WT/TPR/S/361/Rev.1  
 
12 January  2018 
(18-0361) Page: 1/115 
Trade Policy Review Body   
 
 TRADE POLICY REVIEW  
REPORT BY THE SECRET ARIAT  
ICELAND  
Revision  
This report, prepared for the fifth Trade Policy Review of Iceland, has been drawn up by the WTO 
Secretariat on its own responsibility. The Secretariat has, as required by the Agreement 
establi shing the Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement 
Establishing the World Trade Organization), sought clarification from Iceland on its trade policies 
and practices.  
 
Any technical questions arising from this report may be addresse d to Mr John Finn, Tel: 022 739 
5081, email: john.finn@wto.org, Ms Denby Probst, Tel: 022 739 5847, ema il: 
denby.probst@wto.org; and Mr  Usman Ali Khilji, Tel: 022 739 6936, email: 
usmanali.khilji@wto.org.  
 
Document WT/TPR/G/ 361 contains the policy statemen t submitted by Iceland.  
 
 
Note: This report was drafted in English.  WT/TPR/S/361 /Rev.1  • Iceland  
 
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  CONTENTS  
 
SUMMARY  ................................ ................................ ................................ ........................  7 
1   ECONOMIC ENVIRONMENT  ................................ ................................ ........................  11 
1.1   Main Features of the Economy  ................................ ................................ ..................... 11 
1.2   Recent Economic Developments  ................................ ................................ ................... 15 
1.2.1    Monetary policy  ................................ ................................ ................................ .......15 
1.2.2    Fiscal policy  ................................ ................................ ................................ ............ 16 
1.2.3    Balance of payments  ................................ ................................ ................................ 16 
1.3   Trade Performance  ................................ ................................ ................................ .....19 
1.3.1    Composition of trade  ................................ ................................ ................................ 19 
1.3.2    Direction of trade  ................................ ................................ ................................ .....21 
1.4   Foreign Direct Investment  ................................ ................................ ........................... 22 
2   TRADE AND INVESTMENT  REGIME  ................................ ................................ ............  23 
2.1   General Framework  ................................ ................................ ................................ ....23 
2.2   Trade Policy Objectives  ................................ ................................ ............................... 25 
2.3   Trade Agreements and Arrangements  ................................ ................................ ........... 26 
2.3.1    WTO ................................ ................................ ................................ ...................... 26 
2.3.2    Regional and preferential agreements  ................................ ................................ ........ 27 
2.3.2.1    European Free T rade Association (EFTA)  ................................ ................................ ..27 
2.3.2.2    European Economic Area (EEA)  ................................ ................................ ............... 28 
2.3.2.3    Bilateral agreements  ................................ ................................ ............................. 29 
2.3.2.3.1    China  ................................ ................................ ................................ ................ 29 
2.3.2.3.2    Faroe Islands and Greenland  ................................ ................................ ............... 30 
2.3.2.4    Non-reciprocal preferences  ................................ ................................ ..................... 30 
2.3.3    Other agreements and arrangements  ................................ ................................ ......... 30 
2.4   Investment Regime  ................................ ................................ ................................ ....31 
2.4.1    Investment agreements ................................ ................................ ............................ 31 
2.4.2    Investment restrictions  ................................ ................................ ............................. 32 
2.4.3    Investment incentives  ................................ ................................ .............................. 32 
3   TRADE POLICIES AND P RACTICES BY MEASURE  ................................ ........................  35 
3.1   Measures Directly Affecting Imports  ................................ ................................ .............. 35 
3.1.1    Customs procedures and requirements  ................................ ................................ .......35 
3.1.1.1    Trade facilitation  ................................ ................................ ................................ ...37 
3.1.2    Customs valuation  ................................ ................................ ................................ ...38 
3.1.3    Rules of origin  ................................ ................................ ................................ ......... 38 
3.1.4    Tariffs  ................................ ................................ ................................ .................... 39 
3.1.4.1    Nome nclature and WTO bindings  ................................ ................................ ............ 40 
3.1.4.2    Applied rates  ................................ ................................ ................................ ........ 40 
3.1.4.3    Special tariff treatment and duty suspensions  ................................ ........................... 44 WT/TPR/S/361 /Rev.1 • Iceland  
 
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  3.1.4.4    Tariff quotas (TQs) and administration  ................................ ................................ .....44 
3.1.4.5    Preferential tariffs  ................................ ................................ ................................ .45 
3.1.5    Other charges affecting imports  ................................ ................................ ................. 46 
3.1.6    Import prohibitions, restrictions, and licensing  ................................ ............................ 48 
3.1.6.1    Prohib itions and restrictions  ................................ ................................ ................... 48 
3.1.6.2    Licensing  ................................ ................................ ................................ ............. 49 
3.1.7    Anti-dumping, countervailing, and safeguard measures  ................................ ................ 50 
3.1.8    Other measures  ................................ ................................ ................................ .......51 
3.1.8.1    Sanctions  ................................ ................................ ................................ ............. 51 
3.2   Measures Directly Affec ting Exports  ................................ ................................ .............. 52 
3.2.1    Export procedures and requirements  ................................ ................................ .......... 52 
3.2.2    Export taxes, charges, and levies  ................................ ................................ ............... 52 
3.2.3    Export prohibitions, restrictions, and licensing  ................................ ............................. 52 
3.2.4    Export support and promotion  ................................ ................................ ................... 54 
3.2.5    Export finance, insurance, guarantees  ................................ ................................ ........ 54 
3.3   Measures Affecting Production and Trade  ................................ ................................ .......54 
3.3.1    Taxatio n ................................ ................................ ................................ ................. 54 
3.3.2    Incentives  ................................ ................................ ................................ ............... 57 
3.3.3    Technical barriers to trade  ................................ ................................ ........................ 58 
3.3.4    Sanitary and phytosanitary requirements  ................................ ................................ ....60 
3.3.5    Competition policy and price controls  ................................ ................................ ......... 62 
3.3.6    State trading, sta te-owned enterprises, and privatization  ................................ ............. 64 
3.3.6.1    State trading  ................................ ................................ ................................ ........ 64 
3.3.6.2    State -owned enterprises and privatization  ................................ ................................ 64 
3.3.7    Government procurement  ................................ ................................ ......................... 65 
3.3.8    Intellectual property rights  ................................ ................................ ........................ 68 
3.3.8.1    Patents  ................................ ................................ ................................ ................ 70 
3.3.8.2    Copyright  ................................ ................................ ................................ ............. 71 
3.3.8.3    Trademarks  ................................ ................................ ................................ .......... 71 
3.3.8.4    Designs  ................................ ................................ ................................ ............... 71 
3.3.8.5    Geographical indications (GIs)  ................................ ................................ ................ 71 
3.3.8.6    Appeals and enforcement  ................................ ................................ ....................... 72 
4   TRADE POLICIES BY SE CTOR  ................................ ................................ .....................  73 
4.1   Agriculture and fishing  ................................ ................................ ................................ 73 
4.1.1    Agricu lture ................................ ................................ ................................ .............. 73 
4.1.1.1    Features  ................................ ................................ ................................ .............. 73 
4.1.1.2    Trade  ................................ ................................ ................................ .................. 74 
4.1.1.3    Agriculture policies  ................................ ................................ ................................ 75 
4.1.1.3.1    Trade policies  ................................ ................................ ................................ ....76 
4.1.1.3.2    Domestic policies  ................................ ................................ ............................... 77 WT/TPR/S/361 /Rev.1  • Iceland  
 
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  4.1.1.3.2.1    Dairy and beef  ................................ ................................ ................................ 77 
4.1.1.3.2.2    Sheep  ................................ ................................ ................................ ............ 78 
4.1.1.3.2.3    Horticulture  ................................ ................................ ................................ ....79 
4.1.1.3.2.4    Other policies and sectors ................................ ................................ ................. 79 
4.1.1.3.3    Domestic support levels  ................................ ................................ ...................... 80 
4.1.1 .3.3.1    WTO notifications  ................................ ................................ ............................ 80 
4.1.1.3.3.2    OECD monitoring and evaluation of agricultural policies  ................................ .......82 
4.1.2    Fisheries  ................................ ................................ ................................ ................. 84 
4.1.2.1    Features  ................................ ................................ ................................ .............. 84 
4.1.2.2    Trade  ................................ ................................ ................................ .................. 87 
4.1.2.3    Policies  ................................ ................................ ................................ ................ 88 
4.2   Mining and Energy  ................................ ................................ ................................ ......90 
4.2.1    Regulation  ................................ ................................ ................................ .............. 92 
4.3   Services  ................................ ................................ ................................ .................... 93 
4.3.1    Financial sector  ................................ ................................ ................................ .......93 
4.3.1.1    Banking  ................................ ................................ ................................ ............... 93 
4.3.1.1.1    Struc ture and performance  ................................ ................................ .................. 93 
4.3.1.1.2    Regulation  ................................ ................................ ................................ ......... 96 
4.3.2    Telecommunications  ................................ ................................ ................................ .97 
4.3.2.1    Fixed -line telephony  ................................ ................................ .............................. 97 
4.3.2.2    Mobile telephony  ................................ ................................ ................................ ...98 
4.3.2.3    Internet  ................................ ................................ ................................ ............... 98 
4.3.2.4    Regulations  ................................ ................................ ................................ .......... 98 
4.3.3    Transport  ................................ ................................ ................................ ................ 99 
4.3.3.1    Air transport  ................................ ................................ ................................ ......... 99 
4.3.3.2    Maritime transport  ................................ ................................ ..............................  100 
4.3.4    Tourism  ................................ ................................ ................................ ................  101 
4.3.4.1    Regulation  ................................ ................................ ................................ .........  103 
4.3.4.2    Strategy  ................................ ................................ ................................ ............  104 
5   APPENDIX TABLES  ................................ ................................ ................................ .. 105  
 
CHARTS  
 
Chart 1.1 Product composition of merchandise trade, 2012 and 2016  ................................ .......20 
Chart 1.2 Direction of merchandise trade, 2012 and 2016  ................................ ....................... 21 
Chart 1.3 Foreign direct investment (ISK billion), 2010 -15 ................................ ...................... 22 
Chart 3.1 Frequency distribution of MFN tariff rates, 2017  ................................ ....................... 42 
Chart 3.2 Tariff distribution by type of duty, 2017  ................................ ................................ ..42 
Chart 3.3 Tax revenue and social contributions, 2007 -16 ................................ ........................ 55 
Chart 4.1 Domestic support notifications, 2004 -16 ................................ ................................ .81 
Chart 4.2  OECD estimates of support to agriculture, 2004 -15 ................................ ................. 82 WT/TPR/S/361 /Rev.1 • Iceland  
 
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  Chart 4.3 Numbe r of fishing vessels by size category, 2005 -16 ................................ ................ 85 
Chart 4.4 Volume of catch by vessel size category, 2005 -15 ................................ ................... 85 
Chart 4.5  Fish processing, 2000 -15 ................................ ................................ ..................... 86 
Chart 4.6 Primary energy use in Iceland – 2015 ................................ ................................ ....91 
Chart 4.7 Non -performing loans, 2009 -2016 ................................ ................................ ......... 94 
Chart 4.8 Commercial banks' capital adequacy ratios, 2009 -16 ................................ ................ 95 
Chart 4.9 Total tourism spending in Iceland, 2009 -15 ................................ ...........................  102 
Chart 4.10 Passenger numbers through Keflavik airport, 2003 -16 ................................ ..........  103 
 
TABLES  
 
Table 1.1 Selected macroeconomic indicators,  2012-16 ................................ .......................... 11 
Table 1.2 Basic economic indicators, 2012 -16 ................................ ................................ ........ 13 
Table 1.3 Balance of payments, 2012 -16 ................................ ................................ .............. 16 
Table 1.4 Composition of trade in services, 2012 -16 ................................ .............................. 17 
Table 2.1 Organization of main economic and trade -related matters, 2017  ................................ 24 
Table 2.2 Investment restrictions, 2017  ................................ ................................ ................ 32 
Table 3.1 Tariff structure of Iceland, 2012 and 2017  ................................ .............................. 41 
Table 3.2 Summary analysis of Iceland's MFN tariff, 2017  ................................ ....................... 43 
Table 3.3 Tariff exemptions  ................................ ................................ ................................ .44 
Table 3.4 Summary analysis  of the Icelandic preferential tariffs, 2016  ................................ ......45 
Table 3.5 Prohibitions or restrictions on imports, 2017  ................................ ............................ 48 
Table 3.6 Products su bject to import licensing, 2017  ................................ .............................. 49 
Table 3.7 Prohibitions or restrictions on exports, 2017  ................................ ............................ 54 
Table 3.8 Excise duties and relate d taxes, 2017  ................................ ................................ .....56 
Table 3.9 Large SOEs, 2016  ................................ ................................ ................................ 65 
Table 3.10 Public procurement legal framework, 2017  ................................ ............................ 66 
Table 3.11 Domestic thresholds: central Government (and sub -central Government from 
2019)   ................................ ................................ ................................ ............................... 67 
Table 3.12 EEA thresholds, 2017  ................................ ................................ .......................... 67 
Table 3.13 Main intellectual property laws and regulations, 2017  ................................ ............. 69 
Table 3.14 Trends in intellectual property, 2012 -16 ................................ ................................ 69 
Table 4.1 Agriculture: employment and output, 2010 -16 ................................ ........................ 73 
Table 4.2 Trade in agricultural products, 2012 -16 ................................ ................................ ..74 
Table 4.3  Dairy and beef cattle support, 2017 -26 ................................ ................................ ..78 
Table 4.4  Support for sheep farming, 2017 -26 ................................ ................................ ......78 
Table 4.5  Support for horticulture, 2017 -26 ................................ ................................ ......... 79 
Table 4.6  General operating environment for agriculture, 2017 -26 ................................ .......... 79 
Table 4.7 OECD indica tors for support to agriculture in Iceland, 2009 -15 ................................ ..83 
Table 4.8 Fisheries in the economy, 2010 -16 ................................ ................................ ......... 84 
Table 4.9 Aquaculture prod uction, 2010 -16 ................................ ................................ ........... 86 WT/TPR/S/361 /Rev.1  • Iceland  
 
