote rural tourism and assist local museums, and places 
of historical importance, in attracting tourists.  
 
C. FORM OF STATE AID  
 
Grants to projects.  
 
D. AMOUNT OF STATE AID  
 
Total expenditure allowed in 2009: ISK 475,5 million.  
 
E. DURATION  
 
The programme has no time limit, the amounts are decided on in the Budget each year.  
 
F. LEGAL BASIS  
 
Budget, item no. 11 -501. 
 
G. ADDITIONAL INFORMATION  
 
The EFTA Surveillance Authority is currently, following a complaint, examining State aid provided 
to promote Icelandic tourism (reference is made to Case No. 47859).  
 
8  AID TO PROMOTE MARKE TING OF ICELANDIC TO URISM.  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Transport and  Communication and Icelandic Tourism Board (Ferðamálastofa).  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to promote marketing of Icelandic tourism. Further reference is 
made to a correspondence with the Authority concerning Case No. 47859.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 61 - 
 
  C. FORM OF STATE AID  
 
Grants to projects.  
 
D. AMOUNT OF STATE AID  
 
Total expenditure allowed in 2009: ISK 105,0 million.  
 
E. DURATION  
 
The programme is intended to be temporary, the amounts are decided on in the Budget each year.  
 
F. LEGAL BASIS  
 
Budget, item  no. 11 -599.1.44.  
  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 62 - 
 
  2010  
1  THE AGRICULTURAL SEC TOR 
A. NAME OF PROGRAMME  
 
1.1  Agricultural Agreements; Payments to dairy farms, sheep farms and horticulture 
farms  
(Budget items No: 04 -801, 04 -805 & 04 -807).  
 
B. RESPONSIBLE AUTHORITY  
 
Ministry of Fisheries and Agr iculture  
 
C. POLICY OBJECTIVE  
 
Agricultural policy is implemented in Iceland in pursuit of objectives which include increasing 
efficiency in the agro -food sector, ensuring self -sufficiency for the country's major agricultural 
production; seeking to utilize  domestic inputs to the extent possible; increasing overall efficiency 
in the agricultural food sector; utilizing export opportunities to the extent feasible; securing an 
equitable income for farmers; and integrating environmental issues in agricultural po licy. 
 
D. FORMS OF SUBSIDY  
 
Agricultural subsidies in Iceland is mostly provided through direct payments, based on payment 
entitlements, which are directly or indirectly coupled with production factors. Direct payments are 
provided to cattle (mainly dairy)  and sheep producers, and, on a smaller scale, to certain 
greenhouse producers. Allocations for the Agricultural Agreements in 2010 are made under 
items  04-801, 04 -805 and 04 -807 of the State budget (Ministry of Fisheries and Agriculture).  
 
E. AMOUNT OF SUBSIDY  
 
Items making up the amount of support as measured by total costs in Government Accounts 
for 2010 are listed in table 1.  
 
Table 1 Amount of support in 2010 (Government Accounts); Million ISK  
 
 2010  
Agricultural Productivity Fund  148 
Stockholding costs; sheep meat program  347 
Directs payments to sheep farmers  2,231  
Quality control scheme; sheep farmers  1,110  
Wool utilization; subsidies  371 
Direct payments to dairy farmers  4,734  
Direct payments to horticulture farmers  228 
Electricity subsidies  to horticulture farmers 
(greenhouse)  2001 
 
F. RULES AND CONDITIONS  
 
Implementation of the agricultural policy revolves around Agricultural Agreements negotiated 
between the Government and the Farmer's Association. Under Act No. 99/1993 on Agricultural 
Produce, the Minister of Fisheries and Agriculture is given the authority to negotiate with the 
Farmer's Association on behalf of the Government on the total support target for milk and total 
support target for sheep meat entitlements and direct payments for  horticulture. A government -
chaired committee determines a guaranteed minimum price for milk delivered within production 
quotas at the producer level.  
 
Support is provided for dairy farms, sheep farms and horticulture farms (greenhouse).  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 63 - 
 
  1. Dairy farmers  
 
Milk producers receive direct payments from the Government on milk delivered to dairies. The 
annual quantity must be within the allocated supported targets. The amount of monetary support 
is the same for all producers in Iceland.  
 
2. Sheep farmers  
 
Sheep farmers receive direct payments from the Government which are based on support targets 
for sheep meat entitlements, for which they must own 70% live sheep. Additional payments to 
sheep farmers are related to a quality control scheme for lamb meat, based on  animal welfare, 
product quality and traceability, and sustainability criteria.  
 
3. Sheep farmers; wool  
 
Sheep farmers receive support from the Government based on quantity and quality of wool 
produced.  
 
4. Horticulture farmers  
 
Horticulture farmers produ cing cucumbers, peppers and tomatoes in greenhouses, mainly under 
artificial lighting receive direct payments from the government. The distribution of electricity used 
for artificial lighting is also subsidized to some extent by the Government.  
 
G. DURATI ON 
 
The time of application of the agricultural agreements between the Government and the Farmer's 
Association was until the end of 2016 when the agreements were renegotiated. The agreements 
were not revisited, in essence, during the years 2006 to 2014.  
 
H. LEGAL BASIS  
 
Act No. 99/1993 on Agricultural Produce, Pricing and Sales of Agricultural Products. The State 
Budget.  
 
I. TRADE EFFECTS  
 
An assessment of the trade effects of the subsidies is not available. Below, in tables 2, 3 and 4 
there are, however, p resented statistics on production and exports of the relevant agricultural 
commodities.  
 
Table 2 Quantity of milk received by dairies and calculated exports by fat -content of milk 
derived products (in 1,000 of litres) for 2010  
 
Year Milk, received by dairies by fat -
content  Exported products by fat -
content, thereof (%)  
2010 110,657  11% 
 
Table 3 Sheep meat production and exports 2010 (in 1,000 kg)  
 
Year Production  Exports, thereof (%)  
2010 9,166  39% 
 
Table 4 Tomato, cucumber and bell pepper production and exports 2010 (in 1,000 kg)  
 
Tomatoes  Cucumbers  Bell peppers  Total exports, thereof 
(%) 
1,652  1,458  187 <1% 
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 64 - 
 
  2  SUPPORT FOR R&D AND TECHNOLOGICAL INNOVA TION  
2.1  Technical Development Fund  
A. RESPONSIBLE AUTHORITY  
 
The Icelandic Centre for Research  (RANNÍS) which is under the supervision of the Ministry of 
Industry and Innovation.  
 
B. POLICY OBJECTIVES  
 
The objective of the Technology Development Fund is to facilitate innovation through supporting 
research and technological development.  
 
C. AMOUNT A ND FORM OF STATE AID  
 
The amount of State aid in 2010: ISK 756,00 million.  
 
D. RULES AND CONDITIONS  
 
The role of the fund is to support research and development activities, which aim towards 
innovation in Icelandic industry. The Fund will in general operat e as a competitive fund through 
which firms, research institutes and universities will have the possibility of financing projects that 
support technological development and innovation. The Fund is intended to give support to spin -off 
ventures and innovativ e firms to secure that economic benefits accrue to society from the scientific 
and technical knowledge and the innovation arising from these new ventures.  
 
The Science and Technology Policy Council attaches high importance to close co -ordination 
between th e Research Fund and the Technical Development Fund, as well as co -operation with 
other public funds and venture investors. The Technical Development Fund can take the initiative 
to establish programmes and specific actions prepared in consultation with the  business 
community, research institutes and universities. Finally, the Technical Development Fund is 
permitted to enter into partnerships with venture capital investors for seed and early risk financing 
toward establishing firms which base their operation s on technological development and research 
and which involves a novelty to the economy.  
 
E. LEGAL BASIS  
 
Act no. 3/2003 on Public Support for Scientific Research, with later amendments.  
 
F. TRADE EFFECTS  
 
The support is granted to a variety of small proj ects and sectors, therefore it is difficult to present 
statistical data permitting an assessment of trade effects.  
 
G. DURATION  
 
The Technology Development Fund has been operating since 2004. It took over from the 
Technology Fund which expired in 2004.  
 
2.2  Research Fund  
A. RESPONSIBLE AUTHORITY  
 
The Icelandic Centre for Research (RANNÍS) which is under the supervision of the Ministry of 
Culture and Education.  
 
B. POLICY OBJECTIVES  
 
The objective of the Research Fund is to facilitate fundamental research at U niversity institutes or 
other Governmental R&D institutes.  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 65 - 
 
   
C. AMOUNT AND FORM OF STATE AID  
 
The amount of State aid in 2010: ISK 791,50 million.  
 
D. RULES AND CONDITIONS  
 
Subsidies are granted only on the basis of project applications. The Funds grants ar e for 
fundamental research at Universities and the involvement of private companies is very limited or 
non-existent.  
 
The Research Fund is the most powerful tool of the public sector for reinforcing the research 
community infrastructure through project gra nts based on applications from scientists, business 
firms and institutions. The Science and Technology Policy Council encourages the Fund to give 
young scientists an opportunity to establish their work and contribute to the further accumulation 
of scientif ic and technical knowledge.  
 
The Research Fund offers grants in accordance with the priorities set by the Science and 
Technology Policy Council and the grants strategy defined by the Science Board based on a peer 
review evaluation of research project quali ty, the competence of the individuals involved and the 
facilities available for completing the project.  
 
E. LEGAL BASIS  
 
Act no. 3/2003 on Public Support for Scientific Research, with later amendments.  
 
F. TRADE EFFECTS  
 
The support is granted to a variety of small projects and sectors, therefore it is difficult to present 
statistical data permitting an assessment of trade effects.  
 
G. DURATION  
 
Research Fund has been operating since 2004. It took over from the Science Fund which expired 
in 2004.  
 
2.3  Support for R&D in marine aquaculture  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Fisheries and Agriculture.  
 
B. POLICY OBJECTIVE  
 
To enhance scientific know ledge in marine aquaculture.  
 
C. FORM OF SUPPORT  
 
Grants.  
 
D. AMOUNT OF SUPPORT  
 
2010: 23.325,0 million ISK  
 
E. RULES AND CONDITIONS  
 
Grants are awarded on the basis of applications evaluated by a special committee.  
 
F. DURATION  
 
There is no time limit, but each programme is decided on for a year at a time.  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 66 - 
 
   
G. LEGAL BASIS  
 
Act no. 72/2008 on the Directorate of Fisheries.  
 
H. TRADE EFFECTS  
 
There is no trade effect due to limited support.  
 
3  JOB CREATION INITIAT IVE (PRIOR TO 1996 K NOWN AS FIRM SPECIFI C SUBSIDIES 
AND EXPORT PROMOTION  (CASE 93 -221)).  
A. RESPONSIBLE AUTHORITY  
 
Innovation Center Iceland which is under the supervision of the Ministry of Employment and 
Innovation.  
 
B. POLICY OBJECTIVE  
 
The objective is, to increase the kn owledge and competence of entrepreneurs and small and 
medium -sized enterprises such as in managing, financing, product development, marketing and 
innovation.  
 
C. FORM OF SUPPORT  
 
Cost items incurred for consultants, product development, marketing and innov ation are eligible 
for grants. Support shall in general not cover more than 50% of eligible expenses.  
 
D. AMOUNT OF SUPPORT  
 
2010: ISK 80,0 million.  
 
E. RULES AND CONDITIONS  
 
Firms and individuals having a registered domicile in Iceland can apply for a grant. In accordance 
with the de minimis  rule, individuals who apply for grants according to these rules must declare 
that they have not received a grant from the Government amou nts to more than 200,000 EURO 
last 3 years, the grant applied for included.  
 
F. DURATION  
 
There is no time limit, but each programme is decided on for a year at a time.  
 
G. LEGAL BASIS  
 
The Budget item no. 11 -299-1.48. 
 
H. TRADE EFFECTS  
 
There are no tra de effects of the support due to the general framework of the scheme and limited 
support.  
 
4  SUPPORT FOR EMPLOYME NT AND TRAINING  
4.1  Vocational Training Fund. Support for Vocational Training  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Education and Culture.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 67 - 
 
  B. POLICY  OBJECTIVE  
 
The main purpose of this programme is to maintain and develop vocational skills, in most cases for 
people already employed.  
 
C. FORM OF STATE AID  
 
Grants.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2010: ISK 1.348,7 million  
 
E. RULES AND CONDITIONS  
 
Grants to organizations on application to the Vocational Training Fund mainly to make curriculum 
or other teaching materials for the vocational training courses.  
 
F. DURATION  
 
The programme started in 1992. Duration has not been specified.  
 
G. LEGAL BASIS  
 
Adult Education Act No. 27/2010 and he Budget item no. 02 -451. 
 
4.2  Employment Opportunities for Women in Rural Areas  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Fisheries and Agriculture and the Institute of Regional Development (Byggðastofnun).  
 
B. POLICY OBJECTIVE  
 
The main purpose of this programme is to create new jobs among women. Areas where high 
unemployment is among women will especially be considered.  
 
C. FORM OF STATE AID  
 
Grants, up to 50% of primary R&D costs, innovation costs and cost  of new products, process and 
systems for industrial production. Institute of Regional Development pays the grants and controls 
their disposition.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2010: ISK 0 million  
 
It is difficult to give exact information on how many jobs have been created or maintained, as 
many of these new jobs are just part time jobs.  
 
E. RULES AND CONDITIONS  
 
Grants to women on application to the Institute of Regional Development mainly to new product 
developing and marketin g. The grant can only be given to companies, which are at least 50% 
owned by women or have been established by women.  
 
F. DURATION  
 
The programme started in 1990. Duration has not been specified.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 68 - 
 
  G. LEGAL BASIS  
 
Governmental decision from 1990.  
 
4.3  Vocationa l Rehabilitation  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Welfare.  
 
B. POLICY OBJECTIVE  
 
The main purpose of this programme is to develop, integrate and monitor services in the field of 
vocational rehabilitation; aiming systematically for employment of indiv iduals following illness or 
injury.  
 
C. FORM OF STATE AID  
 
Gross wage State aid to rehabilitation centres.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2010: ISK 309,1 million  
 
E. RULES AND CONDITIONS  
 
The rehabilitation centres must have operating license from the Ministry of Welfare to apply to the 
Ministry for subsidies.  
 
F. DURATION  
 
The new programme started in 1992. Duration has not been specified.  
 
G. LEGAL BASIS  
 
Budget item no. 07 -988. 
 
4.4  Employ ment of Handicapped Persons  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Welfare.  
 
B. POLICY OBJECTIVE  
 
The main purpose of this programme is to ensure that disabled persons enjoy human rights and 
freedoms on the same basis as others and that they are guaranteed  the support necessary to 
enjoy these rights.  
 
C. FORM OF STATE AID  
 
Gross wage State aid to rehabilitation centres.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2010: ISK 65,9 million.  
 
E. RULES AND CONDITIONS  
 
Service institutions for disabled people should be deployed in order to meet their specific needs so 
that they can live independently.  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 69 - 
 
   
F. DURATION  
 
No time limit, the amounts are decided on in the Budget each year.  
 
G. LEGAL BASIS  
 
Act No. 59/1992 on the Affairs of Disabled People and the  Budget item no. 07 -701.1.30 and 
07-707.1.30.  
 
5  REGIONAL SUPPORT  
5.1  Assistance to Employment Development Projects  
A. RESPONSIBLE AUTHORITY  
 
Institute of Regional Development (Byggðastofnun).  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to assist th e economic development of the nationally assisted 
areas of Iceland. The assisted projects are small and cover employment development, training and 
innovation.  
 
C. FORM OF STATE AID  
 
Grants, as assistance to Employment Development Projects, which fall within the objectives of Act 
No. 106/1999, on the Institute of Regional Development.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2010: ISK 155,4 million.  
 
E. RULES AND CONDITIONS  
 
The programme is available to individuals, private companies, local  development companies and 
municipalities. The subsidies are subject to the conditions laid down in the EFTA Surveillance 
Authority State Aid Guidelines and the Map of Regional Aid approved by the EFTA Surveillance 
Authority.  
 
F. DURATION  
 
The programme ha s no time limit, the amount is decided on in the Budget each year.  
 
G. LEGAL BASIS  
 
Article 10 of Act no. 106/1999 on the Institute of Regional Development, the Budget item 
no. 04-542. 
 
5.2  Assistance to Local Economic Development  
A. RESPONSIBLE AUTHORITY  
 
Institute of Regional Development (Byggðastofnun).  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to assist local economic development companies and to finance 
venturesome projects within the field of local employment development and innovation.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 70 - 
 
  C. FORM OF STATE AID  
 
Grants to finance venturesome projects within the field of local employment development and 
innovation.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2010: ISK 51,2 million.  
 
E. RULES AND CONDITIONS  
 
According to Act No. 106/1999 , on the Institute of Regional Development, the assistance is to be 
in accordance with rules laid down by the Ministry of Employment and Innovation. These rules 
have not yet been issued. The subsidies are subject to the conditions laid down in the EFTA 
Surveillance Authority State Aid Guidelines and the Map of Regional Aid approved by the EFTA 
Surveillance Authority.  
 
F. DURATION  
 
The programme has no time limit, the amounts are decided on in the Budget each year.  
 
G. LEGAL BASIS  
 
Article 12 of Act no. 106/ 1999 on the Institute of Regional Development, the Budget item no. 
04-542.1.10.  
 
H. ADDITIONAL INFORMATION  
 
The Institute of Regional Development is authorized according to Article 11 of Act No 106/1999 to 
provide loans and guarantees, in accordance with t he role of the Institute as stipulated in the Act. 
These loans and guarantees are provided on market terms, with similar interest rates as on the 
open market.  
 
6  TEMPORARY REPAYMENT OF COSTS OF FILMS PR ODUCTION IN ICELAND  
A. RESPONSIBLE AUTHORITY  
 
Icelandic film centre (Kvikmyndamiðstöð Íslands) under the auspice of the Ministry of Industry.  
 
B. POLICY OBJECTIVE  
 
The objective of the Act is to enhance domestic culture and promote the history and nature of 
Iceland by temporarily supporting motion pictures and television programmes produced in Iceland.  
 
According to the Act authorisation is granted for the reimbursement from the State Treasury of a 
proportion of the production costs incurred in the production of films and television programmes in 
Iceland.  
 
When more than 80% of the total production cost of a motion picture or television programme 
incurs in Iceland, the reimbursement shall be calculated from the total production cost incurring 
within the European Economic Area.  
 
Production costs refers to all co sts incurred in Iceland deductible from the revenues of enterprises 
pursuant to the provisions of the Act on Income and Net Wealth Tax. Payments pertaining to 
employees and contractors are only to be included in production costs if they are verifiable taxa ble 
in Iceland.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 71 - 
 
  C. FORM OF STATE AID  
 
A specific company shall be established in Iceland for the production; an Icelandic branch or 
agency of a company registered in another Member State of the European Economic Area shall be 
considered a specific company  
 
D. AMOUNT OF STATE AID  
 
Total expenditure (reimbursement of production cost) in 2010: ISK 157,0 million.  
 
E. RULES AND CONDITIONS  
 
In assessing whether a proportion of the production costs of a motion picture or a television 
programme shall be reimbursed , the following conditions shall be fulfilled:  
 
a. the production shall be suited for promoting Icelandic culture and the history and nature 
of Iceland;  
b. the production shall be suited for enhancing the experience, knowledge and artistic 
ambition of those involved in the production;  
c. a specific company shall be established in Iceland for the production; an Icelandic branch 
or agency of a company registered in another EEA member state shall be considered a 
specific company;  
d. information on the principal partie s involved in the film or television programme shall be 
submitted;  
e. information on domestic parties and their share in the production of the film or television 
programme shall be submitted;  
f. an itemized estimate of the production costs and sources of funding shall be submitted, 
together with confirmation by the funding parties and a declaration by the producer to 
the effect that the production conforms with the aims of the Act No. 43/1999;  
g. information on the content of the proposed film or television p rogramme shall be 
submitted, including a manuscript, synopsis and information about filming locations;  
h. a production plan shall be available (i.e. filming, post -production and marketing plan), 
providing for completion of the production within three years of  receipt of the application 
for reimbursement;  
i. a statement shall be submitted to the effect that the material to be produced is intended 
for general distribution to cinemas or television stations, the content of the film or 
television programme shall not v iolate the Film Censorship and Prohibition of Violent 
Films Act, No. 47/1995, or Article 210 of the Criminal Code, No. 19/1940.  
F. DURATION  
 
The programme is limited to end of year 2021.  
 
G. LEGAL BASIS  
 
Act on Temporary Reimbursements in Respect of Film M aking in Iceland, No. 43/1999, with 
amendments. The Budget item no. 11 -251.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 72 - 
 
  7  RURAL TOURISM  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Transport and Communication.  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to promote rural tourism and assist local  museums, and places 
of historical importance, in attracting tourists.  
 
C. FORM OF STATE AID  
 
Grants to projects.  
 
D. AMOUNT OF STATE AID  
 
Total expenditure allowed in 2010: ISK 494,9 million.  
 
E. DURATION  
 
The programme has no time limit, the amounts are decided on in the Budget each year.  
 
F. LEGAL BASIS  
 
Budget, item no. 11 -501. 
 
G. ADDITIONAL INFORMATION  
 
The EFTA Surveillance Authority is currently, following a complaint, examining State aid provided 
to promote Icelandic tourism (reference is made to C ase No. 47859).  
 
8  AID TO PROMOTE MARKE TING OF ICELANDIC TO URISM.  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Transport and Communication and Icelandic Tourism Board (Ferðamálastofa).  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to promote marketing of Icelandic tourism. Further reference is 
made to a correspondence with the Authority concerning Case No. 47859.  
 
C. FORM OF STATE AID  
 
Grants to projects.  
 
D. AMOUNT OF STATE AID  
 
Total expenditure allowed in 2010: ISK 85,0 million.  
 
E. DURATION  
The programme is intended to be temporary, the amounts are decided on in the Budget each year.  
 
F. LEGAL BASIS  
 
Budget, item no. 11 -599.1.44.  
  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 73 - 
 
  2011  
1  THE AGRICULTURAL SEC TOR 
A. NAME OF PROGRAMME  
 
1.1  Agricultural Agreements; Payments to dairy farms, sheep farms and  horticulture 
farms  
(Budget items No: 04 -801, 04 -805 & 04 -807).  
 
B. RESPONSIBLE AUTHORITY  
 
Ministry of Fisheries and Agriculture  
 
C. POLICY OBJECTIVE  
 
Agricultural policy is implemented in Iceland in pursuit of objectives which include increasing 
efficiency in the agro -food sector, ensuring self -sufficiency for the country's major agricultural 
production; seeking to utilize domestic inputs to the extent possible; increasing overall efficiency 
in the agricultural food sector; utilizing export opport unities to the extent feasible; securing an 
equitable income for farmers; and integrating environmental issues in agricultural policy.  
 
D. FORMS OF SUBSIDY  
 
Agricultural subsidies in Iceland is  mostly provided through direct payments, based on payment 
entitlements, which are directly or indirectly coupled with production factors. Direct payments are 
provided to cattle (mainly dairy) and sheep producers, and, on a smaller scale, to certain 
greenh ouse producers. Allocations for the Agricultural Agreements in 2011 are made under 
items  04-801, 04 -805 and 04 -807 of the State budget (Ministry of Fisheries and Agriculture).  
 
E. AMOUNT OF SUBSIDY  
 
Items making up the amount of support as measured by tota l costs in Government Accounts 
for 2011 are listed in table 1.  
 
Table 1 Amount of support in 2011 (Government Accounts); Million ISK  
 
 2011  
Agricultural Productivity Fund  15 
Stockholding costs; sheep meat program  0 
Directs payments to sheep farmers  2,397  
Quality control scheme; sheep farmers  1,529  
Wool utilization; subsidies  390 
Direct payments to dairy farmers  4,915  
Direct payments to horticulture farmers  239 
Electricity subsidies to horticulture farmers 
(greenhouse)  213 
 
F. RULES AND CONDITIONS  
 
Implementation of the agricultural policy revolves around Agricultural Agreements negotiated 
between the Government and the Farmer's Association. Under Act No. 99/1993 on Agricultural 
Produce, the Minister of Fisheries and Agriculture is given the authority to negotiate with the 
Farmer's Association on behalf of the Government on the total support target for milk and total 
support target for sheep meat entitlements and direct payments for horticulture. A government -
chaired committee determines a  guaranteed minimum price for milk delivered within production 
quotas at the producer level.  
 
Support is provided for dairy farms, sheep farms and horticulture farms (greenhouse).  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 74 - 
 
  1. Dairy farmers  
 
Milk producers receive direct payments from the Government on milk delivered to dairies. The 
annual quantity must be within the allocated supported targets. The amount of monetary support 
is the same for all producers in Iceland.  
 
2. Sheep farmers  
 
Sheep farmers receive direct payments from the Governme nt which are based on support targets 
for sheep meat entitlements, for which they must own 70% live sheep. Additional payments to 
sheep farmers are related to a quality control scheme for lamb meat, based on animal welfare, 
product quality and traceability , and sustainability criteria.  
 
3. Sheep farmers; wool  
 
Sheep farmers receive support from the Government based on quantity and quality of wool 
produced.  
 
4. Horticulture farmers  
 
Horticulture farmers producing cucumbers, peppers and tomatoes in greenhous es, mainly under 
artificial lighting receive direct payments from the government. The distribution of electricity used 
for artificial lighting is also subsidized to some extent by the Government.  
 
G. DURATION  
 
The time of application of the agricultural agreements between the Government and the Farmer's 
Association was until the end of 2016 when the agreements were renegotiated. The agreements 
were not revisited, in essence, during the years 2006 to 2014.  
 
H. LEGAL BASIS  
 
Act No. 99/1993 on Production, Pr icing and Sales of Agricultural Products. The State Budget.  
 
I. TRADE EFFECTS  
 
An assessment of the trade effects of the subsidies is not available. Below, in tables 2, 3 and 4 
there are, however, presented statistics on production and exports of the relev ant agricultural 
commodities.  
 
Table 2 Quantity of milk received by dairies and calculated exports by fat -content of milk 
derived products (in 1,000 of litres) for 2011  
 
Year Milk, received by dairies by fat -
content  Exported products by fat -content, 
thereof (%)  
2011 111,489  11% 
 
Table 3 Sheep meat production and exports 2011 (in 1,000 kg)  
 
Year Production  Exports, thereof (%)  
2011 10,375  27% 
 
Table 4 Tomato, cucumber and bell pepper production and exports 2011 (in 1,000 kg)  
 
Tomatoes  Cucumbers  Bell peppers   Total exports, thereof 
(%) 
1,605  1,582  229 <1% 
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 75 - 
 
  2  SUPPORT FOR R&D AND TECHNOLOGICAL INNOVA TION  
2.1  Technical Development Fund  
A. RESPONSIBLE AUTHORITY  
 
The Icelandic Centre for Research (RANNÍS) which is under the supervision of the Ministry of 
Industry and Innovation.  
 
B. POLICY OBJECTIVES  
 
The objective of the Technology Development Fund is to facilitate innovation through supporting 
research and technological development.  
 