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  Table 4.10 Exports of fish products, 2007 -15 ................................ ................................ ........ 87 
Table 4.11 Credit system assets, 2008 -16 ................................ ................................ ............. 94 
 
BOXES  
 
Box 2.1 Minister of Foreign Affairs, policy objectives in certain trade -related areas, 
2015-16 ................................ ................................ ................................ ........................... 25 
 
APPENDIX TABLES  
 
Table A1.1 Merchandise imports by product group, 2010 -16 ................................ .................  105 
Table A1.2 Merchandise exports by destination, 2010 -16 ................................ ......................  107 
Table A1.3 Merchandise imports by origin, 2010 -16 ................................ .............................  108 
Table A1.4 Inflows of foreign direct investment, 2010 -16 ................................ ......................  109 
Table A1.5 FDI inward stock, 2010 -16 ................................ ................................ ................  110 
Table A1.6 Outflows of foreign direct investment, 2010 -16 ................................ ....................  111 
Table A1.7 FDI outward stock, 2010 -16 ................................ ................................ ..............  112 
 
Table A2.1 Selected Notifications to the WTO, 1 July 2012 -30 June 2017  ................................  113 
Table A2.2 Iceland's free trade agreements, 2017  ................................ ................................  115 
 WT/TPR/S/361 /Rev.1 • Iceland  
 
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  SUMMARY  
1. Since the last Trade Policy Review of Iceland in 2012 , a number of significant changes to its 
trade policy have been introduced. Tariffs on non -agricultural goods were fully eliminated and 
tariffs on some agricultural goods were also reduced. In addition, a number of measures were 
undertaken and projects are currently under way to improve customs procedures and new free 
trade agreements have been signed. On th e other hand, although new regulations for the 
agriculture sector took effect in 2017 for the period 2017 -2026, the sector continues to be 
protected by high tariffs and supported by subsidies. In addition, foreign investment restrictions 
remain in some sec tors, notably fishing and energy.  
2. Since 2012, the country has continued to recover from the severe economic crisis that 
started in 2008. GDP growth averaged 3.8% for 2012 -16, while GDP per capita reached nearly 
US$60,000 in 2016. Growth during this period was driven by tourism -related services while the 
contribution to GDP from the traditional fishing, fish processing, and aluminium sectors declined.  
3. With a small open economy and limited range of natural resources, trade is critically 
important to Iceland' s economy and exports and imports of goods and services were the 
equivalent of over 90% of GDP in 2016. The main goods exported were fish and fish products, and 
aluminium and products thereof which together accounted for over three -quarters of the value of  
goods exports in 2016. However, a surplus in trade -in-goods in 2012 became a deficit in 2014 as 
imports increased while exports declined due to lower aluminium prices and lower quantities of fish 
exports. The EU is the main destination for exports (nearly  three -quarters) and source of imports 
(nearly half). The deficit in trade -in-goods was more than compensated by the rising surplus in 
trade -in-services, primarily due to increased tourism. T ourism is now Iceland's largest export 
sector, and tourism servic es (transport and travel) were responsible for nearly 80% of Iceland's 
services receipts in 2016, which resulted in a tourism -services -related surplus of ISK 300 billion .  
4. Practically, all the temporary restrictions  on certain types of cross -border capital  transfers 
and foreign exchange transactions that were introduced following the collapse of the banking 
sector have been removed. A capital account liberalization strategy was introduced in 2015 and 
controls were progressively reduced. In March 2017, the r estrictions on foreign exchange 
transactions and cross -border movement of domestic and foreign currency were largely lifted.  
5. Iceland is an active Member of the WTO but has a mixed record for notifications with no 
TBT, import licensing or preferential rules  of origin notifications and only two SPS notifications 
were made in the period 2012 to 2016. On the other hand, several notifications from Iceland were 
distributed in the first half of 2017, including on domestic support for agriculture for the years 
2013-15, new public procurement rules, and state trading enterprises.  
6. As a member of the European Free Trade Association (EFTA) and the European Economic 
Area (EEA), many of Iceland's trade and trade -related policies and laws are closely related to 
those of t he European Union and Iceland is part of the Internal Market with free movement of 
goods, services, capital and workers. However, some issues such as trade policy  and taxation are 
not incorporated into the EEA  and agriculture is covered by bilateral arrang ements. In 2015, a new 
bilateral agreement on trade in agricultural goods between Iceland and the EU was concluded 
which eliminated or reduced tariffs on a range of products, increased the quantities in some 
existing tariff quotas, and created new tariff q uotas. As part of the agreement, Iceland is to apply 
the same level of protection as the EU for GI products  registered in the EU.  
7. Iceland is a party to 32 reciprocal preferential agreements, mostly through the EFTA, with 
three new agreements having entered  into force during the review period (Bosnia and 
Herzegovina, certain Central American states (Costa Rica and Panama), and the GCC). In addition, 
during the review period, Iceland concluded an FTA on its own behalf with China.  
8. Since 2012, several projects have been implemented to improve customs procedures, 
including the introduction of a risk management system, and the introduction of a quality control 
system . In addition, work is under way on the establishment of an authorized economic operator 
programme,  a single window system,  implementation of the revised single administrative 
document , and an electronic system for the clearance of vessels . The instrument of ratification of 
the Trade Facilitation Agreement was submitted to the WTO on 31 October 2016.  WT/TPR/S/361 /Rev.1  • Iceland  
 
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  9. In a significant development, Iceland eliminated tariffs on all non -agricultural products, with 
tariffs on clothing and footwear eliminated on 1 January 2016 and tariffs on remaining products 
eliminated on 1 January 2017. As a result, nearly 90% of tariff li nes are now duty -free compared 
to 70% in 2012. In addition, tariffs on some agricultural products were also reduced. As a result, 
the overall average tariff fell from 8.3% in 2012 to 4.6% in 2017. However, tariffs on several 
agricultural product groups, pa rticularly meat, dairy, plants, and flowers, remain high and often 
take the form of complex non -ad valorem  duties. Nevertheless, the average applied tariff on 
agricultural products declined to 20% in 2017 compared to 29% in 2012 although tariffs are much 
higher on some products, such as dairy products. About 95% of tariff lines are bound and the 
unbound tariffs apply to a wide variety of products including some fuels, fertilizers, and machinery 
products all of which now have duty free applied rates. It was not possible to calculate the 
ad valorem  equivalents for bound tariffs given the complex nature of some of them. However, 
there were no cases of applied rates exceeding bound rates.  
10. Tariff quotas are used for a number of agricultural products either under the WTO 
Agreement on Agriculture, FTAs, or autonomously. In many cases, the current applied tariff for 
tariff lines subject to WTO tariff quotas is the same as, or lower than, the bound in -quota tariff 
and, therefore, the quota is not used.  
11. Iceland has nev er used or initiated investigations for anti -dumping or countervailing duties, 
nor has it ever used the special agricultural safeguard although its customs legislation does 
provide for them and Iceland reserved the right to use the SSG on 390 tariff lines.  There is no 
legislation on global safeguards although safeguard provisions are generally included in the free 
trade agreements to which Iceland is a party. According to Iceland’s notifications to the WTO, 
export subsidies for agricultural products have no t been used since 31 August 1998.  
12. Although a number of amendments have been made during the review period to the laws 
relating to SPS measures they remain strict and are justified on the grounds that Iceland's 
domestic animals are highly susceptible to exo tic pests and diseases. Imports of some products 
are prohibited and others are subject to controls and licensing requirements. In general, Iceland 
applies the EU's rules on food and imported food must comply with requirements that are at least 
equivalent t o those applicable in the EU.  
13. Incentives for regional investment are provided for under new legislation; the previous 
legislation expired at the end of 2013. Some of the projects approved under the expired legislation 
had been found by the EFTA Surveillan ce Authority to be incompatible with the EEA Agreement. 
Under the new legislation, tax incentives apply for investments outside the Reykjavik area which 
are limited to 15 -35% of the initial investment depending on the size of the enterprise with the 
higher  limits applying to smaller enterprises. In addition, there are incentives for research and 
investment through tax credits and grants.  
14. Although there have been no substantive changes to the legislation on competition policy 
during the review period, the Ic elandic Competition Authority (ICA) has been actively 
implementing the law and, in the 2012 -17 period, has prevented one merger , imposed conditions 
on a further 25 mergers, and has fined 17 companies a total of over €22 million for collusion or 
abuse of do minant position.  In addition, in an opinion issued in 2015, the ICA  found that due to 
the slot allocation arrangements at Keflavik Airport Icelandair has enjoyed a de facto  priority for 
the most important slot times . 
15. The legal framework for public procurem ent was significantly revised during the review 
period with a new Act on Public Procurement and other laws and regulations (including new 
thresholds) introduced to bring legislation into line with EEA rules. The new Act, which applies to 
the State, local a uthorities, their institutions and other public entities, sets out to ensure equal 
treatment of economic operators, encourage efficiency in public sector operations through active 
competition and to promote innovation and development in public procurement of supplies, works 
and services . Iceland has been a party to the WTO Agreement on Government Procurement ( GPA) 
since 2001 and has completed the procedures for becoming a party to the revised GPA, which 
entered into force for Iceland on 6 April 2014.  
16. In add ition to changes in legislation on various aspects of intellectual property (IP), including 
on geographical indications (GIs), the trademark law, and a new fee structure, more changes are WT/TPR/S/361 /Rev.1 • Iceland  
 
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  foreseen to bring national laws into line with the EEA. Furthermore,  the Intellectual Property 
Policy, 2016 -22, issued in 2016, put forward a number of proposals to review laws, promote the 
role of IP in the economy, and improve procedures for registration and enforcement of IP rights. 
The new act and regulation on GIs app ly to food, wine, spirit drinks, and some other products . The 
product name may be protected if the product originat es from  a specific area, has qualities or 
characteristics of the area , and the production, processing and preparation of the product takes 
place in the area. The name must be registered by the Icelandic Food and Veterinary Authority 
(MAST) . In addition, as part of the agreement with the EU on trade in agricultural products, 
Iceland is to provide protection for a list of 1,150 EU GIs.  
17. Agricultur e represents a small part of GDP and employment but remains historically, 
socially, and culturally important for Iceland, as well as being relatively highly protected and 
subsidized. Imports (at US$492 million in 2016) exceeded exports (US$95 million). Dom estic 
policies were revised under new agreements between the Government and the farmers' 
association for the period 2017 -26. For dairy and beef, the production quota system remains but is 
to be reviewed in 2019 to consider the feasibility of abolishing it;  headage payments continue and 
milk payments are to be increased; and support entitlements ( basic payments to all active dairy 
and cattle farmers) are to be phased out . For sheep, support entitlements are also to be phased 
out while quality assurance payme nts are to be increased and headage payments introduced. 
Under these and other changes, the total support to agriculture is to decrease slightly over the 
duration of the agreements. During 2012 to 2016, support to agriculture in ISK terms increased 
under t he Green, Blue, and Amber Boxes of the WTO and for the 2012 to 2015 period under the 
OECD's total and producer support estimates (TSE and PSE). The dairy sector is the most heavily 
supported; in 2016, it accounted for ISK 18.5 billion out of a total of ISK  21.3 billion in Amber Box 
support and, together with beef, ISK 0.7 billion in the Blue Box. Overall, the PSE was nearly ISK 
26 billion in 2015 or 56% of gross farm receipts, the third highest among OECD countries.  
18. Although the contributions of fishing an d fish processing to GDP have declined, they remain 
relatively very important and represented 4.6% and 2.7% respectively in 2016. T otal exports of 
fish and fish products were US$1,925 million in 2016, representing 43% of exports of goods, while 
imports wer e US$134 million . Fisheries policy has not changed significantly over the past few 
years. Based on stock assessments by the Marine and Freshwater Research Institute (MRFI) , total 
allowable catches (TACs) are established which are allocated to individual ve ssels under the 
individual transferable quota (ITQ) systems. In addition, a number of effort and gear restrictions 
apply, discards of commercial species are prohibited, and a vessel owner may not leave port 
without an adequate quota for the trip. According  to the OECD, the Fisheries Support Estimates 
(FSE) for 2012 to 2014 was negative indicating a net average annual contribution of ISK 4.4 billion 
from the fisheries sector as fees were greater than the estimates of support . The FSE was positive 
for 2015 wh en general services support was greater than cost recovery charges. Foreign 
ownership of fishing operations and fish processing is limited to 25% direct and 49% direct plus 
indirect ownership although up to 33% direct foreign ownership may be permitted in some cases.  
19. Hydro and thermal power sources are abundant in Iceland and electricity prices for industrial 
consumers are the lowest in the EEA. As a result, energy intensive industries, such as aluminium 
production, have been established and aluminium and alloys thereof represent over one -third of 
total exports of goods (US$1.5 billion). Investment and ownership of energy exploitation rights 
and the production and distribution of energy are limited to EEA and EFTA residents , while 
Landsnet, a private compan y, has the exclusive right to provide transmission services.  
20. Since the financial crisis, the banking system has stabilized and recovered. Currently the re 
are four commercial and four savings banks (compared with nine in 2012). Two of the commercial 
banks a re wholly state -owned, while a third has a minority government stake. The restructuring of 
the banks has also resulted in the ratio of non -performing loans to total loans declining from a 
peak of 20% in 2010 to 2.1% in 2016 . In June 2015, the authorities a nnounced a plan to unwind 
the estates of the failed banks and the remaining offshore ISK holdings  (mainly bank deposits, 
treasury securities and equity interests ). In June 2016, the Central Bank held the first of three 
voluntary euro auctions for offshore ISK holders with the exchange rate based on a sliding scale 
related to the size of the bid. Direct state assistance to the financial sector was the equivalent of 
about 34% of GDP. However, recoveries were estimated to be about 43% of GDP (mainly bank 
equity and subordinated debt, and stability contributions from the estates of the failed banks). 
Thus, the State is estimated to have made a net gain in excess of 9% of GDP.  During the review 
period, several regulatory changes were introduced including the esta blishment of new bodies to WT/TPR/S/361 /Rev.1  • Iceland  
 