C. AMOUNT AND FORM OF STATE AID  
 
The amount of State aid in 2011: ISK 7 19,00 million.  
 
D. RULES AND CONDITIONS  
 
The role of the fund is to support research and development activities, which aim towards 
innovation in Icelandic industry. The Fund will in general operate as a competitive fund through 
which firms, research institutes and universities will have the possibility of financing projects that 
support technological development and innovation. The Fund is intended to give support to spin -off 
ventures and innovative firms to secure that economic benefits accrue to soc iety from the scientific 
and technical knowledge and the innovation arising from these new ventures.  
 
The Science and Technology Policy Council attaches high importance to close co -ordination 
between the Research Fund and the Technical Development Fund, as  well as co -operation with 
other public funds and venture investors. The Technical Development Fund can take the initiative 
to establish programmes and specific actions prepared in consultation with the business 
community, research institutes and universit ies. Finally, the Technical Development Fund is 
permitted to enter into partnerships with venture capital investors for seed and early risk financing 
toward establishing firms which base their operations on technological development and research 
and which involves a novelty to the economy.  
 
E. LEGAL BASIS  
 
Act no. 3/2003 on Public Support for Scientific Research, with later amendments.  
 
F. TRADE EFFECTS  
 
The support is granted to a variety of small projects and sectors, therefore it is difficult to present  
statistical data permitting an assessment of trade effects.  
 
G. DURATION  
 
The Technology Development Fund has been operating since 2004. It took over from the 
Technology Fund which expired in 2004.  
 
2.2  Research Fund  
A. RESPONSIBLE AUTHORITY  
 
The Icelandic Centre for Research (RANNÍS) which is under the supervision of the Ministry of 
Culture and Education.  
 
B. POLICY OBJECTIVES  
 
The objective of the Research Fund is to facilitate fundamental research at University institutes or 
other Governmental R&D institu tes. G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 76 - 
 
   
C. AMOUNT AND FORM OF STATE AID  
 
The amount of State aid in 2011: ISK 773,00 million.  
 
D. RULES AND CONDITIONS  
 
Subsidies are granted only on the basis of project applications. The Funds grants are for 
fundamental research at Universities and the inv olvement of private companies is very limited or 
non-existent.  
 
The Research Fund is the most powerful tool of the public sector for reinforcing the research 
community infrastructure through project grants based on applications from scientists, business 
firms and institutions. The Science and Technology Policy Council encourages the Fund to give 
young scientists an opportunity to establish their work and contribute to the further accumulation 
of scientific and technical knowledge.  
 
The Research Fund offers grants in accordance with the priorities set by the Science and 
Technology Policy Council and the grants strategy defined by the Science Board based on a peer 
review evaluation of research project quality, the competence of the individuals involved and the  
facilities available for completing the project.  
 
E. LEGAL BASIS  
 
Act no. 3/2003 on Public Support for Scientific Research, with later amendments.  
 
F. TRADE EFFECTS  
 
The support is granted to a variety of small projects and sectors, therefore it is difficult to present 
statistical data permitting an assessment of trade effects.  
 
G. DURATION  
 
Research Fund has been operating since 2004. It took over from the Science Fu nd which expired 
in 2004.  
 
2.3  Support for R&D in marine aquaculture  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Fisheries and Agriculture.  
 
B. POLICY OBJECTIVE  
 
To enhance scientific knowledge in marine aquaculture.  
 
C. FORM OF SUPPORT  
 
Grants.  
 
D. AMOUNT OF SUPPO RT 
 
2011: 18.190,0 million ISK  
 
E. RULES AND CONDITIONS  
 
Grants are awarded on the basis of applications evaluated by a special committee.  
 
F. DURATION  
 
There is no time limit, but each programme is decided on for a year at a time.  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 77 - 
 
   
G. LEGAL BASIS  
 
Act no. 72/2008 on the Directorate of Fisheries.  
 
H. TRADE EFFECTS  
 
There is no trade effect due to limited support.  
 
3  JOB CREATION INITIAT IVE (PRIOR TO 1996 K NOWN AS FIRM SPECIFI C SUBSIDIES 
AND EXPORT PROMOTION  (CASE 93 -221)).  
A. RESPONSIBLE AUTHORITY  
 
Innovation Center Iceland which is under the supervision of the Ministry of Employment and 
Innovation.  
 
B. POLICY OBJECTIVE  
 
The objective is, to increase the knowledge and competence of entrepreneurs and small and 
medium -sized enterprises such as in managin g, financing, product development, marketing and 
innovation.  
 
C. FORM OF SUPPORT  
 
Cost items incurred for consultants, product development, marketing and innovation are eligible 
for grants. Support shall in general not cover more than 50% of eligible expenses.  
 
D. AMOUNT OF SUPPORT  
 
2011: ISK 140,0 million.  
 
E. RULES AND CONDITIONS  
 
Firms and individuals having a registered domicile in Iceland can apply for a grant. In accordance 
with the de minimis  rule, individuals who apply for grants according to these rules must declare 
that they have not received a grant from the Government amounts to more than 200,000 EURO 
last 3 years, the grant applied for included.  
 
F. DURATION  
 
There is no time limit, but  each programme is decided on for a year at a time.  
 
G. LEGAL BASIS  
 
The Budget item no. 11 -299-1.48. 
 
H. TRADE EFFECTS  
 
There are no trade effects of the support due to the general framework of the scheme and limited 
support.  
 
4  SUPPORT FOR EMPLOYME NT AND TRAINING  
4.1  Vocational Training Fund. Support for Vocational Training  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Education and Culture.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 78 - 
 
  B. POLICY OBJECTIVE  
 
The main purpose of this programme is to maintain and develop vocational skills, in most cases for 
people already employed.  
 
C. FORM OF STATE AID  
 
Grants.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2011: ISK 1.183,0 million  
 
E. RULES AND CONDITIONS  
 
Grants to organizations on application to the Vocational Training Fund mainly to make curriculum 
or other teaching materials for the vocational training courses.  
 
F. DURATION  
 
The programme started in 1992. Duration has not been specified.  
 
G. LEGAL BASIS  
 
Adult Education Act No. 27/2010 and he Budget item no. 02 -451. 
 
4.2  Employment Opportunities for Women in Rural Areas  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Fisheries and Agriculture and the Institute of Regional Development (Byggðastofnun).  
 
B. POLICY OBJECTIVE  
 
The main purpose of this programme is to create new jobs among women. Areas where high 
unemploy ment is among women will especially be considered.  
 
C. FORM OF STATE AID  
 
Grants, up to 50% of primary R&D costs, innovation costs and cost of new products, process and 
systems for industrial production.  Institute of Regional Development pays the grants and controls 
their disposition.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2011: ISK 0 million  
 
It is difficult to give exact information on how many jobs have been created or maintained, as 
many  of these new jobs are just part time jobs.  
 
E. RULES AND CONDITIONS  
 
Grants to women on application to the Institute of Regional Development mainly to new product 
developing and marketing. The grant can only be given to companies, which are at least 50% 
owned by women or have been established by women.  
 
F. DURATION  
 
The programme started in 1990. Duration has not been specified.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 79 - 
 
  G. LEGAL BASIS  
 
Governmental decision from 1990.  
 
4.3  Vocational Rehabilitation  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Welfare.  
 
B. POLICY OBJECTIVE  
 
The main purpose of this programme is to develop, integrate and monitor services in the field of 
vocational rehabilitation; aiming systematically for employment of individuals following illness or 
injury.  
 
C. FORM OF STATE AID  
 
Gross wage  State aid to rehabilitation centres.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2011 ISK 318,9 million  
 
E. RULES AND CONDITIONS  
 
The rehabilitation centres must have operating license from the Ministry of Welfare to apply to the 
Ministry for sub sidies.  
 
F. DURATION  
 
The new programme started in 1992. Duration has not been specified.  
 
G. LEGAL BASIS  
 
Act No. 60/2012 (lög um atvinnutengda starfsendurhæfingu og starfsemi 
starfsendurhæfingasjóða) and financed by the Budget item no. 08 -856. 
 
4.4  Employm ent of Handicapped Persons  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Welfare.  
 
B. POLICY OBJECTIVE  
 
The main purpose of this programme is to ensure that disabled persons enjoy human rights and 
freedoms on the same basis as others and that they are guaranteed the support necessary to 
enjoy these rights.  
 
C. FORM OF STATE AID  
 
Gross wage State aid to rehabilitation centres.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2011: ISK 61,9 million.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 80 - 
 
  E. RULES AND CONDITIONS  
 
Service institutions for disabled people should be deployed in order to meet their specific needs so 
that they can live independently.  
 
F. DURATION  
 
No time limit, the amounts are decided on in the Budget each year.  
 
G. LEGAL BASIS  
 
Act No. 59/1992 on the Affairs of Disabled People and the  Budget item no. 08 -809.1.11.  
 
5  REGIONAL SUPPORT  
5.1  Assistance to Employment Development Projects  
A. RESPONSIBLE AUTHORITY  
 
Institute of Regional Development (Byggðastofnun).  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to assist the economic development of the nationally assisted 
areas of Iceland. The assisted projects are small and cover employment development, training and 
innovation.  
 
C. FORM OF STATE AID  
 
Grants, as assistance to Employment Development Projects, which fall within the objec tives of 
Act No. 106/1999, on the Institute of Regional Development.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2011: ISK 160,4 million.  
 
E. RULES AND CONDITIONS  
 
The programme is available to individuals, private companies, local development com panies and 
municipalities. The subsidies are subject to the conditions laid down in the EFTA Surveillance 
Authority State Aid Guidelines and the Map of Regional Aid approved by the EFTA Surveillance 
Authority.  
 
F. DURATION  
 
The programme has no time limit,  the amount is decided on in the Budget each year.  
 
G. LEGAL BASIS  
 
Article 10 of Act no. 106/1999 on the Institute of Regional Development, the Budget item 
no. 04-542. 
 
5.2  Assistance to Local Economic Development  
A. RESPONSIBLE AUTHORITY  
 
Institute of Regio nal Development (Byggðastofnun).  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 81 - 
 
  B. POLICY OBJECTIVE  
 
The objective of the programme is to assist local economic development companies and to finance 
venturesome projects within the field of local employment development and innovation.  
 
C. FORM OF STATE AID 
 
Grants to finance venturesome projects within the field of local employment development and 
innovation.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2011: ISK 7,50 million.  
 
E. RULES AND CONDITIONS  
 
According to Act No. 106/1999, on the Institute of Regional Development, the assistance is to be 
in accordance with rules laid down by the Ministry of Employment and Innovation. These rules 
have not yet been issued. The subsidies are subject to the conditions laid down in the EFTA 
Surveillance  Authority State Aid Guidelines and the Map of Regional Aid approved by the EFTA 
Surveillance Authority.  
 
F. DURATION  
 
The programme has no time limit, the amounts are decided on in the Budget each year.  
 
G. LEGAL BASIS  
 
Article 12 of Act no. 106/1999 on t he Institute of Regional Development, the Budget item no. 
04-542 
 
H. ADDITIONAL INFORMATION  
 
The Institute of Regional Development is authorized according to Article 11 of Act No 106/1999 to 
provide loans and guarantees, in accordance with the role of the Institute as stipulated in the Act. 
These loans and guarantees are provided on market terms, with similar interest rates as on the 
open market.  
 
6  TEMPORARY REPAYMENT OF COSTS OF FILMS PR ODUCTION IN ICELAND  
A. RESPONSIBLE AUTHORITY  
 
Icelandic film centre ( Kvikmyndamiðstöð Íslands) under the auspice of the Ministry of Industry.  
 
B. POLICY OBJECTIVE  
 
The objective of the Act is to enhance domestic culture and promote the history and nature of 
Iceland by temporarily supporting motion pictures and television pr ogrammes produced in Iceland.  
 
According to the Act authorisation is granted for the reimbursement from the State Treasury of a 
proportion of the production costs incurred in the production of films and television programmes in 
Iceland.  
 
When more than 8 0% of the total production cost of a motion picture or television programme 
incurs in Iceland, the reimbursement shall be calculated from the total production cost incurring 
within the European Economic Area.  
 
Production costs refers to all costs incurred in Iceland deductible from the revenues of enterprises 
pursuant to the provisions of the Act on Income and Net Wealth Tax. Payments pertaining to 
employees and contractors are only to be included in production costs if they are verifiable taxable 
in Icelan d G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
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C. FORM OF STATE AID  
 
A specific company shall be established in Iceland for the production; an Icelandic branch or 
agency of a company registered in another Member State of the European Economic Area shall be 
considered a specific company  
 
D. AMOUNT OF  STATE AID  
 
Total expenditure (reimbursement of production cost) in 2011: ISK 157,0 million.  
 
E. RULES AND CONDITIONS  
 
In assessing whether a proportion of the production costs of a motion picture or a television 
programme shall be reimbursed, the followin g conditions shall be fulfilled:  
 
a. the production shall be suited for promoting Icelandic culture and the history and nature 
of Iceland;  
b. the production shall be suited for enhancing the experience, knowledge and artistic 
ambition of those involved in the pr oduction;  
c. a specific company shall be established in Iceland for the production; an Icelandic branch 
or agency of a company registered in another EEA member state shall be considered a 
specific company;  
d. information on the principal parties involved in the film or television programme shall be 
submitted;  
e. information on domestic parties and their share in the production of the film or television 
programme shall be submitted;  
f. an itemized estimate of the pro duction costs and sources of funding shall be submitted, 
together with confirmation by the funding parties and a declaration by the producer to 
the effect that the production conforms with the aims of the Act No. 43/1999;  
g. information on the content of the proposed film or television programme shall be 
submitted, including a manuscript, synopsis and information about filming locations;  
h. a production plan shall be available (i.e. filming, post -production and marketing plan), 
providing for completion of the pro duction within three years of receipt of the application 
for reimbursement;  
i. a statement shall be submitted to the effect that the material to be produced is intended 
for general distribution to cinemas or television stations, the content of the film or 
television programme shall not violate the Film Censorship and Prohibition of Violent 
Films Act, No. 47/1995, or Article 210 of the Criminal Code, No. 19/1940.  
F. DURATION  
 
The programme is limited to end of year 2021.  
 