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  assess the financial system, systemic risk, and financial stability and formulate policies. In 
addition, several other measures, including new liquidity rules, funding ratios, capital buffers, and 
rules relating to consumer mortg age credit were introduced.  
21. Tourism has increased considerably since 2010 and, in 2016, represented about 10% of GDP 
and nearly 40% of export receipts for goods and services. Total spending on tourism -related 
activities increased from ISK 93 billion in 20 09 to ISK 222 billion in 2015. Apart from Iceland's 
unique landscape and other attractions, the increase can also be attributed to the depreciation in 
the ISK after the financial crisis, better and more frequent flight connections, and better 
marketing. To urism also accounts for the increase in air passengers, as well as Icelandic airlines 
becoming a more financially viable option for transatlantic passengers and the promotion of 
Iceland as a transatlantic hub. The total number of passengers through Keflavi k airport in 2017 is 
estimated to be in the region of 9 million . 
22. Iceland has improved trading and investment conditions since 2012 and partly as a result of 
this the economy has recovered and is expanding rapidly. With a small population and limited 
natura l resources, apart from energy and fish, trade remains important but the range of exports is 
limited to tourism, fish and fish products, and aluminium and products thereof. Therefore, the 
country remains vulnerable to shocks, including the appreciation of the ISK, overheating of the 
economy, and Brexit. However, short term exposure to external factors has been reduced: at end -
2016, total external debt was US$23.4 billion compared to US$105.8 billion in 2012 and 
international reserves were over US$7 trillion  (partly due to the unwinding of the estates of the 
failed banks). Furthermore, despite uncertainties relating to Brexit, as growth picks up in the EU, 
Iceland's main trading partner, opportunities for trade in goods and services should continue to 
improve . 
 WT/TPR/S/361 /Rev.1 • Iceland  
 
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  1  ECONOMIC ENVIRONMENT  
1.1  Main Features of the Economy  
1.1.  Iceland is a high -income developed economy with a GDP per capita of ISK 7.2 million 
(€53,948) and a population of 338,450 in 2016 (Table 1.1). Fishing and fish processing remain 
important to the economy  (contributing 7.2% to GDP in 2016 ), but services have continued to 
increase (now representing  71% of GDP ), as have  manufacturing (mainly aluminium) (8.4% ), and 
construction (6.8% ). Trade is critical to the economy , with imports and exports of goods and 
services equivalent to about 92% of GDP. Merchandise exports continue to be concentrated in fish 
and fish products and aluminium manufacturing, both of which were responsible for over three 
quarters of merchandise exports in 2016. Furthermore, during the rev iew period, services exports 
have shown robust growth, driven primarily by the tourism sector (Table 1.2).  
1.2.  Iceland was one of the countries worst affected by the 2008 financial crisis with the banking 
system collapsing and the country going into a deep rec ession. 2009  to 20 10, real GDP contracted 
by over 10%. In response, the Government enacted the Emergency Act (the Act on the Authority 
for Treasury Disbursements due to Unusual Financial Market Circumstances, etc., No.  125/2008) 
which allowed for , inter al ia, immediate intervention in the operations of the collapsing banks and 
the putting in place  of capital controls. Furthermore, funding from Nordic countries and the IMF 
through a Stand -By Arrangement helped to shore up the economy.1 Prudent macroeconomic 
management and continued openness of the economy have since helped turn the economy 
around. During the review period (2012 -16), real GDP grew at an average annual rate of 3.8% 
and is estimated to grow at the same rate in 2017 (Table 1.1). Growth has been f uelled mainly by 
tourism -related services (wholesale and retail trade, hotels and restaurants , and transportation 
and storage) (Table 1.2). As a result of the growth, GDP per capita rose from around US$44,000 in 
2012 to nearly US$60,000 in 2016 and the une mployment rate halved from 6% to 3% over the 
same period.  
Table 1.1 Selected macroeconomic indicators, 2012 -16 
  2012  2013  2014  2015  2016  
Real GDP (ISK billion)  1,135.2  1,185.3  1,208.1  1,257.6  1,348.1  
Real GDP (US$ million)  9,075.5  9,701.0  10,346.
0  9,532.9  11,158.8  
Current GDP (ISK billion)  1,778.5  1,891.2  2,005.9  2,214.1  2,422.0  
Current GDP (US$ million)  14,218.
6  15,479.
3  17,179.
0  16,783.
7  20,047.4  
GDP per capita at current market pric e (US$)  44,330.
6  47,806.
9  52,471.
9  50,735.
8  59,654.9  
National accounts (%age change based on constant figures, unless otherwise indicated)  
Real GDP  1.2  4.4  1.9  4.1  7.2  
   Consumption  0.8  1.0  2.5  3.3  5.3  
        Private consumption expend iture 2.0  1.0  2.9  4.3  6.9  
        Government consumption expenditure  -1.8  1.0  1.7  1.0  1.5  
   Gross fixed capital formation  5.3  2.2  16.0  17.8  22.7  
   Exports of goods and services  3.6  6.7  3.2  9.2  11.1  
   Imports of goods and services  4.6  0.1  9.8  13.5  14.7  
        XGS/GDP (%, at current market price)  57.0  55.4  53.3  53.7  49.1  
        MGS/GDP (%, at current market price)  51.0  47.5  47.0  46.2  42.5  
Unemployment rate (%)  6.0 5.4 5.0 4.0 3.0 
Prices and interest rates  
Inflation (CPI, %age change)  5.2  3.9  2.0  1.6  1.7  
Lending rate (%)  8.32  8.15  7.74  7.61  8.24  
                                                
1 For details of the Government's response to the crisis please see WTO Document WT/TPR/S/273/Rev.1 
12 November 2012.  WT/TPR/S/361 /Rev.1  • Iceland  
 
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    2012  2013  2014  2015  2016  
Discount rate (%)  7.00  7.00  6.25  7.50  6.75  
Exchange rate       
ISK/US$ (annual average)  125.08  122.18  116.77  131.92  120.81  
Nominal effective excha nge rate (%age change, 
based on CPI)  -3.3 2.2 5.9 1.3 10.9 
Real effective exchange rate (%age change, based on 
CPI) -0.3 4.6 6.6 2.2 11.7 
Fiscal policy of general government (% of current GDP, unless otherwise indicated)   
Total revenue  41.7  42.1  45.2  42.0  58.4  
   Tax revenue  31.6  32.1  34.9  33.1  32.8  
Total expenditure  45.4  43.9  45.3  42.9  41.2  
Overall balance  -3.7  -1.8  -0.1  -0.8  17.2  
General government gross debt  92.5  84.8  82.5  68.1   ..  
Saving and investment       
Gross nation al saving  12.1  21.5  21.3  24.6  29.3 
Gross domestic investment  16.1  15.4  17.3  19.1  21.3  
Savings -investment gap  -4.0  6.0  4.0  5.5  8.0  
External sector       
Current account balance  -4.0  6.0  4.0  5.5  8.0  
Net merchandise trade  0.7  0.4  -0.5  -1.6  -4.2  
   Merchandise exports  32.4  29.7  28.3  27.7  22.3  
   Merchandise imports  31.7  29.3 28.8  29.4  26.5  
Services balance  5.3  7.5  6.8  9.1  10.7  
Financial account  -0.1  -0.1  -0.1  -0.1  -0.1  
   Direct investment  -5.1  7.1  3.5  5.6  10.2  
Terms of trade (%age change)  -5.3  -4.2  4.8   ..   ..  
Merchandise exports (%age change -national 
currency)  2.4  -2.7  1.3  8.1  -12.1  
   %age change in US$  -5.1  -0.3  6.0  -4.3  -4.0  
Merchandise imports (%age change - national 
currency)  7.2  -2.0  4.6  12.3  -1.2  
   %age change in US$  -0.6  0.4  9.4  -0.6  7.8  
Service exports (%age change - national currency)  9.3  11.4  2.7  14.9  13.0  
   %age change in US$  1.3  14.1  7.5  1.7  23.4  
Service imports (%age change - national currency)  13.9  0.4  5.8  2.2  4.4  
   %age change in US$  5.6  2.8  10.7  -9.5  14.0  
International reserves, excl. gold (US$ million)  4,085.3  4,160.8  4,100.1  4,972.9  7,152.5  
Total external debt (US$ billion; end -period)  105.8  101.7  106.3  29.7  23.4  
.. Not available.  
Source:  Statistics Iceland and Central Bank of Iceland online information ; and  IMF, International Financial 
Statistics indicators.  WT/TPR/S/361 /Rev.1 • Iceland  
 
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  Table 1.2 Basic economic indicators, 2012 -16 
    2012  2013  2014 2015  2016  
GDP by economic activity, at constant prices (%age change)     
Agriculture, forestry and fishing  8.2 -7.2 -1.0 4.6 -1.5 
 Fishing  8.4 -8.8 -1.5 5.5 -4.2 
Mining and quarrying  -2.6 7.5 5.9 18.1 13.1 
Manufacture  3.2 5.7 2.7 4.8 2.1 
 Food produ cts, beverages and tobacco products  4.8 10.0 -2.0 2.9 -4.8 
    Fish processing  3.5 10.9 -6.9 2.8 -9.2 
Electricity, gas, steam and air conditioning supply  3.0 23.9 2.5 4.7 .. 
Construction  1.4 8.8 9.6 10.4 30.9 
Services  -2.2 1.8 1.9 4.3 .. 
 Wholesale an d retail trade; repair of motor vehicles and 
motorcycles  0.1 0.9 5.8 11.3 9.7 
 Hotels and restaurants  13.8 15.5 27.9 19.4 36.5 
 Transportation and storage  10.1 11.7 1.3 14.2 17.3 
 Information and communication  6.5 9.5 7.3 6.9 13.6 
 Finance and insuranc e -17.8 -17.7 -12.6 -14.7 -5.1 
 Real estate  1.4 1.9 0.2 0.9 1.1 
 Professional, scientific and technical activities  3.5 30.7 3.6 6.0 10.3 
 Administrative and support service activities  -1.7 8.8 8.8 22.7 26.7 
 Public administration and defence; compulsor y social security  -1.5 1.0 1.7 1.0 1.5 
 Education  -1.5 1.0 1.7 1.0 1.5 
 Human health and social work activities  -1.5 1.0 1.7 1.0 1.5 
 Other services  0.6 6.4 2.8 1.2 9.2 
Value added by economic activity, at current prices (%)     
Agriculture, forestry a nd fishing  7.7 6.9 6.1 6.2 5.8 
 Fishing  6.4 5.5 4.8 5.0 4.5 
Mining and quarrying  0.1 0.1 0.1 0.1 0.1 
Manufacture  13.0 12.9 12.4 11.5 11.1 
 Food products, beverages and tobacco products  5.8 5.9 5.0 4.9 4.4 
    Fish processing  4.0 4.0 3.2 3.2 2.7 
Electricity, gas and water supply  6.2 5.9 5.1 5.4 5.0 
Construction  4.6 4.9 5.5 5.5 6.8 
Services  68.4 69.4 70.8 71.0 71.4 
 Wholesale and retail trade; repair of motor vehicles and 
motorcycles  8.7 8.7 9.2 9.5 9.8 
 Hotels and restaurants  2.3 2.5 2.9 3.2 4.2 
 Transportation and storage  5.5 5.9 5.6 6.6 7.3 
 Information and communication  4.2 4.9 4.6 4.8 5.1 
 Finance and insurance  9.2 7.9 7.9 6.3 5.6 
 Real estate  9.8 10.0 10.4 10.1 9.0 
 Professional, scientific and technical activities  4.4 4.5 4.7 4.7 4.9 
 Administrative and support service activities  2.6 2.8 3.3 3.8 4.5 
 Public administration and defence; compulsory social security  5.7 5.4 5.4 5.3 5.1 
 Education  6.1 6.1 6.1 6.0 5.7 
 Human health and social work activities  7.1 7.8 7.9 7.9 7.3 
 Other servic es 2.8 2.9 2.8 2.8 2.9 
Share of sector in total employment       
Agriculture  5.7  4.6  4.5  4.3  3.9  
      Fishing and aquaculture  3.0  2.2  2.5  2.2  2.1  
Manufacturing  11.6  11.4  11.1  10.3  10.1  
      Fish processing  2.5  2.9  2.6  2.0  1.9  
Electricity and water supply  1.1  1.1  1.3  1.3  1.2  
Construction  5.5  6.0  5.9  6.2  6.2  WT/TPR/S/361 /Rev.1  • Iceland  
 