G. LEGAL BASIS  
 
Act on Temporary Reimbu rsements in Respect of Film Making in Iceland, No. 43/1999, with 
amendments. The Budget item no. 11 -251.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
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  7  RURAL TOURISM  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Transport and Communication.  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to promote r ural tourism and assist local museums, and places 
of historical importance, in attracting tourists.  
 
C. FORM OF STATE AID  
 
Grants to projects.  
 
D. AMOUNT OF STATE AID  
 
Total expenditure allowed in 2011: ISK 433,9 million.  
 
E. DURATION  
 
The programme has no  time limit, the amounts are decided on in the Budget each year.  
 
F. LEGAL BASIS  
 
Budget, item no. 11 -501. 
 
G. ADDITIONAL INFORMATION  
 
The EFTA Surveillance Authority is currently, following a complaint, examining State aid provided 
to promote Icelandic tourism (reference is made to Case No. 47859).  
 
8  AID TO PROMOTE MARKE TING OF ICELANDIC TO URISM.  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Transport and Communication and Icelandic Tourism Board (Ferðamálastofa).  
 
B. POLICY OBJECTIVE  
 
The objective of the progra mme is to promote marketing of Icelandic tourism. Further reference is 
made to a correspondence with the Authority concerning Case No. 47859.  
 
C. FORM OF STATE AID  
 
Grants to projects.  
 
D. AMOUNT OF STATE AID  
 
Total expenditure allowed in 2011: ISK 371,4  million.  
 
E. DURATION  
 
The programme is intended to be temporary, the amounts are decided on in the Budget each year.  
 
F. LEGAL BASIS  
 
Budget, item no. 11 -599.1.44.  
  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
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  2012  
1  THE AGRICULTURAL SEC TOR 
A. NAME OF PROGRAMME  
 
1.1  Agricultural Agreements; Payments to dairy farms, sheep farms and horticulture 
farms  
(Budget items No: 04 -801, 04 -805 & 04 -807).  
 
B. RESPONSIBLE AUTHORITY  
 
Ministry of Fisheries and Agriculture  
 
C. POLICY OBJECTIVE  
 
Agricultural policy is implemented in Iceland in pursuit of objectives which include increasing 
efficiency in the agro -food sector, ensuring self -sufficiency for the country's major agricultural 
production; seeking to utilize domestic inputs to the extent possible; increasing overall efficiency 
in the agricultural food sector; util izing export opportunities to the extent feasible; securing an 
equitable income for farmers; and integrating environmental issues in agricultural policy.  
 
D. FORMS OF SUBSIDY  
 
Agricultural subsidies in Iceland is  mostly provided through direct payments, based on payment 
entitlements, which are directly or indirectly coupled with production factors. Direct payments are 
provided to cattle (mainly dairy) and sheep producers, and, on a smaller scale, to certain 
greenh ouse producers. Allocations for the Agricultural Agreements in 2012 are made under 
items  04-801, 04 -805 and 04 -807 of the State budget (Ministry of Fisheries and Agriculture).  
 
E. AMOUNT OF SUBSIDY  
 
Items making up the amount of support as measured by tota l costs in Government Accounts 
for 2012 are listed in table 1.  
 
Table 1 Amount of support in 2012 (Government Accounts); Million ISK  
 
 2012  
Agricultural Productivity Fund  45 
Stockholding costs; sheep meat program  0 
Directs payments to sheep farmers  2,517  
Quality control scheme; sheep farmers  1,605  
Wool utilization; subsidies  410 
Direct payments to dairy farmers  5,160  
Direct payments to horticulture farmers  251 
Electricity subsidies to horticulture farmers 
(greenhouse)  224 
 
F. RULES AND CONDITIONS  
 
Implementation of the agricultural policy revolves around Agricultural Agreements negotiated 
between the Government and the Farmer's Association. Under Act No. 99/1993 on Agricultural 
Produce, the Minister of Fisheries and Agriculture is given the authority to negotiate with the 
Farmer's Association on behalf of the Government on the total support target for milk and total 
support target for sheep meat entitlements and direct payments for horticulture. A government -
chaired committee determines a  guaranteed minimum price for milk delivered within production 
quotas at the producer level.  
 
Support is provided for dairy farms, sheep farms and horticulture farms (greenhouse).  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
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  1. Dairy farmers  
 
Milk producers receive direct payments from the Government on milk delivered to dairies. The 
annual quantity must be within the allocated supported targets. The amount of monetary support 
is the same for all producers in Iceland.  
 
2. Sheep farmers  
 
Sheep farmers receive direct payments from the Governme nt which are based on support targets 
for sheep meat entitlements, for which they must own 70% live sheep. Additional payments to 
sheep farmers are related to a quality control scheme for lamb meat, based on animal welfare, 
product quality and traceability , and sustainability criteria.  
 
3. Sheep farmers; wool  
 
Sheep farmers receive support from the Government based on quantity and quality of wool 
produced.  
 
4. Horticulture farmers  
 
Horticulture farmers producing cucumbers, peppers and tomatoes in greenhous es, mainly under 
artificial lighting receive direct payments from the government. The distribution of electricity used 
for artificial lighting is also subsidized to some extent by the Government.  
 
G. DURATION  
 
The time of application of the agricultural a greements between the Government and the Farmer's 
Association was until the end of 2016 when the agreements were renegotiated. The agreements 
were not revisited, in essence, during the years 2006 to 2014.  
 
H. LEGAL BASIS  
 
Act No. 99/1993 on Production, Pri cing and Sales of Agricultural Products. The State Budget.  
 
I. TRADE EFFECTS  
 
An assessment of the trade effects of the subsidies is not available. Below, in tables 2, 3 and 4 
there are, however, presented statistics on production and exports of the releva nt agricultural 
commodities.  
 
Table 2 Quantity of milk received by dairies and calculated exports by fat -content of milk 
derived products (in 1,000 of litres) for 2012  
 
Year Milk, received by dairies by fat -
content  Exported products by fat -content, 
thereof  (%) 
2012 114,143  12% 
 
Table 3 Sheep meat production and exports 2012 (in 1,000 kg)  
 
Year Production  Exports, thereof (%)  
2012 9,921  25% 
 
Table 4 Tomato, cucumber and bell pepper production and exports 2012 (in 1,000 kg)  
 
Tomatoes  Cucumbers  Bell peppers   Total exports, thereof 
(%) 
1,716  1,673  261 <1% 
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
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  2  SUPPORT FOR R&D AND TECHNOLOGICAL INNOVA TION  
2.1  Technical Development Fund  
A. RESPONSIBLE AUTHORITY  
 
The Icelandic Centre for Research (RANNÍS) which is under the supervision of the Ministry of 
Industry and Innovation.  
 
B. POLICY OBJECTIVES  
 
The objective of the Technology Development Fund is to facilitate innovation through supporting 
research and technological development.  
 
C. AMOUNT AND FORM OF STATE AID  
 
The amount of State aid in 2012: ISK 6 75,00 million.  
 
D. RULES AND CONDITIONS  
 
The role of the fund is to support research and development activities, which aim towards 
innovation in Icelandic industry. The Fund will in general operate as a competitive fund through 
which firms, research instit utes and universities will have the possibility of financing projects that 
support technological development and innovation. The Fund is intended to give support to spin -off 
ventures and innovative firms to secure that economic benefits accrue to society f rom the scientific 
and technical knowledge and the innovation arising from these new ventures.  
 
The Science and Technology Policy Council attaches high importance to close co -ordination 
between the Research Fund and the Technical Development Fund, as well as co -operation with 
other public funds and venture investors. The Technical Development Fund can take the initiative 
to establish programmes and specific actions prepared in consultation with the business 
community, research institutes and universities. F inally, the Technical Development Fund is 
permitted to enter into partnerships with venture capital investors for seed and early risk financing 
toward establishing firms which base their operations on technological development and research 
and which involv es a novelty to the economy.  
 
E. LEGAL BASIS  
 
Act no. 3/2003 on Public Support for Scientific Research, with later amendments.  
 
F. TRADE EFFECTS  
 
The support is granted to a variety of small projects and sectors, therefore it is difficult to present 
statistical data permitting an assessment of trade effects.  
 
G. DURATION  
 
The Technology Development Fund has been operating since 2004. It took over from the 
Technology Fund which expired in 2004.  
 
2.2  Research Fund  
A. RESPONSIBLE AUTHORITY  
 
The Icelandic Centre for Research (RANNÍS) which is under the supervision of the Ministry of 
Culture and Education.  
 
B. POLICY OBJECTIVES  
 
The objective of the Research Fund is to facilitate fundamental research at University institutes or 
other Governmental R&D institutes.  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
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C. AMOUNT AND FORM OF STATE AID  
 
The amount of State aid in 2012: ISK 773,00 million.  
 
D. RULES AND CONDITIONS  
 
Subsidies are granted only on the basis of project applications. The Funds grants are for 
fundamental research at Universities and the involvemen t of private companies is very limited or 
non-existent.  
 
The Research Fund is the most powerful tool of the public sector for reinforcing the research 
community infrastructure through project grants based on applications from scientists, business 
firms and institutions. The Science and Technology Policy Council encourages the Fund to give 
young scientists an opportunity to establish their work and contribute to the further accumulation 
of scientific and technical knowledge.  
 
The Research Fund offers grants in accordance with the priorities set by the Science and 
Technology Policy Council and the grants strategy defined by the Science Board based on a peer 
review evaluation of research project quality, the competence of the individuals involved and the 
facilities available for completing the project.  
 
E. LEGAL BAS IS 
 
Act no. 3/2003 on Public Support for Scientific Research, with later amendments.  
 
F. TRADE EFFECTS  
 
The support is granted to a variety of small projects and sectors, therefore it is difficult to present 
statistical data permitting an assessment of trade effects.  
 
G. DURATION  
 
Research Fund has been operating since 2004. It took over from the Science Fu nd which expired 
in 2004.  
 
2.3  Support for R&D in marine aquaculture  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Fisheries and Agriculture.  
 
B. POLICY OBJECTIVE  
 
To enhance scientific knowledge in marine aquaculture.  
 
C. FORM OF SUPPORT  
 
Grants.  
 
D. AMOUNT OF SUPPO RT 
 
2012: 13.850,0 million ISK  
 
E. RULES AND CONDITIONS  
 
Grants are awarded on the basis of applications evaluated by a special committee.  
 
F. DURATION  
 
There is no time limit, but each programme is decided on for a year at a time.  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 88 - 
 
   
G. LEGAL BASIS  
 
Act no. 72/2008 on the Directorate of Fisheries.  
 
H. TRADE EFFECTS  
 
There is no trade effect due to limited support.  
 
3  SUPPORT TO SMALL AND  MEDIUM -SIZED COMPANIES  
3.1  Job Creation Initiative (prior to 1996 known as Firm specific subsidies and export 
promotion (Case 93 -221)).  
A. RESPONSIBLE AUTHORITY  
 
Innovation Center Iceland which is under the supervision of the Ministry of Employment and 
Innovation.  
 
B. POLICY OBJECTIVE  
 
The objective is, to increase the knowledge and competence of entrepreneurs and small and  
medium -sized enterprises such as in managing, financing, product development, marketing and 
innovation.  
 
C. FORM OF SUPPORT  
 
Cost items incurred for consultants, product development, marketing and innovation are eligible 
for grants. Support shall in gener al not cover more than 50% of eligible expenses.  
 
D. AMOUNT OF SUPPORT  
 
2012: ISK 70,0 million.  
 
E. RULES AND CONDITIONS  
 
Firms and individuals having a registered domicile in Iceland can apply for a grant. In accordance 
with the de minimis  rule, individuals who apply for grants according to these rules must declare 
that they have not received a grant from the Government amounts to more than 200,000 EURO 
last 3 years, the grant applied for included.  
 
F. DURATION  
 
There is no time limit, but  each programme is decided on for a year at a time.  
 
G. LEGAL BASIS  
 
The Budget item no. 11 -299-1.48. 
 
H. TRADE EFFECTS  
 
There are no trade effects of the support due to the general framework of the scheme and limited 
support.  
 
3.2  Regional Development Fund  
A. RESPONSIBLE AUTHORITY  
 
Innovation Center Iceland (Nýsköpunarmiðstöð Íslands) which is under the supervision of the 
Ministry of Employment and Innovation.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 89 - 
 
   
B. POLICY OBJECTIVE  
 
To promote cooperation between local governments, safeguard their interests, support industries 
and enhance quality of life in the entire region economically, socially and culturally.  
 
C. FORM OF SUPPORT  
 
Grants.  
 
D. AMOUNT OF SUPPORT  
 
2012: ISK 219,40  million  
 
E. RULES AND CONDITIONS  
 
Grants are awarded on the basis of applications evaluated by a special committee.  
 
F. DURATION  
 
There is no time limit.  
 
G. LEGAL BASIS  
 
Act No 106/1999 (Lög um Byggðastofnun) and the Budget item no. 09 -992-1.10. 
 
H. TRADE EFFECTS  
 
There are no trade effects of the support due to the general framework of the scheme and limited 
support.  
 
4  SUPPORT FOR EMPLOYME NT AND TRAINING  
4.1  Vocational Training Fund. Support for Vocational Training  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Educa tion and Culture.  
 