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      2012  2013  2014 2015  2016  
Services  76.1  76.9  77.2  78.0  78.7  
     Wholesale and retail trade, repairs  13.2  13.4  13.1  13.0  13.3  
     Hotels and restaurants  4.8  5.8  6.0  6.1  6.2  
     Transport and storage  5.2  5.3  5.7  6.2  6.8  
     Information and communication  4.2  4.2  4.6  5.1  5.2  
     Finance and insurance  4.4  4.1  3.8  3.4  3.3  
     Real estate  0.5  0.5  0.4  0.5  0.6  
     Professional, scientific and technical a ctivities  5.7  5.7  6.0  6.2  6.2  
     Administrative and support service activities  3.0  3.0  3.5  3.1  3.6  
     Public administration and defence; compulsory social security  5.3  5.2  4.3  4.1  4.4  
     Education  11.5  11.7  12.4  12.8  12.1  
     Human health and social work activities  11.4  11.8  11.4  11.4  11.1  
     Other services  6.9  6.3  6.0  6.2  6.0  
.. Not available.  
Source:  Statistics Iceland online information.  
1.3.  The main risks to sustained growth stem from the potential overheating of  the economy 
which would be perpetuated by the recent large wage awards, capital account liberalization (which 
could result in monetary and exchange rate instability ), and the uncertainty surrounding the 
aftermath of Brexit. To mitigate the risks from thes e, the right policy mix would include monetary 
and some fiscal tightening to cool demand.  
1.4.  The large wage awards (about 25% for 2015 -18) could increase domestic demand and, 
coupled with fiscal easing, could give rise to inflationary pressures.  
1.5.  To keep fisc al policy in check, the parliament passed new legislation on public sector finances 
in December 2015. The new legislation imposes stringent rules on operational performance and 
developments in the debt level. The main objective of the new legislation is to  provide for sound 
macro -fiscal policy based on comprehensive medium -term budgeting and reporting. The new 
medium -term fiscal framework (MTFF), the cornerstone of the new Act, is designed to address 
gaps in the old legal framework from budget formulation t o execution. The objective is to set up a 
transparent and credible MTFF that serves the purpose of mapping out macroeconomic and fiscal 
policy -making. The Act establishes a procedural fiscal rule that maps out a five -year general 
government fiscal path wit h the following three fiscal rules: the overall result over a five -year 
period must always be positive, and the annual deficit may not exceed 2.5% of GDP; total debt, 
excluding pension obligations and accounts payable, but including cash balances and depos its, 
may not exceed 30% of GDP; and, if the net debt ratio rises above 30%, the excess portion must 
decline by an average of at least 5% per year in each three -year period.  
1.6.  The objective of the capital controls that were introduced as a temporary measure d uring the 
crisis was to place temporary restrictions on certain types of cross -border capital transfers and 
foreign exchange transactions that could cause monetary and exchange rate instability while the 
resurrection of the Icelandic economy and financial system was underway. The capital controls 
played an important role in achieving and safeguarding the objectives of the Icelandic policy 
response to stabilize the exchange rate, ensure medium -term fiscal sustainability, and develop a 
comprehensive bank rest ructuring strategy. According to the authorities , the controls were 
successful in achieving these objectives.  
1.7.  The Government's updated capital account liberali zation strategy was presented in June 
2015. The strategy proposed that the controls be lifted in stages. The first phase in the strategy 
involved reducing the size of outflows through the foreign exchange market in connection with the 
resolution of the failed banks' estates, either through voluntary composition agreements based on 
specific stability c onditions or through taxation that would mitigate the adverse balance of 
payments effects. The second phase would focus on reducing the externalities associated with 
outflows from offshore ISK owners through an auction and secure segregation of the offshor e 
market from the onshore market  during the liberali zation of restrictions on households and 
businesses.  The third phase would focus on households and businesses . WT/TPR/S/361 /Rev.1 • Iceland  
 
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  1.8.  The Act No. 37/2016 on the Treatment of Króna -Denominated Assets Subject to Special 
Restricti ons was passed by the parliament in May 2016 enabling the authorities to segregate 
offshore ISK and take the next step towards lifting the capital controls. Under the provisions of the 
Act, offshore ISK holders were allowed to invest in the same instrument s as before, with the 
addition of special certificates of deposit issued by the Central Bank. However, the banks holding 
the accounts of offshore ISK owners were required to buy equivalent certificates of deposit from 
the Central Bank. These instruments be ar an interest rate of 0.5%, which is reviewed every 
12 months. In June 2016 , the Central Bank held a foreign currency single price auction in which 
owners of offshore ISK assets were given the option of exchanging their holdings for foreign 
currency. The auction price was set at ISK 190/euro and the Bank accepted all offers submitted at 
that rate. The auction helped to facilitate the exit of offshore ISK without negative effects on the 
foreign exchange market, and the outstanding stock of offshore ISK was reduced significantly.2 
The Act grants  the owners of offshore ISK assets temporary authori zation to withdraw and 
conclude foreign exchange transaction s at a reference rate of ISK 220/euro ; such transactions 
amounted to a further ISK 15.5 billion exiting. I n March 2017, the Central Bank concluded 
agreements with several owners of offshore ISK assets subject to special restrictions pursuant to 
Act No. 37/2016. Under the agreement, the Bank purchased a further ISK 90 billion at an 
exchange rate of ISK 137.5/eu ro of offshore ISK assets. As a result of the above measures, the 
remaining offshore ISK assets are now estimated to be ISK 103.6 billion or 4.3% of GDP and the 
risk of large -scale outflows of offshore ISK through the foreign exchange market following the 
liberali zation of capital controls has been mitigated.  
1.9.  Owners of offshore króna assets who were not parties to the March agreement were 
subsequently given the option of  conclud ing a transaction with the Central Bank on the same 
terms. The Central Bank's o ffer was valid until 28 April 2017. Owners of remaining offshore ISK 
assets continue to have the right to sell their assets; they can make withdrawals, exchange all 
interest payments in the foreign exchange market, and trade in the offshore market.  
1.10.   Additio nally, Act No. 105/2016 (amending the Foreign Exchange Act, No.  87/1992 ), which is 
aimed at lifting capital controls on individuals and businesses , entered into force on 21 October 
2016. The Act authorized immediate outward FDI and easing of restrictions o n long - and 
short-term portfolio investment up to a limit of ISK 30 million. Effective 1 January 2017, the limit 
was raised to ISK 100 million and expanded to include cross -border deposit transfers. The Central 
Bank is authori zed to ease these limits until  they are abolished, along with limitations on 
derivatives and other instruments and other remaining restrictions.  
1.11.   Furthermore, in June 2016, in order to pre -empt any disruptions caused by the lifting of 
capital controls, the Central Bank of Iceland publis hed new Rules on Special Reserve Requirements 
for New Foreign Currency Inflows, No. 490/2016. The main purpose of the Temporary Provision 
was to provide the Central Bank with a policy instrument, generally referred to as a capital flow 
management measure ( CFM), which is designed to temper inflows of foreign currency and to affect 
the composition of such inflows. The CFM aimed to reduce the risk of excessive and speculative 
capital inflows aimed at  exploit ing the wide interest rate differential between Icela nd and its 
trading partners and to safeguard against implementation risks associated with the second and 
third phase of the capital account liberalization strategy. From 14 March 2017, the restrictions on 
foreign exchange transactions and cross -border move ment of domestic and foreign currency were 
largely lifted.3 
1.2  Recent Economic Developments  
1.2.1   Monetary policy  
1.12.   The Central Bank's main monetary policy objective is to maintain price stability. The Bank 
has full instrumental independence to achieve its goal. The price stability goal is defined as an 
annual inflation (as measured by the consumer price index) target of 2.5%. The Bank is also 
financially independent with direct financing of the Government by the Central Bank prohibited.  
                                                
2 Accepted offers amoun ted to ISK 83 billion , of a total of ISK 188 billion that were submitted in the 
auction and the post -auction tender.  
3 Central Bank of Iceland online information. Viewed at: 
http://www.cb.is/publications/news/news/2017/03/12/New -Rules -on-Foreign -Exchange -/ [April 2017].  WT/TPR/S/361 /Rev.1  • Iceland  
 
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  1.13.   In the aftermath of the 2008 financial crisis, the inflation -targeting regime was refined 
(dubbed "inflation -targeting plus"). Active use of intervention in the foreign exchange market to 
correct excessive exchange rate fluctuations has become an important part of the post -crisis 
mone tary policy framework, which also emphasizes the use of additional policy instruments such 
as macro -prudential tools and capital flow management measures to curb destabilizing capital 
inflows.  
1.14.   After the large spike in inflation following the financial cris is in 2008, inflation gradually 
declined towards the inflation target in early 2014. It fell further following the large decline in 
global oil prices in late 2014 and has remained below or close to the target for the last three years 
(Table 1.1). The Monet ary Policy Committee of the Central Bank of Iceland started raising interest 
rates again in 2015 in the face of rising risks of inflation expectations becoming unmoored 
following a very generous wage settlement. As inflation expectations eased back to targ et, the 
Bank has started lowering rates again. The monetary policy stance remains tight, however, as 
output grows strongly and spare capacity is fully absorbed.  
1.2.2   Fiscal policy  
1.15.   The legacy of the 2008 financial crisis continues to affect Iceland's fiscal pos ition. The crisis 
increased social protection expenses mainly through unemployment benefits, which peaked at 
1.9% of GDP in 2009 before subsiding to 0.5% of GDP in 2015 (still higher than they were in 
2008). The crisis also imposed a debt burden on the Gov ernment resulting in increased interest 
payments, which rose to 6% of GDP in 2009, before falling to around 4.5% of GDP in 2015. 
Consequently, since the advent of the crisis, Iceland had continuously registered a fiscal deficit, 
which was 0.8% of GDP in 20 15. In recent years , public sector wage growth and increased 
municipal borrowing have fuelled the deficit. On the other hand , general government gross debt, 
which was over 90% of GDP in 2012 , had fallen to under 70% of GDP in 2015 (Table 1.1).  
1.16.   The settleme nt of the failed banks' estates resulted in a one -off windfall gain of around 17% 
of GDP. As a result , Iceland registered a fiscal surplus of over 17% of GDP in 2016. The proceeds 
from the settlement of the banks ' estates are to be used for public debt red uction, which should 
reduce the general government gross debt to around 50% of GDP.  
1.17.   The 2016 budget included a reform of the personal income tax (PIT) system. The main 
objectives of the reform were to lower taxes on average wage income , and also to simplif y the 
system, increase its efficiency and make it more transparent. The personal income tax  rates were 
reduced and the current three rate bands harmonized into two, in two phases, for an annual 
revenue loss of about 0.5% of GDP. The latter phase was subjec t to a general proviso that the 
changes would only be implemented if it can be considered justifiable in view of economic 
developments and prospects as they were assessed in mid -2016. That test was passed and the 
latter phase of the PIT changes came into f orce from the beginning of the year 2017. No specific 
tax measures were made to make up the revenue loss from the PIT changes.  
1.2.3   Balance of payments  
1.18.   During the period under review, Iceland's current account showed a drastic turnaround. 
From a deficit of aro und 4% of GDP in 2012, the current account registered a surplus of 8% of 
GDP in 2016, reflecting an increasing difference between gross national savings and gross national 
investment (Table 1.3).  
Table 1.3 Balance of payments, 2012 -16 
(ISK million)  
  2012  2013  2014  2015  2016  
      
Current account  -70,335.1  114,260.8  79,845.1  121,141.2  193,500.6  
Balance on goods  12,035.2  7,815.0  -10,318.7  -35,497.2  -101,505.1  
      Merchandise exports f.o.b.  576,339.7  561,0 36.4 568,315.5  614,381.9  540,333.0  
      Merchandise imports f.o.b.  564,304.4  553,221.4  578,634.2  649,879.0  641,838.1  
Balance on services  94,177.7  142,629.1  135,733.0  202,112.1  260,340.8  
      Credit  436,928.5  486,871.5  500,004.8  574,362.5  648,936.9  
          Transportation  .. 190,114.7  189,240.3  205,022.1  218,129.6  WT/TPR/S/361 /Rev.1 • Iceland  
 
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    2012  2013  2014  2015  2016  
          Travel  .. 131,063.9  160,077.3  213,328.8  291,808.2  
     Debit 342,750.8  344,242.4  364,271.8  372,250.4  388,596.1  
          Transportation  .. 59,812.4  58,531.0  63,037.1  61,866.9  
          Travel  .. 103,452.5  113,594.1  131,407.2  153,219.4  
Primary income, net  -166,897.0  -23,433.1  -32,986.9  -10,143.7  51,038.0  
      Credit  109,533.8  130,376.3  107,579.3  115,375.4  118,223.3  
          Compensation of employees  18,532.0  23,970.6  23,749. 9 25,536.7  27,344.0  
          Investment income  82,781.2  99,969.1  77,323.2  82,729.7  82,812.1  
          Reserve assets  8,220.6  6,436.6  6,506.2  7,109.0  8,067.1  
      Debit 276,430.8  153,809.3  140,566.2  125,519.1  67,185.3  
          Compensation of employe es 4,230.5  4,337.4  6,701.5  3,759.2  7,212.1  
          Investment income  272,200.3  149,472.0  133,864.7  121,759.9  59,973.2  
Secondary income, net  -9,651.1  -12,750.3  -12,582.4  -35,330.0  -16,373.1  
Capital account  -1,243.5  -1,289.7  -1,591.7  -1,476.0  -1,387.5  
Financial account  -91,166.6  134,558.4  70,932.0  123,378.9  246,651.9  
        Direct investment, net  -529,197.2  5,962.0  -85,603.0  -92,248.0  -86,375.0  
              Iceland's direct investment abroad  -400,971.2  63,046.0  2,799.0  56,571.0  -225,047.0  
              Direct investment in Iceland  128,225.9  57,084.0  88,402.0  148,819.0  -138,672.0  
        Portfolio investment, net  -59,775.4  135,076.4  -139,310.4  504,323.3  223,302.1  
              Assets  78,232.0  150,076.5  -8,905.4  -390,811.0  114,494.1  
              Liabilities  138,007.4  15,000.1  130,405.0  -895,134.3  -108,808.0  
        Financial derivatives, net  -14.4 -628.3  -743.2  2,162.2  2,961.4  
        Other investment, net  1,041,277.4  -6,981.8  261,165.0  -434,366.0  -182,276.1  
              Assets  253,108.6  -113,3 22.3 -371,610.1  -54,562.3  -651,077.2  
              Liabilities  -788,168.9  -106,340.5  -632,775.1  379,803.7  -468,801.1  
      Reserve assets  -543,457.0  1,130.0  35,423.5  143,507.5  289,039.5  
Net errors and omissions  -19,587.9  21,587.3  -7,321.4  3,713.6  54,538 .9 
.. Not available.  
Source : Central Bank of Iceland online information.  
1.19.   The improvement in the current account since the 2008 financial crisis was initially due to 
reduced interest payments and a surplus in merchandise trade, which has since turned into a 
deficit. However the increase in the surplus for services has more than compensated for the 
negative goods balance. The growth in the services balance was primarily due to the strong 
performance of the tourism sector. Between 2010 and 2015, the number of  visitors to Iceland 
grew by an average annual rate of 22% to reach 1.3 million , and tourism -related spending more 
than doubled to ISK 222 billion over the same period ( Section 4.3.4 ). Consequently , tourism is 
Iceland's largest export sector , and tourism s ervices (transport and travel) were responsible for 
nearly 80% of Iceland's  services receipts in 2016, which resulted in a tourism -services -related 
surplus of ISK 300 billion in 2016 (Table 1.4). Additionally the balance on the income account , 
which had re ached a deficit of over ISK 300 billion in 2008 , has also shown a significant 
improvement, albeit not a s marked as the services surplus, reach ing a surplus of ISK 51 billion. 
The improvement has come  about  due to reduced outlays in lieu of investment.4  
Table 1.4 Composition of trade in services, 2012 -16 
  2012  2013  2014  2015  2016  
      
Total credit (ISK million)  436,929  486,872  500,005  574,363  648,937  
 % of total credit  
Manufacturing services on physical inputs owned by 
others  .. 10.4  5.1  3.1  1.1  
Maintenance and repair services n.i.e.  .. 1.0  1.2  0.9  1.0  
Transport  .. 39.0  37.8  35.7  33.6  
    Passenger transport by air  .. 29.9  28.9  27.2  26.9  
Travel  .. 26.9  32.0  37.1  45.0  
                                                
4 In line with BOP6 prescriptions, interest on debt, in default and arrears, should be calculated and 
accounted for in the BOP accounts until the debt has been fully paid or written off. This happened at the end of 
the year 2015, which explains lower interest charges in 2016.  WT/TPR/S/361 /Rev.1  • Iceland  
 
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    2012  2013  2014  2015  2016  
Construction  .. 0.9  0.7  0.4  0.4  
Insurance and pension services  .. 0.7  0.5  0.5  0.4  
Financial services  .. 4.4  3.9  2.9  2.3  
Charges for the use of intellectual property n.i .e. .. 2.3  3.7  5.3  3.5  
Telecommunications, computer and information 
services .. 5.0  5.2  5.6  5.1  
Other business services  .. 7.9  8.0  7.0  6.0  
Personal, cultural and recreational services  .. 1.1  1.0  1.0  1.3  
Government goods and services n.i.e.  .. 0.5  0.7  0.4  0.4  
      
Total debit (ISK million)  342,751  344,242   364,272  372,250  388,596  
 % of total debit  
 Maintenance and repair services n.i.e.  .. 5.6  4.9  4.9  4.7  
 Transport  .. 17.4  16.1  16.9  15.9  
     Passenger transport by air  .. 2.1  2.0  2.1  1.9  
 Travel  .. 30.1  31.2  35.3  39.4  
 Constru ction  .. 0.3  0.2  0.5  0.7  
 Insurance and pension services  .. 1.9  1.5  1.3  1.2  
 Financial services  .. 5.6  4.3  2.7  1.8  
 Charges for the use of intellectual property n.i .e.  .. 2.8  3.8  3.0  2.9  
 Telecommunications, computer and information  
services  .. 5.7  5.6  6.3  6.0  
 Other business services  .. 28.8  30.1  26.9  24.8  
 Personal, cultural and recreational services  .. 1.4  1.7  1.8  2.1  
 Government goods and services n.i.e.  .. 0.6  0.6  0.6  0.5  
.. Not available.  
Source:  Data pr ovided by the authorities.  
1.20.   The capital account measures capital transfers between residents and non -residents; these 
can include investment grants, debt forgiveness, or unusually large insurance compensation 
payments. The financial account includes net tra nsactions with financial assets and liabilities that 
take place between residents and non -residents. Not all entries in the financial account derive from 
actual transactions. In certain instances, imputed values are entered into the financial account 
even though no transaction has taken place , so as to reflect the underlying economic relationship. 
Reinvested earnings, investment income earned on technical reserves, accrued unpaid interest on 
liabilities, interest added to the principal amount , and interest in arrears are all classified as 
financial account transactions . The difference between assets and liabilities is the international 
investment position (IIP), which indicates whether there is a net claim or a net liability vis-à-vis 
non-residents. Net dire ct investment, portfolio investment and financial derivatives are also 
included in the financial account.  
1.21.   During the period under review, the capital and financial account has gone from a deficit of 
around ISK 92 billion in 2012 to a surplus of ISK 300 bil lion in 2016. Iceland's net international 
investment position (NIIP) improved considerably in the post -crisis period, through debt 
repayments facilitated by the current account surplus, debt write -offs due to bankruptcies of 
private sector entities, and th e composition agreements of the failed financial institutions' estates 
in late 2015. With regard to failed banks and the settlement of their estates, the underlying NIIP 
calculated by the Central Bank of Iceland was -131% of GDP in 2008 , but that improved to -31.5% 
in 2015. Nearly 40% of the reduction is due to the current account surplus and GDP growth during 
the period, while the rest is due to asset revaluation and debt restructuring.5 Furthermore, at the 
end of 2008, the failed banks owned 77% of total foreign loans. This share increased to 90% at 
year-end 2009 but had fallen to 64% by the end of 2014. Between 2009 and 2014, the stock of 
foreign lending by the deposit money banks in winding -up proceedings dropped from 63% of GDP 
to 11%. The main reason f or this decline is that some of the loans were reclassified as foreign 
direct investment (FDI) at the end of 2009 because of financial difficulties among the banks' 
debtors, prompting a takeover of the companies concerned. At the end of 2015, foreign lendi ng by 
the holding companies of the failed banks amounted to 7.4% of GDP, and had decreased further to 
5.6% of GDP in 2016.  
                                                
5 Central Bank of Iceland online information. Viewed at: www.sedlabanki.is .  WT/TPR/S/361 /Rev.1 • Iceland  
 
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  1.22.   In addition to the current account surplus, the Central Bank purchased foreign currency 
through interventions so as to build up forei gn exchange reserves in preparation for the lifting of 
capital controls. At the end of 2016, reserves amounted to 34% of GDP and provided import cover 
for nine months . 
1.3  Trade Performance  
1.23.   Iceland's economy has continued to depend on trade, and trade in good s and services as a 
proportion of GDP exceeded  92%. During the period under review, the balance on trade in goods 
turned from a surplus to a deficit as exports fell and import rose, due mainly to an appreciation of 
the exchange rate. In contrast, the servi ces surplus more than doubled during the review period to 
over ISK 260 billion in 2016. The increase was mainly due to an upsurge in tourism.  
1.3.1   Composition of trade  
1.24.   During the review period, the composition of Iceland's exports did not change ; exports of 
primary products in total merchandise exports remained static at around 85% of total exports 
(Chart  1.1). Within primary products, the share of agricultur e, fish, and food products increased. 
In contrast, the share of aluminium products fell (Table A 1.1). The  share of manufactures declined 
from over 14% in 2012 to around 13% in 2016. Within manufactures , the decline was due to 
reduced exports of iron and steel and chemicals.  WT/TPR/S/361 /Rev.1  • Iceland  
 
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  Chart 1.1 Product composition of mercha ndise trade, 2012 and 2016  
Source:  UNSD, Comtrade database (SITC Rev.3).  
1.25.   The share of primary products in total merchandise imports declined from nearly 40% in 
2012 to 31.5% in 2016. Within primary products, the decline was due to reduced imports of 
alumina on account of lower alumina prices (Table A 1.1). On the other hand, the share of 
manufacturing in total merchandise imports rose from around 60% in 2012 to 68.4% in 2016. 
Within manufactures, imports of transport equipment and  consumer goods rose partly due to 
increased tourism and strong consumption growth fuelled by a rapid rise in households' purchasing 
power.   
WT/TPR/S/361 /Rev.1 • Iceland  
 
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  1.3.2   Direction of trade  
1.26.   Iceland's main export destination in 2016 remained the EU -28, followed by the United 
States, and  then other EFTA countries (Norway, Liechtenstein, and Switzerland). The shares of the 
EU-28 and EFTA declined negligibly during the review period, while the share of the United States 
and that of Asia as a whole increased (Chart  1.2 and Table A 1.2). 
Chart  1.2 Direction of merchandise trade, 2012 and 2016  
Source:  UNSD, Comtrade database.  
WT/TPR/S/361 /Rev.1  • Iceland  
 
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  1.27.   The EU -28 remains Iceland's largest import supplier , followed by EFTA and the United 
States. Duri ng the period under review, the EU -28 share rose significantly, as did that of Asia as a 
whole, while the shares of Brazil and EFTA declined sharply (Table A 1.3). The decline in the latter 
two is explained by declining oil and other commodity prices.  
1.4  Forei gn Direct Investment  
1.28.   During the period under review, both inward and outward FDI flows were volatile. FDI 
inflows peaked at over ISK 128 billion in both 2011 and 2012 (around 11% of GDP), before 
declining to ISK 48 billion (4% of GDP) in 2013. They have si nce picked up, and amounted to  
ISK 93 billion in 2015 (around 7% of GDP). Consequently, the stock of inward FDI peaked at 
104% in the beginning of 2012 but had fallen back to 75% of GDP by year -end 2015 because of 
the restructuring of a pharmaceutical comp any, in 2012 and again in 2015. The 2012 restructuring 
also explains the turnaround in the net FDI position, which was negative in 2010 and 2011 but had 
turned positive by year -end 2012. Furthermore, non -residents' equity as a share of inward FDI 
had been roughly 12% in 2011 but fell to 0 at the end of 2013 because of the restructuring of the 
pharmaceutical company. At year -end 2015, the ratio had risen up to 32%, due to a further 
restructuring of the pharmaceutical company in early 2015 (Chart 1.3).  
Chart 1.3 Foreign direct investment (ISK billion), 2010 -15 
Source:  Statistics Iceland online information.  
1.29.   In 2015, the main investor in Iceland was Luxembourg (nearly 80% of FDI stock), f ollowed 
by the Netherlands and Switzerland. Most of the FDI in Iceland takes the form of inter -company 
loans; and Luxembourg has a large banking industry and a large cross -border fund adm inistration 
industry (Table A1.4 and A1.6 ). Netherlands is the larges t recipient of FDI from Iceland, followed 
by the United Ki ngdom and Luxembourg (Table A1.5 and A1.7 ). According to the authorities, FDI 
investment in the Netherlands and in Luxembourg is most often related to affiliates of domestic 
companies that have head quarters in these countries due to tax reasons. The FDI in the United 
Kingdom can to some extent be explained by investment in companies that have been acquired as  
a result of debt restructuring and which are being prepared for sale by their holders.  
 
WT/TPR/S/361 /Rev.1 • Iceland  
 
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  2  TRADE AND INVESTMENT R EGIME  
2.1  General Framework  
2.1.  Iceland, an island nation, located strategically between Europe and North America, has 
excellent connectivity, both by air and sea. It possesses plentiful energy resources from 
geothermal and hydroelectric  source s, which has allowed it to have 100% renewable energy and 
thus one of the most reliable power infrastructures. The country also benefits from social stability 
and a well -educated work force. Iceland has capitali zed on these elements and has developed 
many energy -intensive industries  and data centres, and propelled its tourism sector to the leading 
export earner. As a representative democracy, Iceland's people assign powers to their elected 
representatives in the parliament, who have legislative and fiscal p owers. Iceland is governed by 
rule of law whereby the judiciary is autonomous and the executive is answerable to parliament.  
2.2.  Iceland's constitution forms the country's main legal framework and is comprised of seven 
sections covering the parliament, preside nt, judiciary, church (including freedom of religion) , and 
human rights. The current constitution dates from 1944 , but has been amended eight times since. 
The most recent amendment1 was in 2013 and concerned a temporary provision that applied until 
30 Apri l 2017 on rules to amend the constitution.2 It provided that in order to amend the 
constitution, the parliament (Althingi) was required  to vote two -thirds in favour and that a 
referendum would then be launched so that the electorate of the country could vo te to approve or 
reject the amendment. These temporary provisions have since expired and are no longer relevant.  
2.3.  The main law for the judiciary, Act No. 15/1998 on the Judiciary, will be replaced by Act 
No. 50/2016 on the Judiciary, with entry into force a s of 1 January 2018. Under Act No. 50/2016, 
the Supreme Court remains the highest court , while a court on national law and appeals 
(Landsréttur) has been introduced between the Supreme Court and the eight district courts. The 
speciali zed Labour Court and C ourts of Impeachment remain. Most provisions of Act No. 50/2016 
are to take effect from 1 January 2018 , but provisional provisions I, II, IV, V and VI entered into 
force on 14 June 2016, as necessary for the Act's  entry into force. There are no special cou rts for 
trade disputes; they are handled by the general courts.  
2.4.  In 2009 , the Althingi instructed the Government to apply for EU membership. The European 
Commission commenced negotiations with Iceland in 2010, however following a change of 
government in 20 13, Iceland's EU membership negotiations were halted. In 2015, Iceland formally 
informed the E uropean Union that it had no intention of resuming the accession process and was 
no longer a candidate country.3 In 2014, the Icelandic Government presented a pol icy on Europe, 
including main priorities and implementation.4 The policy gives priority to the efficient 
implementation of the EEA Agreement, proactive and close collaboration with the EU, and 
collaboration among EFTA States for access to international mar kets. 
2.5.  A Presidential Decree was issued in January 2017 setting  out the organization and 
administrative responsibilities of the various ministries in the Government of Iceland.5 The decree 
introduced some changes of reporting or responsibility  for the Centr al Bank  and Statistics Iceland, 
among others . There are several ministries involved in economic and trade -related policies; these 
include the Ministry of Finance and Economic Affairs responsible for customs and tax matters and 
the Ministry for Foreign Affa irs for trade policy and agreements . However a number of other 
ministries have various roles in trade and economic matters, particularly the Ministry of Industries 
and Innovation (Table 2.1)  
                                                
1 Act No. 91/2013.  
2 Althingi online information. Viewed  at: http://www.althingi.is/lagas/nuna/1944033.html . 
3 Ministry of Foreign Affairs online information . Viewed at : https://www.mfa.is/tasks/european -co-
operation/ .  
4 Ministry of Foreign Affairs online information . Viewed at : https://www.mfa.is/news -and-
publications/nr /7990  and https://www.mfa.is/media/esb/Evropustefna -ENS.pdf .  
5 Althingi online information. Viewed  at: http://www.althingi.is/ lagas/nuna/2017001.html . Presidential 
Decree No. 1 of 11 January 2017.  WT/TPR/S/361 /Rev.1  • Iceland  
 