B. POLICY OBJECTIVE  
 
The main purpose of this programme is to maintain and develop vocational skills, in most cases for 
people already employed.  
 
C. FORM OF STATE AID  
 
Grants.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2012: ISK 1.393,0 million  
 
E. RULES AND CONDITIONS  
 
Grants to organizations on application to the Vocational Training Fund mainly to make curriculum 
or other teaching materials for the vocational training courses.  
 
F. DURATION  
 
The programme started in 1992. Dur ation has not been specified.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 90 - 
 
  G. LEGAL BASIS  
 
Adult Education Act No. 27/2010 and he Budget item no. 02 -451. 
 
4.2  Employment Opportunities for Women in Rural Areas  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Fisheries and Agriculture and the Institute of Regional Development (Byggðastofnun).  
 
B. POLICY OBJECTIVE  
 
The main purpose of this programme is to create new jobs among women. Areas where high 
unemployment is among women will especially be considered.  
 
C. FORM OF STATE AID  
 
Grants, up to 50% of primary R&D costs, innovation costs and cost of new products, process and 
systems for industrial production. Institute of Regional Development pays the grants and controls 
their disposition.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2012: ISK 0 million  
 
It is difficult to give exact information on how many jobs have been created or maintained, as 
many of these new jobs are just part time jobs.  
 
E. RULES AND CONDITIONS  
 
Grants to women on application to the Institute of Regional Development mainly to new prod uct 
developing and marketing. The grant can only be given to companies, which are at least 50% 
owned by women or have been established by women.  
 
F. DURATION  
 
The programme started in 1990. Duration has not been specified.  
 
G. LEGAL BASIS  
 
Governmental dec ision from 1990.  
 
4.3  Vocational Rehabilitation  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Welfare.  
 
B. POLICY OBJECTIVE  
 
The main purpose of this programme is to develop, integrate and monitor services in the field of 
vocational rehabilitation; aiming systematically for employment of individuals following illness or 
injury.  
 
C. FORM OF STATE AID  
 
Gross wage State aid to rehabilitation centres.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2012: ISK 486,8 million  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 91 - 
 
   
E. RULES AND CONDITIONS  
 
The reha bilitation centres must have operating license from the Ministry of Welfare to apply to the 
Ministry for subsidies.  
 
F. DURATION  
 
The new programme started in 1992. Duration has not been specified.  
 
G. LEGAL BASIS  
 
Act No. 60/2012 (lög um atvinnutengda s tarfsendurhæfingu og starfsemi 
starfsendurhæfingasjóða) and financed by the Budget item no. 08 -856. 
 
4.4  Employment of Handicapped Persons  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Welfare.  
 
B. POLICY OBJECTIVE  
 
The main purpose of this programme is to ensure that disabled persons enjoy human rights and 
freedoms on the same basis as others and that they are guaranteed the support necessary to 
enjoy these rights.  
 
C. FORM OF STATE AID  
 
Gross wage State aid to rehabilitation centres.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2012: ISK 67,2 million.  
 
E. RULES AND CONDITIONS  
 
Service institutions for disabled people should be deployed in order to meet their specific needs so 
that they can live independently.  
 
F. DURATION  
 
No time limit, the amounts are de cided on in the Budget each year.  
 
G. LEGAL BASIS  
 
Act No. 59/1992 on the Affairs of Disabled People and the Budget item no. 08 -842.1.21.  
 
5  REGIONAL SUPPORT  
5.1  Assistance to Employment Development Projects  
A. RESPONSIBLE AUTHORITY  
 
Institute of Regional Devel opment (Byggðastofnun).  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to assist the economic development of the nationally assisted 
areas of Iceland. The assisted projects are small and cover employment development, training and 
innovation.  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 92 - 
 
   
C. FORM OF STATE AID  
 
Grants, as assistance to Employment Development Projects, which fall within the objectives of 
Act No. 106/1999, on the Institute of Regional Development.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2012: ISK 164,7 million.  
 
E. RULES AND CONDITIONS  
 
The programme is available to individuals, private companies, local development companies and 
municipalities. The subsidies are subject to the conditions laid down in the EFTA Surveillance 
Authority State Aid Guidelines and the Map of Regional Aid approved by the EFTA Surveillance 
Authority.  
 
F. DURATION  
 
The programme has no time limit, the amount is decided on in the Budget each year.  
 
G. LEGAL BASIS  
 
Article 10 of Act no. 106/1999 on the Institute of Regional Development, the Budget item 
no. 04-542. 
 
5.2  Assistance to Local Economic Development  
A. RESPONSIBLE AUTHORITY  
 
Institute of Regional Development (Byggðastofnun).  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to assist local economic development companies and to finance 
venturesome projects within the field of local employment development and innovation.  
 
C. FORM OF STATE AID  
 
Grants to finance venturesome projects within the field of local employment development and 
innovation.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2012: ISK 3,40 million.  
 
E. RULES AND CONDITIONS  
 
According to Act No. 106/1999, on the Institute of Regional Development, the assistance is to be 
in accordance with rules laid down by the Ministry of Employment and Innovation. These rules 
have not yet been issued. The subsidies are subject to the conditions laid down in the EFTA 
Surveillance Authority State Aid Guidelines and the Map of Regional Aid approved by the EFTA 
Surveillance Authority.  
 
F. DURATION  
 
The programme has no time limit, t he amounts are decided on in the Budget each year.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 93 - 
 
  G. LEGAL BASIS  
 
Article 12 of Act no. 106/1999 on the Institute of Regional Development, the Budget item 
no. 04-542 
 
H. ADDITIONAL INFORMATION  
 
The Institute of Regional Development is authorized accordin g to Article 11 of Act No 106/1999 to 
provide loans and guarantees, in accordance with the role of the Institute as stipulated in the Act. 
These loans and guarantees are provided on market terms, with similar interest rates as on the 
open market.  
 
6  TEMPORARY REPAYMENT OF COSTS OF FILMS PR ODUCTION IN ICELAND  
A. RESPONSIBLE AUTHORITY  
 
Icelandic film centre (Kvikmyndamiðstöð Íslands) under the auspice of the Ministry of Industry.  
 
B. POLICY OBJECTIVE  
 
The objective of the Act is to enhance domestic cult ure and promote the history and nature of 
Iceland by temporarily supporting motion pictures and television programmes produced in Iceland.  
 
According to the Act authorisation is granted for the reimbursement from the State Treasury of a 
proportion of the production costs incurred in the production of films and television programmes in 
Iceland.  
 
When more than 80% of the total production cost of a motion picture or television programme 
incurs in Iceland, the reimbursement shall be calculated from the total  production cost incurring 
within the European Economic Area.  
 
Production costs refers to all costs incurred in Iceland deductible from the revenues of enterprises 
pursuant to the provisions of the Act on Income and Net Wealth Tax. Payments pertaining to 
employees and contractors are only to be included in production costs if they are verifiable taxable 
in Iceland  
 
C. FORM OF STATE AID  
 
A specific company shall be established in Iceland for the production; an Icelandic branch or 
agency of a company register ed in another Member State of the European Economic Area shall be 
considered a specific company  
 
D. AMOUNT OF STATE AID  
 
Total expenditure (reimbursement of production cost) in 2012: ISK 400,0 million.  
 
E. RULES AND CONDITIONS  
 
In assessing whether a propo rtion of the production costs of a motion picture or a television 
programme shall be reimbursed, the following conditions shall be fulfilled:  
 
a. the production shall be suited for promoting Icelandic culture and the history and nature 
of Iceland;  
b. the product ion shall be suited for enhancing the experience, knowledge and artistic 
ambition of those involved in the production;  
c. a specific company shall be established in Iceland for the production; an Icelandic branch 
or agency of a company registered in another EEA member state shall be considered a 
specific company;  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 94 - 
 
  d. information on the principal parties involved in the film or television programme shall be 
submitted;  
e. information on domestic parties and their share in the production of the film or television 
programme shall be submitted;  
f. an itemized estimate of the production costs and sources of funding shall be submitted, 
together with confirmation by the funding parties and a declaration by the producer to 
the effect that the production conforms with the aims o f the Act No. 43/1999;  
g. information on the content of the proposed film or television programme shall be 
submitted, including a manuscript, synopsis and information about filming locations;  
h. a production plan shall be available (i.e. filming, post -production  and marketing plan), 
providing for completion of the production within three years of receipt of the application 
for reimbursement;  
i. a statement shall be submitted to the effect that the material to be produced is intended 
for general distribution to cinem as or television stations, the content of the film or 
television programme shall not violate the Film Censorship and Prohibition of Violent 
Films Act, No. 47/1995, or Article 210 of the Criminal Code, No. 19/1940.  
F. DURATION  
 
The programme is limited to e nd of year 2021.  
 
G. LEGAL BASIS  
 
Act on Temporary Reimbursements in Respect of Film Making in Iceland, No. 43/1999, with 
amendments. The Budget item no. 11 -251.  
 
7  RURAL TOURISM  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Transport and Communication.  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to promote rural tourism and assist local museums, and places 
of historical importance, in attracting tourists.  
 
C. FORM OF STATE AID  
 
Grants to projects.  
 
D. AMOUNT OF STATE AID  
 
Total expenditure allowed in 2012: ISK 458,0 million.  
 
E. DURATION  
 
The programme has no time limit, the amounts are decided on in the Budget each year.  
 
F. LEGAL BASIS  
 
Budget, item no. 11 -501. 
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
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  8  AID TO PROMOTE MARKE TING OF ICELANDIC TO URISM.  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Transport and Communication and Icelandic Tourism Board (Ferðamálastofa).  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to promote marketing of Icelandic tourism. Further reference is 
made to a correspondence with the Authority concerning Case No . 47859.  
 
C. FORM OF STATE AID  
 
Grants to projects.  
 
D. AMOUNT OF STATE AID  
 
Total expenditure allowed in 2012: ISK 371,4 million.  
 
E. DURATION  
 
The programme is intended to be temporary, the amounts are decided on in the Budget each year.  
 
F. LEGAL BASIS  
 
Budget, item no. 11 -559.1.44.  
  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
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  2013  
1  THE AGRICULTURAL SEC TOR 
A. NAME OF PROGRAMME  
 
1.1  Agricultural Agreements; Payments to dairy farms, sheep farms and horticulture 
farms  
(Budget items No: 04 -801, 04 -805 & 04 -807).  
 
B. RESPONSIBLE AUTHORITY  
 
Ministry of Indu stries and Innovation  
 
C. POLICY OBJECTIVE  
 
Agricultural policy is implemented in Iceland in pursuit of objectives which include increasing 
efficiency in the agro -food sector, ensuring self -sufficiency for the country's major agricultural 
production; seeki ng to utilize domestic inputs to the extent possible; increasing overall efficiency 
in the agricultural food sector; utilizing export opportunities to the extent feasible; securing an 
equitable income for farmers; and integrating environmental issues in ag ricultural policy.  
 
D. FORMS OF SUBSIDY  
 
Agricultural subsidies in Iceland is mostly provided through direct payments, based on payment 
entitlements, which are directly or indirectly coupled with production factors. Direct payments are 
provided to cattle ( mainly dairy) and sheep producers, and, on a smaller scale, to certain 
greenhouse producers. Allocations for the Agricultural Agreements in 2013 are made under 
items  04-801, 04 -805 and 04 -807 of the State budget (Ministry of Industries and Innovation).  
 
E. AMOUNT OF SUBSIDY  
 
Items making up the amount of support as measured by total costs in Government Accounts 
for 2013 are listed in table 1.  
 
Table 1 Amount of support in 2013 (Government Accounts); Million ISK  
 
 2013  
Agricultural Productivity Fund  70 
Stockholding costs; sheep meat program  0 
Directs payments to sheep farmers  2,589  
Quality control scheme; sheep farmers  1,651  
Wool utilization; subsidies  422 
Direct payments to dairy farmers  5,307  
Direct payments to horticulture farmers  261 
Electricity subsidies to horticulture farmers 
(greenhouse)  228 
 
F. RULES AND CONDITIONS  
 
Implementation of the agricultural policy revolves around Agricultural Agreements negotiated 
between the Government and the Farmer's Association. Under Act No. 99/199 3 on Agricultural 
Produce, the Minister of Fisheries and Agriculture is given the authority to negotiate with the 
Farmer's Association on behalf of the Government on the total support target for milk and total 
support target for sheep meat entitlements and  direct payments for horticulture. A 
government -chaired committee determines a guaranteed minimum price for milk delivered within 
production quotas at the producer level.  
 
Support is provided for dairy farms, sheep farms and horticulture farms (greenhouse) . 
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
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  1. Dairy farmers  
 
Milk producers receive direct payments from the Government on milk delivered to dairies. The 
annual quantity must be within the allocated supported targets. The amount of monetary support 
is the same for all producers in Iceland.  
 
2. Sheep farmers  
 
Sheep farmers receive direct payments from the Government which are based on support targets 
for sheep meat entitlements, for which they must own 70% live sheep. Additional payments to 
sheep farmers are related to a quality control scheme fo r lamb meat, based on animal welfare, 
product quality and traceability, and sustainability criteria.  
 
3. Sheep farmers; wool  
 
Sheep farmers receive support from the Government based on quantity and quality of wool 
produced.  
 
4. Horticulture farmers  
 
Hortic ulture farmers producing cucumbers, peppers and tomatoes in greenhouses, mainly under 
artificial lighting receive direct payments from the government. The distribution of electricity used 
for artificial lighting is also subsidized to some extent by the Gov ernment.  
 
G. DURATION  
 
The time of application of the agricultural agreements between the Government and the Farmer's 
Association was until the end of 2016 when the agreements were renegotiated. The agreements 
were not revisited, in essence, during the ye ars 2006 to 2014.  
 
H. LEGAL BASIS  
 
Act No. 99/1993 on Production, Pricing and Sales of Agricultural Products. The State Budget.  
 
I. TRADE EFFECTS  
 
An assessment of the trade effects of the subsidies is not available. Below, in tables 2, 3 and 4 
there are, however, presented statistics on production and exports of the relevant agricultural 
commodities.  
 
Table 2 Quantity of milk received by dairies and calculated exports by fat -content of milk 
derived products (in 1,000 of litres) for 2013  
 
Year Milk, received by dairies by fat -
content  Exported products by fat -content, 
thereof (%)  
2013 120,803  3% 
 
Table 3 Sheep meat production and exports 2013 (in 1,000 kg)  
 
Year Production   Exports, thereof (%)  
2013 9,891  28% 
 
Table 4 Tomato, cucumber and bell pepper production and exports 2013 (in 1,000 kg)  
 
Tomatoes  Cucumbers  Bell peppers   Total exports, thereof 
(%) 
1,560  1,781  243 <1% 
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
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  2  SUPPORT FOR R&D AND TECHNOLOGICAL INNOVA TION  
2.1  Technical Development Fund  
A. RESPONSIBLE AUTHORITY  
 
The Icelandic Centre for Research (RANNÍS) which is under the supervision of the Ministry of 
Industry and Innovation.  
 
B. POLICY OBJECTIVES  
 
The objective of the Technology Development Fund is to facilitate innovation through supporting 
research and technological development.  
 
C. AMOUNT AND FORM OF STATE AID  
 
The amount of State aid in 2013: ISK 1.060,0 million.  
 
D. RULES AND CONDITIONS  
 
The role of the fund is to support research and development activities, which aim towards 
innovation in Icelandic industry. The Fund will in gener al operate as a competitive fund through 
which firms, research institutes and universities will have the possibility of financing projects that 
support technological development and innovation. The Fund is intended to give support to spin -off 
ventures and innovative firms to secure that economic benefits accrue to society from the scientific 
and technical knowledge and the innovation arising from these new ventures.  
 
The Science and Technology Policy Council attaches high importance to close co -ordination 
between the Research Fund and the Technical Development Fund, as well as co -operation with 
other public funds and venture investors. The Technical Development Fund can take the initiative 
to establish programmes and specific actions prepared in consultation  with the business 
community, research institutes and universities. Finally, the Technical Development Fund is 
permitted to enter into partnerships with venture capital investors for seed and early risk financing 
toward establishing firms which base their operations on technological development and research 
and which involves a novelty to the economy.  
 
E. LEGAL BASIS  
 
Act no. 3/2003 on Public Support for Scientific Research, with later amendments.  
 
F. TRADE EFFECTS  
 
The support is granted to a variety of s mall projects and sectors, therefore it is difficult to present 
statistical data permitting an assessment of trade effects.  
 
G. DURATION  
 
The Technology Development Fund has been operating since 2004. It took over from the 
Technology Fund which expired in  2004.  
 
2.2  Research Fund  
A. RESPONSIBLE AUTHORITY  
 
The Icelandic Centre for Research (RANNÍS) which is under the supervision of the Ministry of 
Culture and Education.  
 
B. POLICY OBJECTIVES  
 
The objective of the Research Fund is to facilitate fundamental resea rch at University institutes or 
other Governmental R&D institutes.  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
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C. AMOUNT AND FORM OF STATE AID  
 
The amount of State aid in 2013: ISK 915,00 million.  
 
D. RULES AND CONDITIONS  
 
Subsidies are granted only on the basis of project applications. The Funds g rants are for 
fundamental research at Universities and the involvement of private companies is very limited or 
non-existent.  
 
The Research Fund is the most powerful tool of the public sector for reinforcing the research 
community infrastructure through pro ject grants based on applications from scientists, business 
firms and institutions. The Science and Technology Policy Council encourages the Fund to give 
young scientists an opportunity to establish their work and contribute to the further accumulation 
of scientific and technical knowledge.  
 
The Research Fund offers grants in accordance with the priorities set by the Science and 
Technology Policy Council and the grants strategy defined by the Science Board based on a peer 
review evaluation of research proje ct quality, the competence of the individuals involved and the 
facilities available for completing the project.  
 
E. LEGAL BASIS  
 
Act no. 3/2003 on Public Support for Scientific Research, with later amendments.  
 
F. TRADE EFFECTS  
 
The support is granted to a variety of small projects and sectors, therefore it is difficult to present 
statistical data permitting an assessment of trade effects.  
 
G. DURATION  
 
Research Fund has been operating since 2004. It took over from the Science Fu nd which expired in 
2004.  
 
2.3  Support for R&D in marine aquaculture  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Fisheries and Agriculture.  
 
B. POLICY OBJECTIVE  
 
To enhance scientific knowledge in marine aquaculture.  
 
C. FORM OF SUPPORT  
 
Grants.  
 
D. AMOUNT OF SUPPO RT 
 
2013: 17.265,0 million ISK  
 
E. RULES AND CONDITIONS  
 
Grants are awarded on the basis of applications evaluated by a special committee.  
 
F. DURATION  
 
There is no time limit, but each programme is decided on for a year at a time.  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
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G. LEGAL BASIS  
 
Act no. 72/2008 on the Directorate of Fisheries.  
 
H. TRADE EFFECTS  
 
There is no trade effect due to limited support.  
 
3  SUPPORT TO SMALL AND  MEDIUM -SIZED COMPANIES  
3.1  Job Creation Initiative (prior to 1996 known as Firm specific subsidies and export 
promotion (Case 93 -221)).  
A. RESPONSIBLE AUTHORITY  
 
Innovation Center Iceland which is under the supervision of the Ministry of Employment and 
Innovation.  
 
B. POLICY OBJECTIVE  
 
The objective is, to increase the knowledge and competence of entrepreneurs and small and  
medium -sized enterprises such as in managing, financing, product development, marketing and 
innovation.  
 
C. FORM OF SUPPORT  
 
Cost items incurred for consultants, product development, marketing and innovation are eligible 
for grants. Support shall in gener al not cover more than 50% of eligible expenses.  
 
D. AMOUNT OF SUPPORT  
 
2013: ISK 68,0 million.  
 
E. RULES AND CONDITIONS  
 
Firms and individuals having a registered domicile in Iceland can apply for a grant. In accordance 
with the de minimis  rule, individuals who apply for grants according to these rules must declare 
that they have not received a grant from the Government amounts to more than 200,000 EURO 
last 3 years, the grant applied for included.  
 
F. DURATION  
 
There is no time limit, but  each programme is decided on for a year at a time.  
 
G. LEGAL BASIS  
 
The Budget item no. 04 -528-1.48. 
 
H. TRADE EFFECTS  
 
There are no trade effects of the support due to the general framework of the scheme and limited 
support.  
 
3.2  Regional Development Fund  
A. RESPONSIBLE AUTHORITY  
 
Innovation Center Iceland (Nýsköpunarmiðstöð Íslands) which is under the supervision of the 
Ministry of Employment and Innovation.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
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B. POLICY OBJECTIVE  
 
To promote cooperation between local governments, safeguard their interests, support industries 
and enhance quality of life in the entire region economically, socially and culturally.  
 
C. FORM OF SUPPORT  
 
Grants.  
 
D. AMOUNT OF SUPPORT  
 
2013: ISK 400,0 million  
 
E. RULES AND CONDITIONS  
 
Grants are awarded on the basis of applications evaluated by a special committee.  
 
F. DURATION  
 
There is no time limit.  
 
G. LEGAL BASIS  
 
Act No 106/1999 (Lög um Byggðastofnun) and the Budget item no. 09 -992-1.10. 
 
H. TRADE EFFECTS  
 
There are no trade effects of the support due to the gener al framework of the scheme and limited 
support.  
 
4  SUPPORT FOR EMPLOYME NT AND TRAINING  
4.1  Vocational Training Fund. Support for Vocational Training  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Education and Culture.  
 
B. POLICY OBJECTIVE  
 
The main purpose of this progr amme is to maintain and develop vocational skills, in most cases for 
people already employed.  
 
C. FORM OF STATE AID  
 
Grants.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2013: ISK 1.358,9 million  
 
E. RULES AND CONDITIONS  
 
Grants to organizations on  application to the Vocational Training Fund mainly to make curriculum 
or other teaching materials for the vocational training courses.  
 
F. DURATION  
 
The programme started in 1992. Duration has not been specified.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
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  G. LEGAL BASIS  
 
Adult Education Act No. 2 7/2010 and he Budget item no. 02 -451. 
 
4.2  Employment Opportunities for Women in Rural Areas  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Fisheries and Agriculture and the Institute of Regional Development (Byggðastofnun).  
 
B. POLICY OBJECTIVE  
 
The main purpose of t his programme is to create new jobs among women. Areas where high 
unemployment is among women will especially be considered.  
 
C. FORM OF STATE AID  
 
Grants, up to 50% of primary R&D costs, innovation costs and cost of new products, process and 
systems for industrial production. Institute of Regional Development pays the grants and controls 
their disposition.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2013: ISK 0 million  
 
It is difficult to give exact information on how many jobs have been created or maintained, as 
many of these new jobs are just part time jobs.  
 
E. RULES AND CONDITIONS  
 
Grants to women on application to the Institute of Regional Development mainly to new product 
developing and marketing. The grant can only be given to companies, wh ich are at least 50% 
owned by women or have been established by women.  
 
F. DURATION  
 
The programme started in 1990. Duration has not been specified.  
 
G. LEGAL BASIS  
 
Governmental decision from 1990.  
 
4.3  Vocational Rehabilitation  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Welfare.  
 
B. POLICY OBJECTIVE  
 
The main purpose of this programme is to develop, integrate and monitor services in the field of 
vocational rehabilitation; aiming systematically for employment of individuals following illness or 
injury.  
 
C. FORM OF  STATE AID  
 
Gross wage State aid to rehabilitation centres.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2013: ISK 298,2 million  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
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E. RULES AND CONDITIONS  
 
The rehabilitation centres must have operating license from the Ministry of Welfare to apply to the 
Ministry for subsidies.  
 
F. DURATION  
 
The new programme started in 1992. Duration has not been specified.  
 
G. LEGAL BASIS  
 
Act No. 60/2012 (lög um atvinnu tengda starfsendurhæfingu og starfsemi 
starfsendurhæfingasjóða) and financed by the Budget item no. 08 -856. 
 
4.4  Employment of Handicapped Persons  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Welfare.  
 
B. POLICY OBJECTIVE  
 
The main purpose of this programme is to ensure that disabled persons enjoy human rights and 
freedoms on the same basis as others and that they are guaranteed the support necessary to 
enjoy these rights.  
 
C. FORM OF STATE AID  
 
Gross wage State aid to rehabilitation centres.  
 
D. AMOUNT OF STATE AI D 
 
Actual total expenditure in 2013: ISK 69,4 million.  
 
E. RULES AND CONDITIONS  
 
Service institutions for disabled people should be deployed in order to meet their specific needs so 
that they can live independently.  
 
F. DURATION  
 
No time limit, the amounts  are decided on in the Budget each year.  
 
G. LEGAL BASIS  
Act No. 59/1992 on the Affairs of Disabled People and the Budget item no. 08 -842.1.21.  
 
5  REGIONAL SUPPORT  
5.1  Assistance to Employment Development Projects  
A. RESPONSIBLE AUTHORITY  
 
Institute of Regional  Development (Byggðastofnun).  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to assist the economic development of the nationally assisted 
areas of Iceland. The assisted projects are small and cover employment development, training and 
innovation.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
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  C. FORM OF STATE AID  
 
Grants, as assistance to Employment Development Projects, which fall within the objectives of 
Act No. 106/1999, on the Institute of Regional Development.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2013: ISK 172,20 million.  
 
E. RULES AND CONDITIONS  
 
The programme is available to individuals, private companies, local development companies and 
municipalities. The subsidies are subject to the conditions laid down in the EFTA Surveillance 
Authority State Aid Guidelines and the M ap of Regional Aid approved by the EFTA Surveillance 
Authority.  
 
F. DURATION  
 
The programme has no time limit, the amount is decided on in the Budget each year.  
 
G. LEGAL BASIS  
 
Article 10 of Act no. 106/1999 on the Institute of Regional Development, the B udget item 
no. 04-542. 
 
5.2  Assistance to Local Economic Development  
A. RESPONSIBLE AUTHORITY  
 
Institute of Regional Development (Byggðastofnun).  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to assist local economic development companies and to finance 
venturesome projects within the field of local employment development and innovation.  
 
C. FORM OF STATE AID  
 
Grants to finance venturesome projects within the field of local employment development and 
innovation.  
 
D. AMOUNT OF STATE AID  
 
Actual tot al expenditure in 2013: ISK 6,50 million.  
 
E. RULES AND CONDITIONS  
 
According to Act No. 106/1999, on the Institute of Regional Development, the assistance is to be 
in accordance with rules laid down by the Ministry of Employment and Innovation. These rules 
have not yet been issued. The subsidies are subject to the conditions laid down in the EFTA 
Surveillance Authority State Aid Guidelines and the Map of Regional Aid approved by the EFTA 
Surveillance Authority.  
 
F. DURATION  
 
The programme has no time l imit, the amounts are decided on in the Budget each year.  
 
G. LEGAL BASIS  
 
Article 12 of Act no. 106/1999 on the Institute of Regional Development, the Budget item 
no. 04-542 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
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H. ADDITIONAL INFORMATION  
 
The Institute of Regional Development is authorized a ccording to Article 11 of Act No 106/1999 to 
provide loans and guarantees, in accordance with the role of the Institute as stipulated in the Act. 
These loans and guarantees are provided on market terms, with similar interest rates as on the 
open market.  
 