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  Table 2.1 Organiz ation of main economic and trade -related matters, 2017  
Ministries and responsibilities  
Prime Minister's Office  
  Economic activity  
  Central Bank  
Ministry of Industries and Innovation  
  Intellectual property rights  
  Investment  
  Energy and natural resources  
  Business and legal framework  
  Fisheries resources  
  Agriculture, food, and food safety  
  Industry, trade in services  
  Consumer affairs  
Ministry of Finance and Economic Affairs  
  Taxation  
  Customs and excise  
  Economic policy and fin ancial stability  
  Financial markets  
  Public procurement  
  Trade in alcohol and tobacco products  
Ministry of the Interiora 
  Law enforcement  
  Transportation  
  Telecommunications  
Ministry for the Environment and Natural Resources  
  Forestry and t imber products  
  Fisheries and international trade in wild animals and plants threatened with extinction  
  GMOs  
Ministry for Foreign Affairs  
  Export trade  
  Preparation and implementation of trade agreements  
  Trade fairs  
a The Ministry of the Inte rior, as of 1 May 2017, was to be split into two Ministries: Ministry of Justice 
and Ministry of Transport and Local Government.  Prime Minister's Office online information. Viewed 
at: https://www.forsaetisraduneyti.is/frettir/ny -raduneyti -domsmala -og-samgongu -og-
sveitarstjornarmala -sett-a-fot.  
Source:  Althingi, Presidential Decree No. 1 of 11 January 2017. Viewed at: 
http://www.althingi.is/lagas/nuna/2017001.html . 
2.6.  In late 2015, the Althingi passed legislation to  amend  its law on International Development 
Cooperation6 transferring  all activities of the Icelandic Internati onal Development Agency (ICEIDA) 
to the Ministry for Foreign Affairs.7 The reasons for these amendments were to simplify 
organizational aspects, improve harmonization and results, and to ensure the best use of funds.  
The amendments also create a new Develo pment Cooperation Committee and a new five -year 
development policy plan.8 Iceland's Strategy for Development Cooperation 2013 -16 focuses on the 
fight against poverty and hunger and highlights human rights, gender equality, democracy , and 
peace and security . It gives priority to natural resources, social infrastructure, and peace -building 
through bilateral and multilateral cooperation.9 A new strategy is currently being developed which 
is expected to be presented to the Althingi later in 2017.  
2.7.  There are no s pecific laws or regulations concerning consultations with the private sector on 
trade matters or trade policy matters. However, the administration regularly holds consultations 
with the private sector or the relevant sectors thereof on such matters.   
                                                
6 Act No. 121/2008. Ministry for Foreign Affairs online information. Viewed  at: 
https://www.mfa.is/media/MFA_pdf/Act -on-Icelands -International -Development -Cooperation.pdf .  
7 Act No. 122/ 2015. Althingi online information. Viewed  at: 
http://www.althingi.is/altext/stjt/ 2015.122.html .  
8 Ministry for Foreign Affairs online information. Viewed  at: https://www.mfa.is/news -and-
publications/all -of-icedia -s-activities -transferred -to-the-ministry -for-foreign -affairs . 
9 Ministry for Foreign Affairs online information. Viewed  at: 
https://www.mfa.is/media/throunarsamvinna/MFA -StrategyforIcelandsDevelopmentCooperation -2013-
2016.pdf . WT/TPR/S/361 /Rev.1 • Iceland  
 
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  2.2  Trade Policy Objectives  
2.8.  Iceland's Minister of Foreign Affairs reports annually to the Althingi on the matters under its 
competence, including international trade.  In the most recent report covering the legislative period 
2015-16, the Minister enumerated a numb er of priorities and objectives in various trade and 
investment areas (Box 2.1).  
Box 2.1 Minister of Foreign Affairs, policy objectives in certain trade -related areas, 
2015 -16 
International trade   Strengthen the network of free trade agreements: Asian countries, 
Mercosur, and Canada  
 Advance TISA negotiations  
 Finalize WTO negotiations on environmental goods  
 Identify Iceland's interests in transnational trade agreements  
 Facilitate further trade with China by obtaini ng the necessary 
authori zations for new product exports to China  
 Aid Icelandic companies in foreign markets  
 Strengthen the business environment in foreign markets, especially in 
relation to investment and air transport agreements  
 Secur e the important trade  relationship with the UK post -Brexit  
Artic and Nordic regions   Preparation for Chairmanship of the Artic Council in 2019  
 Address the growing importance of foreign policy in the region  
 Foreign ministers will continue to discuss important international and 
regional issues with the Nordic countries, such as security in Europe, the 
situation in Syria, terrorist threats and issues with refugees  
 Increase the number of subjects and enhance cooperation and flexibility 
in the Nordic Council  
European Economic Area   Achieve a transposition deficit below 1% and ensure that issues do not 
come before the EFTA Court  
 Strengthen cooperation within stakeholder consultative groups within 
the EEA  
 Focus on analysing EEA proposals in the early stages  
 Continue to promote informat ion about the EEA both within and outside 
the Government  
 Launch a centralized database of EEA Acts  
International agreements   Focus on Iceland's interest in the work on the Law of the Sea  
 Participate in discussions on agreements to protect against uncontrol led 
fishing in the North Sea and protect biodiversity beyond national 
jurisdictions  
International development 
cooperation   Continue work towards the framework strategy on International 
Development Cooperation 2013 -2016  
 Work to prepare the International De velopment Cooperation framework 
for the period 2017 -2021 
Source:  Ministry of Foreign Affairs online information.  Viewed at: 
https://www.utanrikisraduneyti.is/media/gunnar -
bragi/Sky%CC%81rslautanri%CC%81kisra%CC%81dherra -til-Althingis -2016.pdf . 
2.9.  Iceland's Statement of Fiscal Policy and Fiscal Strategy Plan 2017 -21 was presented by the 
Government to the parliament in 2016 in order to better prepare Iceland for the future and to 
incorporate new legislation on public sector finances; it was thereafter formally  approved.10 In 
addition to imposing stringent rules on the level of public debt, it also provides policy aims and 
objectives by government unit. In terms of trade and foreign affairs, there has been an emphasis 
placed on promoting Icelandic interests abroa d, ensuring access to foreign markets, facilitating 
international cooperation, promoting the image of Iceland, attracting foreign investment and 
tourists to Iceland, developing a network of free trade agreements, completing the TISA 
negotiations, actively participating in Nordic cooperation, and implementing EEA rules in a timely 
                                                
10 Ministry of Finance and Economic Affairs  online information, "Fiscal Policy and Fiscal Strategy Plan, 
2017-2021" . Viewed at: https://www.ministryoffinance.is/news/statement -of-fiscal-policy -and-fiscal-strategy -
plan-presented -for-the-first-time and http://fjarlog.origo.is/Opinber -fjarmal -2017-2021.pdf . WT/TPR/S/361 /Rev.1  • Iceland  
 
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  manner.11 As of the first quarter of 2017, a new Plan for 2018 -2022 was under discussion in the 
Althingi.  
2.10.   Iceland's 2017 budget provides for a number of priorities or direction in c ertain policies.12 It 
notes the success of recent economic and fiscal policies leading to a cumulative surplus of 
ISK 96 billion during 2014 -16, in part due to tax reform and cuts.  Iceland is to continue working 
towards simplification and improving the effi ciency of the tax system , notably the abolishment of 
the general excise in 2015, the elimination of duties on non -agricultural products in 2016 -17, and 
simplification of the VAT system.  The 2017 budget gives priority to social security, health, and 
educati on activities.  For example, there has been a continued increase in spending on healthcare, 
higher education, and research and technology; and a new framework put in place for agriculture 
with support  amounting to ISK 1.1 billion.13 
2.11.   The Directorate of Custom s also has a policy document – Customs 2020.14 It provides for 
trust, cooperation and progress in all areas of customs. There are a number of performance 
objectives for customs including: efficient and effective collection of taxes and fees; effective 
partn erships with industry and stakeholders; effective financial management; health and safety 
matters; and responsible information and records management.  
2.3  Trade Agreements and Arrangements  
2.3.1   WTO  
2.12.   Iceland has been a Member of the WTO since its establishment in 199 5 and was a GATT 
Contracting Party from 1968. It has participated in the post -Uruguay Round negotiations on 
telecommunications, financial services, and the ITA. More recently , it completed the WTO 
procedures and implemented the revised ITA product coverage , and it ratified the Trade 
Facilitation Agreement in October 2016. Iceland is also a party to the plurilateral Government 
Procurement Agreement (GPA) and completed the procedures for adopting the revised GPA in 
April 2014.  
2.13.   During the Doha Round , Iceland h as made proposals or joint proposals in the areas of 
services; intellectual property ; fisheries subsidies; and market access, including for trade 
liberalization of fish and fish products. More recent communications during 2015 -16 have 
concerned sustainable  development in fisheries and on effective disciplines for fisheries 
subsidies.15 At the last Ministerial Conference in Nairobi, Iceland contributed to a joint ministerial 
statement on fisheries subsidies.16   
2.14.   In terms of dispute settlement, Iceland has not been involved as a complainant or as a 
respondent in any DSB cases during the review period.  However, it has been a third party to three 
disputes since 2012.17 
2.15.   Regarding notifications, Iceland has had mixed compliance with its notification obligations 
during the review period. For example, there have been no notifications on TBT, import licensing 
and preferential rules of origin despite Iceland having measures or completing new preferential 
arrangements during the period. There have only been two notificatio ns on SPS (in 2012 ). 
However, in early 2017 Iceland notified its state trading entity, GPA legislation and made its first 
notifications of statistical information under the GPA. An overview of notifications is provided 
(Table A2.1).  
                                                
11 Ministry of Finance and Economic Affairs online information. Viewed  at: 
https://eng.fjarmalaraduneyti.is/government -finance/fiscal -budget/fiscal -policy -and-fiscal-strategy -plan-for-
2017-2021.  
12 Ministry of Finance and Economic Affairs online information. Viewed  at: 
https://www.fjarmalaraduneyti.is/frettir/fjarlagafrumvarp -2017.  
13 Ministry of Finance and Economic Affairs online information. Viewed  at: 
https://www.fjarmalaraduneyti.is/frettir/fjarlagafrumvarp -2017. 
14 Directorate of Customs online information. Viewed  at: 
https://www.t ollur.is/library/Skrar/Stefna/BAeklingar/Tollur%202020%20web.pdf . 
15 WTO documents TN/RL/W/258, TN/RL/W/272, and TN/RL/W/272/Rev.1.  
16 WTO document WT/MIN(15)/37 and WT/MIN(15)/37/Rev.1.  
17 WT/DS400, WT/DS401, and WT/DS469.  WT/TPR/S/361 /Rev.1 • Iceland  
 
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  2.3.2   Regional and preferenti al agreements  
2.16.   To date, Iceland participates in 32 reciprocal preferential agreements, mostly through EFTA 
FTAs (Table A2.2) . However, in recent years , where FTAs could not be concluded with EFTA 
partners, Iceland has proceeded on its own and has concluded FTAs with China and the Faroe 
Islands.18 As of early 2017, no plans have been made for additional bilateral negotiations.  Iceland 
also continues to pursue FTAs as part of EFTA, as there are a number of agreements currently in 
the pipeline ( Section 2.3.2.1) . During the review period, there have been no changes in policy with 
respect to FTAs.  
2.17.   In 2015, as part of the European Economic Area (EEA), Iceland pursued more market 
opening with the European Union  on agriculture (both processed and unprocessed), includi ng the 
protection of GIs. This will result in the further elimination of tariffs, reduction of tariffs, and 
greater access through TRQs when it is implemented. As of early 2017, the old agreement was still 
in force, pending the finali zation of internal pro cedures for the entry into force of the new 
agreement.   
2.18.   More recently, in August 2016, Iceland, Greenland, and the Faroe Islands (West Nordic 
countries) signed a declaration to increase cooperation between them.19 The Foreign Ministers of 
the three countrie s agreed in a statement to establish a working group with participants from the 
three countries to draft a proposal for a cooperation agreement and to assess common benefits. As 
of early 2017, the working group had not yet finali zed its work.  
2.19.   Iceland is ac tively involved in the Trade in Services Agreement (TISA) negotiations among 
50 countries to further liberalize trade in services building upon the GATS.20 As of November 2016, 
21 rounds of negotiations had taken place and Iceland had made two conditional o ffers. These 
include sector -specific commitments in professional, courier, financial, telecommunications, 
construction, distribution, tourism & travel, entertainment & sporting, transport, and 
environmental services.21 
2.3.2.1   European Free Trade Association (EFTA)  
2.20.   Iceland has been a member of EFTA since 1970 and follows the EFTA Convention for free  
trade between the EFTA States and the free trade and partnerships agreements that the EFTA 
States have negotiated with third parties.22 The EFTA Convention dates from 196 0 and originally 
provided a framework for the liberalization of trade in goods, but was expanded in 2002 to cover 
intellectual property, agriculture, services, investment, public procurement, movement of persons, 
air and land transport, social security, an d mutual recognition of conformity assessments.23 Since 
that time, the EFTA Council has made a number of smaller amendments.  During the review period , 
amendments were made with respect to mutual recognition, basic agricultural products, air 
transport, land transport, and social security.24 
2.21.   Iceland, as part of EFTA, currently participates in 25 EFTA FTAs which cover trade with 
36 partner s (Table A2.2).25 EFTA has an extensive coverage of FTAs and its members benefit from 
being integrated into the global economy ; about 80% of their merchandise trade benefits from 
FTAs. As a group, EFTA countries ranked 8th in world merchandise trade and 5th in services trade in 
                                                