6  TEMPORARY REPAYMENT O F COSTS OF FILMS PRO DUCTION IN ICELAND  
A. RESPONSIBLE AUTHORITY  
 
Icelandic film centre (Kvikmyndamiðstöð Íslands) under the auspice of the Ministry of Industry.  
 
B. POLICY OBJECTIVE  
 
The objective of the Act is to enhance domestic culture and promote the history and nature of 
Iceland by temporarily supporting motion pictures and television programmes produced in Iceland.  
 
According to the Act authorisation is granted for the reimburse ment from the State Treasury of a 
proportion of the production costs incurred in the production of films and television programmes in 
Iceland.  
 
When more than 80% of the total production cost of a motion picture or television programme 
incurs in Iceland, the reimbursement shall be calculated from the total production cost incurring 
within the European Economic Area.  
 
Production costs refers to all costs incurred in Iceland deductible from the revenues of enterprises 
pursuant to the provisions of the Act on  Income and Net Wealth Tax. Payments pertaining to 
employees and contractors are only to be included in production costs if they are verifiable taxable 
in Iceland  
 
C. FORM OF STATE AID  
 
A specific company shall be established in Iceland for the production;  an Icelandic branch or 
agency of a company registered in another Member State of the European Economic Area shall be 
considered a specific company  
 
D. AMOUNT OF STATE AID  
 
Total expenditure (reimbursement of production cost) in 2013: ISK 850,0 million.  
 
E. RULES AND CONDITIONS  
 
In assessing whether a proportion of the production costs of a motion picture or a television 
programme shall be reimbursed, the following conditions shall be fulfilled:  
 
a. the production shall be suited for promoting Icelandic cultur e and the history and nature 
of Iceland;  
b. the production shall be suited for enhancing the experience, knowledge and artistic 
ambition of those involved in the production;  
c. a specific company shall be established in Iceland for the production; an Icelandic b ranch 
or agency of a company registered in another EEA member state shall be considered a 
specific company;  
d. information on the principal parties involved in the film or television programme shall be 
submitted;  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
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  e. information on domestic parties and their share in the production of the film or television 
programme shall be submitted;  
f. an itemized estimate of the production costs and sources of funding shall be submitted, 
together with confirmation by the funding parties and a declaration by the producer to 
the effect that the production conforms with the aims of the Act No. 43/1999;  
g. information on the content of the proposed film or television programme shall be 
submitted, including a manuscript, synopsis and information about filming locations;  
h. a production plan shall be available (i.e. filming, post -production and marketing plan), 
providing for completion of the production within three years of receipt of the application 
for reimbursement;  
i. a statement shall be submitted to the effect that the material to be produced is intended 
for general distribution to cinemas or television stations, the content of the film or 
television programme shall not violate the Film Censorship and Prohibition of Violent 
Films Act, No. 47/1995, or Article 210 of the Criminal Code, N o. 19/1940.  
F. DURATION  
 
The programme is limited to end of year 2021.  
 
G. LEGAL BASIS  
 
Act on Temporary Reimbursements in Respect of Film Making in Iceland, No. 43/1999, with 
amendments. The Budget item no. 04 -521.  
 
7  RURAL TOURISM  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Transport and Communication.  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to promote rural tourism and assist local museums, and places 
of historical importance, in attracting tourists.  
 
C. FORM OF STATE AID  
 
Grants to projects.  
 
D. AMOUNT OF STATE AID  
 
Total expenditure allowed in 2013: ISK 483,3 million.  
 
E. DURATION  
 
The programme has no time limit, the amounts are decided on in the Budget each year.  
 
F. LEGAL BASIS  
 
Budget, item no. 04 -551. 
 
8  AID TO PROMOTE MARKE TING OF ICELANDIC  TOURISM.  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Transport and Communication and Icelandic Tourism Board (Ferðamálastofa).  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
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  B. POLICY OBJECTIVE  
 
The objective of the programme is to promote marketing of Icelandic tourism. Further reference is 
made to a correspondence with the Authority concerning Case No. 47859.  
 
C. FORM OF STATE AID  
 
Grants to projects.  
 
D. AMOUNT OF STATE AID  
 
Total expenditure allowed in 2013: ISK 370,4 million.  
 
E. DURATION  
 
The programme is intended to be temporary, the amounts are decided on in the Budget each year.  
 
F. LEGAL BASIS  
 
Budget, item no. 04 -559.1.44.  
  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
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  2014  
1  THE AGRICULTURAL SEC TOR 
A. NAME OF PROGRAMME  
 
1.1  Agricultural Agreements; Payments to dairy farms, sheep farms and horticulture 
farms  
(Budget items No: 04 -801, 04 -805 & 04-807).  
 
B. RESPONSIBLE AUTHORITY  
 
Ministry of Industries and Innovation  
 
C. POLICY OBJECTIVE  
 
Agricultural policy is implemented in Iceland in pursuit of objectives which include increasing 
efficiency in the agro -food sector, ensuring self -sufficiency fo r the country's major agricultural 
production; seeking to utilize domestic inputs to the extent possible; increasing overall efficiency 
in the agricultural food sector; utilizing export opportunities to the extent feasible; securing an 
equitable income for  farmers; and integrating environmental issues in agricultural policy.  
 
D. FORMS OF SUBSIDY  
 
Agricultural subsidies in Iceland is mostly provided through direct payments, based on payment 
entitlements, which are directly or indirectly coupled with producti on factors. Direct payments are 
provided to cattle (mainly dairy) and sheep producers, and, on a smaller scale, to certain 
greenhouse producers. Allocations for the Agricultural Agreements in 2014 are made under 
items  04-801, 04 -805 and 04 -807 of the State  budget (Ministry of Industries and Innovation).  
 
E. AMOUNT OF SUBSIDY  
 
Items making up the amount of support as measured by total costs in Government Accounts 
for 2014 are listed in table 1.  
 
Table 1 Amount of support in 2014 (Government Accounts); Million ISK  
 
 2014  
Agricultural Productivity Fund  72 
Stockholding costs; sheep meat program  0 
Directs payments to sheep farmers  2,667  
Quality control scheme; sheep farmers  1,701  
Wool utilization; subsidies  435 
Direct payments to dairy farmers  5,466  
Direct payments to horticulture farmers  204 
Electricity subsidies to horticulture farmers 
(greenhouse)  305 
 
F. RULES AND CONDITIONS  
 
Implementation of the agricultural policy revolves around Agricultural Agreements negotiated 
between the Government and t he Farmer's Association. Under Act No. 99/1993 on Agricultural 
Produce, the Minister of Fisheries and Agriculture is given the authority to negotiate with the 
Farmer's Association on behalf of the Government on the total support target for milk and total 
support target for sheep meat entitlements and direct payments for horticulture. A government -
chaired committee determines a guaranteed minimum price for milk delivered within production 
quotas at the producer level.  
 
Support is provided for dairy farms, sh eep farms and horticulture farms (greenhouse).  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
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  1. Dairy farmers  
 
Milk producers receive direct payments from the Government on milk delivered to dairies. The 
annual quantity must be within the allocated supported targets. The amount of monetary support 
is the same for all producers in Iceland.  
 
2. Sheep farmers  
 
Sheep farmers receive direct payments from the Government which are based on support targets 
for sheep meat entitlements, for which they must own 70% live sheep. Additional payments to 
sheep farmer s are related to a quality control scheme for lamb meat, based on animal welfare, 
product quality and traceability, and sustainability criteria.  
 
3. Sheep farmers; wool  
 
Sheep farmers receive direct payments from the Government which are based on support t argets 
for sheep meat entitlements, for which they must own 65% of live sheep.  
 
4. Horticulture farmers  
 
Horticulture farmers producing cucumbers, peppers and tomatoes in greenhouses, mainly under 
artificial lighting receive direct payments from the gover nment. The distribution of electricity used 
for artificial lighting is also subsidized to some extent by the Government.  
 
G. DURATION  
 
The time of application of the agricultural agreements between the Government and the Farmer's 
Association was until the  end of 2016 when the agreements were renegotiated. The agreements 
were not revisited, in essence, during the years 2006 to 2014.  
 
H. LEGAL BASIS  
 
Act No. 99/1993 on Production, Pricing and Sales of Agricultural Products. The State Budget.  
 
I. TRADE EFFECT S 
 
An assessment of the trade effects of the subsidies is not available. Below, in tables 2, 3 and 4 
there are, however, presented statistics on production and exports of the relevant agricultural 
commodities.  
 
Table 2 Quantity of milk received by dairies and calculated exports by fat -content of milk 
derived products (in 1,000 of litres) for 2014  
 
Year Milk, received by dairies by fat -
content  Exported products by fat -content, 
thereof (%)  
2014 128,968  1% 
 
Table 3 Sheep meat production and exports 2014 (in 1,000 kg)  
 
Year Production  Exports, thereof (%)  
2014 10,100  34% 
 
Table 4 Tomato, cucumber and bell pepper production and exports 2014 (in 1,000 kg)  
 
Tomatoes  Cucumbers  Bell peppers  Total exports, thereof 
(%) 
1,516  1,807  223 <1% 
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
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  2  SUPPORT FOR R&D AND TECHNOLOGICAL INNOVA TION  
2.1  Technical Development Fund  
A. RESPONSIBLE AUTHORITY  
 
The Icelandic Centre for Research (RANNÍS) which is under the supervision of the Ministry of 
Industry and Innovation.  
 
B. POLICY OBJECTIVES  
 
The objective of the Technology Development Fund is to facilitate innovation through supporting 
research and technological development.  
 
C. AMOUNT AND FORM OF STATE AID  
 
The amount of State aid in 2014: ISK 943,0 million.  
 
D. RULES AND CONDITIONS  
 
The role of the fund is to support resea rch and development activities, which aim towards 
innovation in Icelandic industry. The Fund will in general operate as a competitive fund through 
which firms, research institutes and universities will have the possibility of financing projects that 
suppor t technological development and innovation. The Fund is intended to give support to spin -off 
ventures and innovative firms to secure that economic benefits accrue to society from the scientific 
and technical knowledge and the innovation arising from these new ventures.  
 
The Science and Technology Policy Council attaches high importance to close co -ordination 
between the Research Fund and the Technical Development Fund, as well as co -operation with 
other public funds and venture investors. The Technical Deve lopment Fund can take the initiative 
to establish programmes and specific actions prepared in consultation with the business 
community, research institutes and universities. Finally, the Technical Development Fund is 
permitted to enter into partnerships wi th venture capital investors for seed and early risk financing 
toward establishing firms which base their operations on technological development and research 
and which involves a novelty to the economy.  
 
E. LEGAL BASIS  
 
Act no. 3/2003 on Public Support f or Scientific Research, with later amendments.  
 
F. TRADE EFFECTS  
 
The support is granted to a variety of small projects and sectors, therefore it is difficult to present 
statistical data permitting an assessment of trade effects.  
 
G. DURATION  
 
The Technology Development Fund has been operating since 2004. It took over from the 
Technology Fund which expired in 2004.  
 
2.2  Research Fund  
A. RESPONSIBLE AUTHORITY  
 
The Icelandic Centre for Research (RANNÍS) which is under the supervision of the Ministry of 
Culture and Education.  
 
B. POLICY OBJECTIVES  
 
The objective of the Research Fund is to facilitate fundamental research at University institutes or 
other Governmental R&D institutes.  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
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C. AMOUNT AND FORM OF STATE AID  
 
The amount of State aid in 2014: ISK 1.235 ,0 million.  
 
D. RULES AND CONDITIONS  
 
Subsidies are granted only on the basis of project applications. The Funds grants are for 
fundamental research at Universities and the involvement of private companies is very limited or 
non-existent.  
 
The Research Fun d is the most powerful tool of the public sector for reinforcing the research 
community infrastructure through project grants based on applications from scientists, business 
firms and institutions. The Science and Technology Policy Council encourages the F und to give 
young scientists an opportunity to establish their work and contribute to the further accumulation 
of scientific and technical knowledge.  
 
The Research Fund offers grants in accordance with the priorities set by the Science and 
Technology Polic y Council and the grants strategy defined by the Science Board based on a peer 
review evaluation of research project quality, the competence of the individuals involved and the 
facilities available for completing the project.  
 
E. LEGAL BASIS  
 
Act no. 3/20 03 on Public Support for Scientific Research, with later amendments.  
 
F. TRADE EFFECTS  
 
The support is granted to a variety of small projects and sectors, therefore it is difficult to present 
statistical data permitting an assessment of trade effects.  
 
G. DURATION  
 
Research Fund has been operating since 2004. It took over from the Science Fund which expired 
in 2004.  
 
2.3  Support for R&D in marine aquaculture  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Fisheries and Agriculture.  
 
B. POLICY OBJECTIVE  
 
To enhance scie ntific knowledge in marine aquaculture.  
 
C. FORM OF SUPPORT  
 
Grants.  
 
D. AMOUNT OF SUPPORT  
 
2014: 13.420,0 million ISK  
 
E. RULES AND CONDITIONS  
 
Grants are awarded on the basis of applications evaluated by a special committee.  
 
F. DURATION  
 
There is no time limit, but each programme is decided on for a year at a time.  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
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G. LEGAL BASIS  
 
Act no. 72/2008 on the Directorate of Fisheries.  
 
H. TRADE EFFECTS  
 
There is no trade effect due to limited support.  
 
3  SUPPORT TO SMALL AND  MEDIUM -SIZED COMPANIES  
3.1  Job Creat ion Initiative (prior to 1996 known as Firm specific subsidies and export 
promotion (Case 93 -221)).  
A. RESPONSIBLE AUTHORITY  
 
Innovation Center Iceland which is under the supervision of the Ministry of Employment and 
Innovation.  
 