18 Ministry of Foreign Affairs onli ne information. Viewed  at: 
https://www.utanrikisraduneyti.is/media/gunnar -bragi/Sky%CC%81rsla -utanri%CC%81kisra%CC%81dherra -
til-Althingis -2016.pdf . 
19 Iceland Review Online, online information. Viewed  at: 
http://icelandreview.com/news/2016/08/23/west -nordics -increase -cooperation . 
20 Ministry of Foreign Affairs online information . Viewed at : https://www.utanrikisraduneyti.is/nyr -
starfssvid/vidskiptasvid/vidskiptasamningar/tisa -yfirlit/ . 
21 Ministry of Foreign Affairs online information . Viewed at : 
https://www.utanrikisraduneyti.is/media/PDF/Annad -endurskodad -tilbod -Islands -i-TiSA-vidraedunum.pdf . 
22 EFTA Member States are Iceland, Liechtenstein, Norway, and Switzerland.  
23 EFTA online information. View ed at: http://www.efta.int/legal -texts/efta -convention/detailed -
overview -of-the-efta-convention .  
24 EFTA online information. Viewed  at: http://www.efta.int/legal -texts/efta -convention .  
25 Twenty -five were in force as of May 2017; an additional two have been completed but entry into force 
remains pending.  WT/TPR/S/361 /Rev.1  • Iceland  
 
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  2014.26 During the review period, EFTA concluded new agreements that have entered into force 
with Bosnia  and Herzegovina, Central America, and the Gulf Cooperation Council . These FTAs have 
generally covered the following subjects: trade in non -agricultural products, trade in services, 
investment, protection of intellectual property, government procurement, c ompetition, trade and 
sustainable development, cooperation, and dispute settlement. Trade in unprocessed agricultural 
products is generally excluded from the EFTA agreements. For the agreements with Bosnia and 
Herzegovina and Central American States, Icela nd has substantially eliminated tariff protection, 
however 6.7% and 5.2% , respectively, of all tariff lines remain dutiable under the agreements.27 
As of May 2017, the agreement with the Gulf Cooperation Council  had not been notified to the 
WTO.  
2.22.   As of May 2017, EFTA States were pursuing FTA negotiations with Algeria, Ecuador, India, 
Indonesia, Malaysia, the Russian Federation, Belarus, Kazakhstan, Thailand, and Viet Nam; but 
negotiations were on hold with respect to Algeria, Thailand and the Customs Union o f the Russian 
Federation, Belarus and Kazakhstan.28 EFTA was also undergoing work to update certain existing 
agreements. The FTAs with Georgia and the Philippines were concluded in 2016 but had not yet 
entered into force as of May 2017.  
2.3.2.2   European Economic Ar ea (EEA)  
2.23.   Iceland, as a signatory of the EEA  agreement , is integrated with Norway and Liechtenstein 
together with the European Union  to form the Internal Market, providing for the free movement of 
goods, services, capital and workers. The European Economic Area also provides for cooperation in 
competition, state aid, research and development, environment, education, consumer protection, 
enterprise, tourism, and social policy.  Iceland, as part of the European Economic Area , is expected 
to incorporate EU legis lation  in these areas  into its own legal framework following a decision by the 
EEA Joint Committee. In 2015, for example, the EEA Joint Committee adopted 320 decisions to 
incorporate 483 EU legal acts.29 Although  included in the Internal Market, trade polic y, taxation, 
the customs union, and agricultural products are not  incorporat ed into the EEA . Agricultur e is 
generally covered by bilateral agreements.  
2.24.   In 2015 , Iceland and the European Union concluded new bilateral agreements on 
agricultur al products  and G Is under the auspices of the EEA Article 19. The new agreements, which 
will supersede the previously applicable agreement, will increase market access for agriculture by 
significantly increasing the number of agricultural products granted duty -free status by Iceland to 
more than 800 tariff lines, and with reduced tariffs on nearly 200 tariff lines.30 This results in 
duty-free trade on nearly all processed agricultur al products and above 90% of trade of basic 
agricultural products.  At the same time, many bila teral quotas are increased to gain better access 
and new ones created; the agreement now provides for Iceland to grant quotas under nine 
categories of products31, and the E uropean Union  under eight categories.32 For processed 
agricultural products , full libe ralization was reached on the approximate 500 Icelandic tariff lines 
covered by Protocol 3 to the EEA Agreement, with the exception of around 20 tariff lines that will 
continue to be subject to customs tariffs. As for GIs, Iceland has committed to the same  level of 
protection as the European Union  for its 1,150 agricultural and foodstuff GI products.33 The 
internal procedures for the entry into force of the agreements are still under way; entry into force 
of the agreement s is envisaged at the end of 2017 at the earliest.  
                                                
26 EFTA online information. Viewed  at: http://www.efta.int/sites/default/files/publications/fact -
sheets/General -EFTA-fact-sheets/EFTAs -Free-Trade -Relatio ns-FAQs.pdf .  
27 WTO documents WT/REG357/1/Rev.1 and WT/REG360/1.  
28 EFTA online information. Viewed  at: http://www.efta.int/free -trade/ongoing -negotiations -talks; and 
information pro vided by the authorities.  
29 EFTA online information. Viewed  at: http://www.efta.int/sites/default/files/publications/annual -
report/annual -report -2015.p df.  
30 Ministry of Foreign Affairs, online information. Viewed  at: 
https://www.utanrikisraduneyti.is/media/esb/Agreed -minutes -annexes.pdf .  
31 Beef, pig meat, poultry, p oultry  – organic/free -range, meat (salted, dried, or smoked), cheese, 
sausages, and processed meat products.  
32 Sheep meat, processed sheep meat, pig meat, poultry, skyr, butter, cheese, and sausages.  
33 European Commission online information. Viewed  at: 
http://ec.europa.eu/agriculture/newsroom/224_en .  WT/TPR/S/361 /Rev.1 • Iceland  
 
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  2.25.   In 2014 , pursuant to  Iceland's policy on Europe, Iceland decided to give priority to the 
efficient implementation of the EEA Agreement.34 In this context, a steering group was established 
by the Government. The steering group subsequently publ ished its report in December 2015, 
where it made a number of recommendations to improve the implementation  of the EEA 
Agreement in Iceland.35 As part of these recommendations,  Iceland, inter alia , planned to work on 
the implementing acts at an earlier stage , increase communication between the Government and 
parliament, and provide more resources to relieve the backlog.36  
2.26.   The EFTA Surveillance Authority (ESA) is responsible for monitoring the implementation of 
EEA provisions in the EEA -EFTA States; EEA -EFTA States should furthermore notify the 
transposition into domestic law. The ESA also has certain enforcement mechanisms, i.e. it can 
order repayment, impose fines, etc. As of October 2016, ESA gained new authority over financial 
sector supervision and can now  take certain binding decisions similar to those of the European 
Supervisory Authorities.  
2.27.   According to the ESA's latest Internal Market Score board  from January 2017, Iceland has 
the largest transposition deficit of the three EEA members and the scorecard s tates: "Iceland's 
performance remains disappointing on all counts and the Icelandic Government is once again 
urged to take steps to improve and demonstrate its commitment to the EEA Agreement".37 It was 
noted that Iceland's situation had continued to deteri orate since the last bi -annual score board  with 
a 0.2% increase in the transposition deficit.  It had 18 directives and 65 regulations overdue for 
transposition. Most of Iceland's outstanding directives concerned technical barriers on goods and 
the outstandi ng regulations concerned mainly the categories of food and feed, animal health and 
welfare , and financial services.38 The ESA had also initiated the largest percentage of infringement 
cases due to non -transposition against Iceland ; as of December 2016, 75% of the cases were with 
respect to Iceland. Once the ESA has issued a reasoned opinion alleging infringement, the matter 
may be brought to the EFTA Court; the Court is also the forum for appeals of ESA decisions.   
2.28.   It was noted that the Icelandic authoritie s were committed to reducing the transposition 
deficit and it remained a firm priority of the Government. There were a number of reasons for the 
transposition deficit.  
2.3.2.3   Bilateral agreements  
2.29.   The majority of Iceland's reciprocal trade agreements are through EFTA. However, excluding 
its relationship with the EU, it has three bilateral free  trade agreements with China, Greenland, 
and the Faroe Islands.  
2.3.2.3.1   China  
2.30.   As of 1 July 2014, the free trade agreement between Iceland and China, the Iceland -China 
Free Trade Agree ment, has entered into force and covers trade in both goods and services.39 It 
has been described as similar to the FTA's Iceland has entered into as part of EFTA, as it abolishes 
the majority of tariffs on goods, and covers trade in services, and other are as such as investment, 
trade facilitation, competition, and intellectual property.40 Despite large differences in the size of 
their economies and rank in world trade, Iceland and China continue to have growing trade 
interests as Iceland's imports from China  have grown constantly in recent years, with the 
exception of 2014, where there was a slight decrease of imports from the previous year. Iceland's 
                                                
34 Ministry of Foreign Affairs online information . Viewed at : 
https://www.mfa.is/ media/esb/Evropustefna -ENS.pdf . 
35 Government of Iceland online information. Viewed  at: 
https://www.forsaetisraduneyti.is/media/Skyrslur/skyrsla -styriho ps-um-framkvaemd -EES.pdf .  
36 Government of Iceland online information. Viewed  at: 
https://www.forsaetisraduneyti.is/media/Skyrslur/skyrsla -styrihops -um-framkvaemd -EES.pdf .  
37 ESA online information. Viewed  at: http://www.eftasurv.int/media/scoreboard/Internal -Market -
Scoreboard -No-39.pdf .   
38 ESA online informat ion. Viewed  at: http://www.eftasurv.int/media/scoreboard/Internal -Market -
Scoreboard -No-39.pdf .   
39 WTO Document WT/REG355/1.  
40 Ministry of Foreign Affairs online information. Viewed  at: https://www.mfa.is/news -and-
publications/nr/7655 . WT/TPR/S/361 /Rev.1  • Iceland  
 
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  main and growing export to China has been seafood.41 Exports of goods from Iceland to China 
doubled in value b etween 2014 and 2015, and increased by 15% in 2016 from the previous year.  
2.3.2.3.2   Faroe Islands and Greenland  
2.31.   Iceland's FTA with the Faroe Islands dates from 2006 and the substantive scope covers: 
trade in goods, trade in services, movement of persons and right t o residence, movement of 
capital and investment, right of establishment, competition, state monopolies, state aid, public 
procurement, and cooperation in other areas. National treatment and MFN provisions form an 
integral part of the agreement although the re are some exceptions to national treatment such as 
for investment in the fish sector and for trade in goods subject to SPS restrictions. There have 
been no developments during the review period.  
2.32.   Iceland's agreement with Greenland dates from 1985 , through  the Agreement between 
Iceland and Denmark on trade between Iceland and Greenland,  and covers trade in goods.  The 
agreement has six articles and mainly pertains to the continued trade provisions once Greenland 
left the European Community and became an over seas country and territory (OCT). This FTA has 
not been notified to the WTO. As part of the group of West Nordic countries, Iceland and 
Greenland are forging stronger ties and working towards greater cooperation ( Section 2.3.2) .  
2.3.2.4   Non-reciprocal preferences  
2.33.   In 2003 , Iceland notified its Generalized System of Preferences  (GSP)  scheme to the WTO's 
Committee on Trade and Development.42 Only the poorest countries benefit from Iceland's 
scheme, consistent with similar tariff preferences given in the EEA.43 Iceland' s customs regulation 
on the GSP provides the product coverage and rules of origin of the programme.44 Iceland's GSP 
programme provides for both reduced rates of duty and elimination of duties for the GSP 
preference products ( see Section 3.1.3 for GSP origin  information and 3.1.4 for GSP preferential 
tariffs). According to the authorities, Iceland plans to upgrade is GSP scheme during 2017.   
2.3.3   Other agreements and arrangements  
2.34.   As of April 2017 , Iceland has concluded 95 air transport agreements.45 The agreements  
generally have provisions on traffic rights, code sharing, operational flexibility, freight, and 
competition provisions.46 Often there are other provisions, for example  on cabotage, charter 
flights, or tax issues; depending on the agreement and the country  concerned. There have been 
34 concluded during the review period.  
2.35.   Iceland is also a member of the Nordic Cooperation Council, which was created in 1962 and 
includes Denmark, Finland, Norway, Sweden, Faroe Islands , Greenland, and the Aland Islands.47 
This r egional body cooperates in a number of ways and includes agreements or provisions on the 
free movement of persons, tax issues, and the labour market. Among certain members, 
(Denmark, Iceland, Norway, and Sweden) there is also an agreement on cooperation in  matters of 
competition and with respect to formalities for bus transport services (Denmark, Finland, Norway, 
                                                
41 Ministry of Foreign Affairs online information. Viewed  at: https://www.mfa.is/media/fta -
kina/China_fact_sheet_enska_15042013_Final.pdf . 
42 WTO document WT/COMTD/N/17.  
43 Beneficiaries as of May 2017: Afghanistan, Angola, Bangladesh, Benin, Burkina Faso, Burundi, 
Bhutan, Cambodia, Cabo Verde , Central African Republic, Chad, Congo, Comoros, Djibouti, Eritrea, Equatorial 
Guinea, Ethiopia, The Gambia, Guinea, Guinea -Bissau, Haiti, Kiribati, Lao People's Democratic Republic , 
Lesotho, Liberia, Madagascar, Malawi, Maldives, Mali, Mauritan ia, Mozambique, Myanmar , Nepal, Niger, 
Rwanda, Solomon Islands, Samoa, Sao Tome and Principe, Sierra Leone, Somalia, Sudan, Tanzania, Togo, 
Tuvalu, Uganda, Vanuatu, Yemen and Zambia.  
44 Regulation 119/2002.  
45 Ministry of Foreign Affairs online information.  Viewed  at: 
https://www.utanrikisraduneyti.is/samningar/loftferdasamningar/ . 
46 Ministry of Foreign Affairs online information. Viewed  at: 
https://www.utanrikisraduneyti.is/media/utn -pdf-skjol/Yfirlit -yfir-loftferdasamninga -Islands -i-arslok -
desember.pdf . 
47 Nordic Cooperation online information. Viewed  at: https://www.norden.org/en/om -samarbejdet -
1/formal -nordic -co-operation . WT/TPR/S/361 /Rev.1 • Iceland  
 