B. POLICY OBJECTIVE  
 
The o bjective is, to increase the knowledge and competence of entrepreneurs and small and 
medium -sized enterprises such as in managing, financing, product development, marketing and 
innovation.  
 
C. FORM OF SUPPORT  
 
Cost items incurred for consultants, product d evelopment, marketing and innovation are eligible 
for grants. Support shall in general not cover more than 50% of eligible expenses.  
 
D. AMOUNT OF SUPPORT  
 
2014: ISK 67,0 million.  
 
E. RULES AND CONDITIONS  
 
Firms and individuals having a registered domicile in Iceland can apply for a grant. In accordance 
with the de minimis  rule, individuals who apply for grants according to these rules must declare 
that they have not received a grant from the Government amou nts to more than 200,000 EURO 
last 3 years, the grant applied for included.  
 
F. DURATION  
 
There is no time limit, but each programme is decided on for a year at a time.  
 
G. LEGAL BASIS  
 
The Budget item no. 04 -528-1.48. 
 
H. TRADE EFFECTS  
 
There are no trad e effects of the support due to the general framework of the scheme and limited 
support.  
 
3.2  Regional Development Fund  
A. RESPONSIBLE AUTHORITY  
 
Innovation Center Iceland (Nýsköpunarmiðstöð Íslands) which is under the supervision of the 
Ministry of Employment  and Innovation.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
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B. POLICY OBJECTIVE  
 
To promote cooperation between local governments, safeguard their interests, support industries 
and enhance quality of life in the entire region economically, socially and culturally.  
 
C. FORM OF SUPPORT  
 
Grants.  
 
D. AMOUNT OF SUPPORT  
 
2014: ISK 101,5 million   
 
E. RULES AND CONDITIONS  
 
Grants are awarded on the basis of applications evaluated by a special committee.  
 
F. DURATION  
 
There is no time limit.  
 
G. LEGAL BASIS  
 
Act No 69/2015 (Lög um byggðaáætlun og sóknaráætlun) and the Budget item no. 09 -992-1.10. 
 
H. TRADE EFFECTS  
 
There are no trade effects of the support due to the general framework of the scheme and limited 
support.  
 
4  SUPPORT FOR EMPLOYME NT AND TRAINING  
4.1  Vocational Training Fund. Support for Vocat ional Training  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Education and Culture.  
 
B. POLICY OBJECTIVE  
 
The main purpose of this programme is to maintain and develop vocational skills, in most cases for 
people already employed.  
 
C. FORM OF STATE AID  
 
Grants.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2014: ISK 1.363,9 million  
 
E. RULES AND CONDITIONS  
 
Grants to organizations on application to the Vocational Training Fund mainly to make curriculum 
or other teaching materials for the vocational training c ourses.  
 
F. DURATION  
 
The programme started in 1992. Duration has not been specified.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
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  G. LEGAL BASIS  
 
Adult Education Act No. 27/2010 and he Budget item no. 02 -451. 
 
4.2  Employment Opportunities for Women in Rural Areas  
A. RESPONSIBLE AUTHORITY  
 
Ministry of F isheries and Agriculture and the Institute of Regional Development (Byggðastofnun).  
 
B. POLICY OBJECTIVE  
 
The main purpose of this programme is to create new jobs among women. Areas where high 
unemployment is among women will especially be considered.  
 
C. FORM OF STATE AID  
 
Grants, up to 50% of primary R&D costs, innovation costs and cost of new products, process and 
systems for industrial production. Institute of Regional Development pays the grants and controls 
their disposition.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2014: ISK 0 million  
 
It is difficult to give exact information on how many jobs have been created or maintained, as 
many of these new jobs are just part time jobs.  
 
E. RULES AND CONDITIONS  
 
Grants to women on application to the  Institute of Regional Development mainly to new product 
developing and marketing. The grant can only be given to companies, which are at least 50% 
owned by women or have been established by women.  
 
F. DURATION  
 
The programme started in 1990. Duration has not been specified.  
 
G. LEGAL BASIS  
 
Governmental decision from 1990.  
 
4.3  Vocational Rehabilitation  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Welfare.  
 
B. POLICY OBJECTIVE  
 
The main purpose of this programme is to develop, integrate and monitor services in the field of 
vocational rehabilitation; aiming systematically for employment of individuals following illness or 
injury.  
 
C. FORM OF STATE AID  
 
Gross wage State aid to rehabilitation centres.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2014 ISK 351,6  million  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
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E. RULES AND CONDITIONS  
 
The rehabilitation centres must have operating license from the Ministry of Welfare to apply to the 
Ministry for subsidies.  
 
F. DURATION  
 
The new programme started in 1992. Duration has not been specified.  
 
G. LEGAL BAS IS 
 
Act No. 60/2012 (lög um atvinnutengda starfsendurhæfingu og starfsemi 
starfsendurhæfingasjóða) and financed by the Budget item no. 08 -856. 
 
4.4  Employment of Handicapped Persons  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Welfare.  
 
B. POLICY OBJECTIVE  
 
The main  purpose of this programme is to ensure that disabled persons enjoy human rights and 
freedoms on the same basis as others and that they are guaranteed the support necessary to 
enjoy these rights.  
 
C. FORM OF STATE AID  
 
Gross wage State aid to rehabilitatio n centres.  
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2014: ISK 71,8 million.  
 
E. RULES AND CONDITIONS  
 
Service institutions for disabled people should be deployed in order to meet their specific needs so 
that they can live independently.  
 
F. DURATION  
 No time limit, the amounts are decided on in the Budget each year.  
 
G. LEGAL BASIS  
 
Act No. 59/1992 on the Affairs of Disabled People and the Budget item no. 08 -842.1.21.  
 
5  REGIONAL SUPPORT  
5.1  Assistance to Employment Development Projects  
A. RESPONSIBL E AUTHORITY  
 
Institute of Regional Development (Byggðastofnun).  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to assist the economic development of the nationally assisted 
areas of Iceland. The assisted projects are small and cover employment development, training and 
innovation.  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
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  C. FORM OF STATE AID  
 
Grants, as assistance to Employment Development Projects, which fall within the objectives of Act 
No. 106/1999, on the Institute of Regional Development.  
 
D. AMOUNT OF STATE AID  
 
Actual total exp enditure in 2014: ISK 172,40 million.  
 
E. RULES AND CONDITIONS  
 
The programme is available to individuals, private companies, local development companies and 
municipalities. The subsidies are subject to the conditions laid down in the EFTA Surveillance 
Authority State Aid Guidelines and the Map of Regional Aid approved by the EFTA Surveillance 
Authority.  
 
F. DURATION  
 
The programme has no time limit, the amount is decided on in the Budget each year.  
 
G. LEGAL BASIS  
 
Article 10 of Act no. 106/1999 on the Ins titute of Regional Development, the Budget item 
no. 04-542. 
 
5.2  Assistance to Local Economic Development  
A. RESPONSIBLE AUTHORITY  
 
Institute of Regional Development (Byggðastofnun).  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to assist local economic development companies and to finance 
venturesome projects within the field of local employment development and innovation.  
 
C. FORM OF STATE AID  
 
Grants to finance venturesome projects within the field of local employment development and 
innovatio n. 
 
D. AMOUNT OF STATE AID  
 
Actual total expenditure in 2014: ISK 6,95 million.  
 
E. RULES AND CONDITIONS  
 
According to Act No. 106/1999, on the Institute of Regional Development, the assistance is to be 
in accordance with rules laid down by the Ministry of  Employment and Innovation. These rules 
have not yet been issued. The subsidies are subject to the conditions laid down in the EFTA 
Surveillance Authority State Aid Guidelines and the Map of Regional Aid approved by the EFTA 
Surveillance Authority.  
 
F. DURATION  
 
The programme has no time limit, the amounts are decided on in the Budget each year.  
 
G. LEGAL BASIS  
 
Article 12 of Act no. 106/1999 on the Institute of Regional Development, the Budget item 
no. 04-542 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 117 - 
 
   
H. ADDITIONAL INFORMATION  
 
The Institute of  Regional Development is authorized according to Article 11 of Act No 106/1999 to 
provide loans and guarantees, in accordance with the role of the Institute as stipulated in the Act. 
These loans and guarantees are provided on market terms, with similar int erest rates as on the 
open market.  
 
6  TEMPORARY REPAYMENT OF COSTS OF FILMS PR ODUCTION IN ICELAND  
A. RESPONSIBLE AUTHORITY  
 
Icelandic film centre (Kvikmyndamiðstöð Íslands) under the auspice of the Ministry of Industry.  
 
B. POLICY OBJECTIVE  
 
The objective of the Act is to enhance domestic culture and promote the history and nature of 
Iceland by temporarily supporting motion pictures and television programmes produced in Iceland.  
 
According to the Act authorisation is granted for the reimburse ment from the State Treasury of a 
proportion of the production costs incurred in the production of films and television programmes in 
Iceland.  
 
When more than 80% of the total production cost of a motion picture or television programme 
incurs in Iceland, the reimbursement shall be calculated from the total production cost incurring 
within the European Economic Area.  
 
Production costs refers to all costs incurred in Iceland deductible from the revenues of enterprises 
pursuant to the provisions of the Act on  Income and Net Wealth Tax. Payments pertaining to 
employees and contractors are only to be included in production costs if they are verifiable taxable 
in Iceland  
 
C. FORM OF STATE AID  
 
A specific company shall be established in Iceland for the production;  an Icelandic branch or 
agency of a company registered in another Member State of the European Economic Area shall be 
considered a specific company  
 
D. AMOUNT OF STATE AID  
 
Total expenditure (reimbursement of production cost) in 2014: ISK 837,2 million.  
 
E. RULES AND CONDITIONS  
 
In assessing whether a proportion of the production costs of a motion picture or a television 
programme shall be reimbursed, the following conditions shall be fulfilled:  
 
a. the production shall be suited for promoting Icelandic cultur e and the history and nature 
of Iceland;  
b. the production shall be suited for enhancing the experience, knowledge and artistic 
ambition of those involved in the production;  
c. a specific company shall be established in Iceland for the production; an Icelandic b ranch 
or agency of a company registered in another EEA member state shall be considered a 
specific company;  
d. information on the principal parties involved in the film or television programme shall be 
submitted;  G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/284/ISL  
 
- 118 - 
 
  e. information on domestic parties and their share in the production of the film or television 
programme shall be submitted;  
f. an itemized estimate of the production costs and sources of funding shall be submitted, 
together with confirmation by the funding parties and a declaration by the producer to 
the effect that the production conforms with the aims of the Act No. 43/1999;  
g. information on the content of the proposed film or television programme shall be 
submitted, including a manuscript, synopsis and information about filming locations;  
h. a production plan shall be available (i.e. filming, post -production and marketing plan), 
providing for completion of the production within three years of receipt of the application 
for reimbursement;  
i. a statement shall be submitted to the effect that the material to be produced is intended 
for general distribution to cinemas or television stations, the content of the film or 
television programme shall not violate the Film Censorship and Prohibition of Violent 
Films Act, No. 47/1995, or Article 210 of the Criminal Code, N o. 19/1940.  
F. DURATION  
 
The programme is limited to end of year 2021.  
 
G. LEGAL BASIS  
 
Act on Temporary Reimbursements in Respect of Film Making in Iceland, No. 43/1999, with 
amendments. The Budget item no. 04 -521.  
 
7  RURAL TOURISM  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Transport and Communication.  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to promote rural tourism and assist local museums, and places 
of historical importance, in attracting tourists.  
 
C. FORM OF STATE AID  
 
Grants to projects.  
 
D. AMOUNT OF STATE AID  
 
Total expenditure allowed in 2014: ISK 478,4 million.  
 
E. DURATION  
 
The programme has no time limit, the amounts are decided on in the Budget each year.  
 
F. LEGAL BASIS  
 
Budget, item no. 04 -551. 
 
8  AID TO PROMOTE MARKE TING OF ICELANDIC  TOURISM.  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Transport and Communication and Icelandic Tourism Board (Ferðamálastofa).  
 G/SCM/N/155/ISL • G/SCM/N/186/ISL • G/SCM/N/220/ISL • G/SCM/N/253/ISL • 
G/SCM/N/2 84/ISL  
 
- 119 - 
 
  B. POLICY OBJECTIVE  
 
The objective of the programme is to promote marketing of Icelandic tourism. Further reference is 
made to a correspondence with the Authority concerning Case No. 47859.  
 
C. FORM OF STATE AID  
 
Grants to projects.  
 
D. AMOUNT OF STATE AID  
 
Total expenditure allowed in 2014: ISK 255,4 million.  
 
E. DURATION  
 
The programme is intended to be temporary, the amounts are decided on in the Budget each year.  
 
F. LEGAL BASIS  
 
Budget, item no. 04 -559.1.44.  
 
9  SCHEME TO SUPPORT IN NOVATION COMPANIES  
A. RESPONSIBLE AUTHORITY  
 
Ministry of Industries and Innovation.  
 
B. POLICY OBJECTIVE  
 
The objective of the programme is to promote r esearch and development work and to improve the 
competitive conditions of innovation companies by giving them the right to deduct tax for the cost 
of innovation projects.  
 
C. FORM OF STATE AID  
 
Grants to projects.  
 
D. AMOUNT OF STATE AID  
 
Total expenditure  allowed in 2014: ISK 0 million.  
 
E. DURATION  
 
Until 31 December 2013, no total budget.  
The programme is limited to end of year 2019.  
 
F. LEGAL BASIS  
 
Act No. 152/2009 on support for innovation enterprises.  
 
__________