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  Sweden).48 The agreement on competition dates from 2003 and provides for the strengthening of 
the formal cooperation between competition authoritie s of the parties, including for the exchange 
of information, notification and enforcement measures, and formal requirements.49 
2.4  Investment Regime  
2.36.   Iceland's investment regime remains principally governed by its 1991 Law on Investment by 
Non-Residents in Business Enterprises as amended in 2014 by Act No.  57/2014.50 It allows 
non-residents to invest in business enterprises in Iceland pursuant to the provisions or limitations 
in the Act.  In particular , it outlines investment restrictions ( Section 2.4.2), provides  for notification 
of investments to the Minister of Industries and Innovation when applicable, gives rights for the 
transfer and conversion of foreign currency, and sets up a Committee on Foreign Investment for 
monitoring and enforcement. The 2014 amendmen t removed the pre -existing general notification 
obligation for all foreign investments by limiting the obligation to foreign investments in areas 
where specific restrictions apply, as well as by granting exemptions to legal and natural persons 
from the EEA  countries, the EFTA  countries and the Faroe Islands. Another development during the 
period was the entry into force of the 2015 Act on Incentives for Initial Investments in Iceland 
which sets out specific investment incentives and the procedures for recei ving them51 (Section 
2.4.3) . Iceland has maintained about the same number of investment contracts, i.e. less than 10 
per year , under the old and new incentive regimes.  
2.37.   Iceland's investment policy is developed by the Ministry of Industries and Innovation , which 
also has role in entering into contracts for incentives. Invest in Iceland is Iceland's one -stop shop 
for information on investing in Iceland; it provides information on investment opportunities and 
the business environment. It is part of Promote Icela nd, a public -private partnership created by a 
2010 Act to enhance Iceland's image and attract investment, among others.52 Promote Iceland 
also has advisory boards composed of representatives from government and industry to cooperate 
on policy, set prioritie s, develop new projects, and make recommendations.  
2.4.1   Investment agreements  
2.38.   Iceland has eight bilateral investment treaties (BIT s) in force, with Chile, China, India, 
Latvia, Lithuania, Lebanon, Mexico,  and Viet Nam.  The agreements with Latvia and Lithuania a re 
being evaluated as to their future need. In addition , for example, within the EFTA framework, 
Iceland has signed a multilateral investment agreement with the Republic of Korea, and the 
EFTA-Singapore FTA includes a chapter on investment.53 In general, in vestment provisions are 
covered in Iceland's FTAs, but not investor -state dispute settlement (ISDS) mechanisms. Iceland 
has concluded a BIT with Egypt but it has not entered into force as of March 2017.   
2.39.   Iceland's BITs are generally long -standing, the last  one being concluded in 2008. However, 
there are two draft agreements awaiting signature, and two others under discussion as of May 
2017. There has been no change in policy with respect to Iceland's BITs. Iceland's BITs generally 
contain provisions on prom otion and protection of investments, national and MFN treatment, 
expropriation, compensation for losses, repatriation, subrogation, and disputes.  
                                                
48 Nordic Cooperation online information. Viewed  at: https://www.norden.org/en/om -samarbejdet -
1/nordic -agreements/treaties -and-agreements/industry -trade. 
49 Nordic Cooperation online information. Viewed  at: https://www.norden.org/en/om -samarbejdet -
1/nordic -agreements/treaties -and-agreements/industry -trade/agreement -between -denmark -iceland -norway -
and-sweden -concerning -cooperation -in-matters -of-competition . 
50 Ministry of Industries and Innovation, online information. Viewed  at: 
https://eng.atvinnuvegaraduneyti.is/laws -and-regulations/nr/nr/7448  and 
http://www.stjornartidindi.is/Advert.aspx?Recor dID=ca66a5c9 -486f-4610-b3d6-786d850f2be4 .  
51 Ministry of Industries and Innovation, online information. Viewed  at: 
https:// eng.atvinnuvegaraduneyti.is/media/acts/Act -on-incentives -for-initial -investments -in-Iceland -English -
2015.pdf .  
52 Promote Iceland, online information. Viewed  at: http://www.islandss tofa.is/en/about/the -promote -
iceland -act. 
53 Information provided by the authorities.  WT/TPR/S/361 /Rev.1  • Iceland  
 
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  2.40.   In addition to investment agreements, Iceland has also concluded 44 agreements on the 
avoidance of double tax ation and 36 on tax information exchange.54 
2.4.2   Investment restrictions  
2.41.   Iceland's investment restrictions have remained essentially unchanged since the last review , 
with restrictions remaining in three main sectors (fish/fish processing, energy, and air transpo rt) 
and other restrictions  remaining  on foreign public ownership, property ownership, and with respect 
to companies/business establishment (Table 2.2) . There are no plans to remove these restrictions 
at this time according to the authorities.  
2.42.   While there are no official statistics available on approvals, the authorities indicate that in 
the majority of cases (around 95%), permission is granted for the investments requiring approval.  
2.43.   In March 2017 , Iceland lifted the capital controls it had in place since 2 008 as a result of the 
banking crisis.55 Iceland's central bank has removed the restrictions on businesses pursuant to the 
Foreign Exchange Act.  Thus, foreign investment, hedging, and foreign exchange are no longer 
subject to these restrictions (Section s 1 and 4. 3.1). 
Table 2.2 Investment restrictions, 2017  
Sector  Restriction  Legal reference  
Fishing and fish 
processing  The right to operate fishing operations or fish processing 
is restricted to Icelandic citize ns or Icelandic legal 
entities controlled by Icelandic entities.  Act No. 34 of 1991  
Energy  Energy exploitation rights, production, and distribution 
of energy are restricted to Icelandic citizens, Icelandic 
entities, or EEA residents/legal entities.  Act N o. 34 of 1991  
Air transport  Icelandic airline companies limit the maximum share 
capital to 49% for non -residents.  Act No. 34 of 1991  
Foreign public 
ownership  Special permission is required from the Minister of 
Industries and Innovation for investments by  foreign 
States, municipalities, or authorities.  Act No. 34 of 1991  
Business 
establishment  Individuals not domiciled in an EEA or OECD country 
require permission from the Minister of Industries and 
Innovation to establish an unlimited liability company in  
Iceland.  Act No. 138/1994 and 
Act No. 2/1995  
Foreign companies  Companies domiciled outside EEA or OECD countries 
may only operate in Iceland if permitted by treaty or 
when granted permission from the Minister of Industries 
and Innovation.  Act No. 138/199 4 and 
Act No. 2/1995  
Board membership  The manager and at least half the board members of 
Icelandic companies must be resident in Iceland unless 
a waiver is granted by the Ministry of Industries and 
Innovation. This does not apply to citizens of the EEA 
countries, the EFTA countries , or the Faroe Islands.  Act No . 138/1994 and 
Act No. 2/1995  
Ownership of real 
property  Restrictions exist for the ownership of property for 
residents and legal entities outside EEA or EFTA.  Act No. 34 of 1991  
Source:  Invest in  Iceland, online information . Viewed at: http://www.invest.is/doing -business/restrictions ; 
and Ministry of Industries and Innovation, online information . Viewed at: 
https://eng.atvinnuvegaraduneyti.is/invest -in-iceland/investments -by-non-residents -in-iceland ---
restrictions/ .  
2.4.3   Investment incentives  
2.44.   Invest in Iceland, as Iceland's one -stop shop for information on investing in Iceland, has a 
number of roles , including collecting data on the business environment, arranging site visits and 
contacts with local authorities, arranging meetings with local business partners and co nsultants, 
lobbying the Government for improved conditions in legislation, creating task forces for specific 
projects, and operating the Film in Iceland Commission project. There are also regional investment 
promotion agencies that work to attract business es in certain regions of Iceland; they offer local 
                                                
54 Information provided by the authorities.  
55 Invest in Iceland, online information. Viewed  at: http://www.invest.is/press --
media/news/invest/capital -controls -lifted/243 .  WT/TPR/S/361 /Rev.1 • Iceland  
 
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  expertise and information to potential investors. Iceland has also created certain development 
agreements to facilitate business clusters, i.e. to increase cooperation between local businesses, 
universitie s, municipalities, and the State. 
2.45.   Invest in Iceland has identified 11 key sectors to promote investment in Iceland;  these are: 
data centres, chemical industry, carbon fibre, life sciences, sodium chlorate, polysilicon, algae 
culture, energy dependent indus tries, greenhouses, fish farming, and tourism.56 The sectors were 
chosen based on benchmarking studies and where Iceland has a competitive advantage. The 
incentives offered are non -discriminatory and apply to all sectors equally.  
2.46.   Among the incentives that I nvest in Iceland promotes are low corporate taxes, available 
land, and competitive energy prices. In addition , there are a number of specific incentives 
available depending on the project. Pursuant to the 2015 Act on Incentives, initial investments in 
Iceland are eligible for certain incentives contracted through the Minister of Industries and 
Innovation if they meet certain criteria.57 The requirements include, inter alia , that a separate 
company be established in Iceland, 75% of the investment cost be fina nced without state aid, the 
annual turnover be a minimum of ISK 300 million or 20 -man years of employment, the investment  
be in operation in the specified area of Iceland for at least 10 years, etc.58 The Act provides for 
several different types of incentiv es: granting of regional aid in amounts not exceeding 
15%/25%/35% of investment costs , depending on the size of the enterprise ; derogations from 
taxes59 or public levies ; sale or lease of land from the State or municipalities ; and derogations 
from certain s pecific laws such as compulsory insurance and residence of board members of LLCs. 
Incentives are granted on a case -by-case basis upon the recommendation of a Committee formed 
under the Minster for the purpose of examining the investment proposal. When an a greement is 
reached, the incentives are enumerated in a contract with the investor that gives the specific 
provisions.  Certain sectors are not eligible for these incentives, i.e. financial institutions, insurance 
operations , securities , airports, and energ y production (Section 3.3 .2). In 2015, there were four 
new investment contracts concluded under the provisions of the 2015 Act, in biotechnology, heavy 
industry, and fishing sectors.60 
2.47.   Also, there are other incentives that may be given pursuant to other leg islation. The 2009 
Act on support for innovation enterprises61 provides for tax credits for innovation companies 
involved in research and development.62 In general, the enterprise is entitled to a special tax 
credit of 20% of the paid costs up to a certain c ost ceiling of ISK 300 or 450 million.63 In 2014, the 
Act was extended until the end of 2019.64 There are also tax incentives for foreign experts hired to 
work in Iceland in the form of reduced tax base to 75% for personal income tax based on the 
provisions contained in Act No. 90/2003.65 
2.48.   Iceland also offered direct start -up grants for SMEs through the Innovation Center Iceland 
and through Landsbanki Iceland during the period 2012 -13. The grants ranged from ISK 500,000 
to ISK 10 million per year depending upon  the type of project.  Direct R&D grants are available 
through the Icelandic Centre for Research to promote innovation in Iceland. 66 A maximum grant of 
                                                
56 Invest in Iceland, online information. Viewed  at: http://www.invest.is/key -sectors .  
57 Act No. 41/2015. Ministry o f Industries and Innovation online information. Viewed  at: 
https://eng.atvinnuvegaraduneyti.is/media/acts/Act -on-incentives -for-initial -investments -in-Iceland -English -
2015.pdf .  
58 See Article 5 of Act No. 41/2015 for the full list of conditions.  
59 This includes the exemption from customs duties for imported building materials, machinery and 
equipment, and other capital goods u sed for the investment project.  
60 Information provided by the authorities.  
61 Act No. 152/2009. Ministry of Finance and Economic Affairs online information . Viewed at : 
https://eng.fjarmalaraduneyti.is/media/log -reglur/Act_No_152_2009.pdf .  
62 Invest in Iceland, online information. Viewed  at: http://www.invest.is/files/skjol/pdff/iceland -
incentives -factsheet.pdf .  
63 Act No. 152/2009. Ministry of Finance and Economic Affairs online information . Viewed at : 
https://eng.fjarmalaraduneyti.is/media/log -reglur/Act_ No_152_2009.pdf . 
64 Act No. 126/2014.  
65 Invest in Iceland, online information. Viewed  at: http://www.invest.is/files/skjol/pdff/iceland -
incentives -factsheet.pdf . 
66 Ranni s online information. Viewed  at: https://en.rannis.is/funding/research/technology -development -
fund/ .  WT/TPR/S/361 /Rev.1  • Iceland  
 
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  ISK 45 million is available to eligible companies over a three -year period. 67 Special incentives are 
also made available to producers of film and TV material in Iceland whereby all costs are eligible 
for a 25% reimbursement by the Film in Iceland Agency.68 
2.49.   In October 2015 , Iceland launched a Route Development Fund to encourage new flight 
routes to Iceland.69 The Fund makes grants to eligible service providers after they make an 
application to the Ministry of Industries and Innovation.  The maximum grant for route 
development is €200,000 over a three -year period and , for promotion/marketing support , a 
minimum of ISK 10 million for each flight route.70 
2.50.   Iceland also offers incentives pursuant to EU regulations.  EU Regulation No. 651/2014 
provides the legal basis for Iceland pursuant to the EEA to offer training aid, aid to SMEs, and to 
environmental protection investment projects.71  
 
                                                
67 Invest in Iceland, online information. Viewed  at: http://www.invest.is/doing -business/incentives -and-
support/ .  
68 Ministry of Industries and Innovation, online information. Viewed  at: 
https://eng.atvinnuvegaraduneyti.is/laws -and-regulations/film -reimbursement .  
69 Ministry of Industries and Innovation, online information. Viewed  at: 
https://eng.atvinnuvegaraduneyti.is/subjects/the -icelandic -route -development -fund/ .  
70 Ministry of Industries and Innovation, online information. Viewed  at: 
https://eng.atvinnuvegaraduneyti.is/media/Acrobat/Protocols -of-the-Board -of-Directors -of-the-Icelandic -
Route -Development -Fund.pdf .  
71 Invest in Iceland, online information. Viewed  at: http://www.invest.is/files/skjol/pdff/iceland -
incentives -factsheet.pdf . WT/TPR/S/361 /Rev.1 • Iceland  
 
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  3  TRADE POLICIES AND P RACTICES BY MEASURE  
3.1  Measures Directly Affecting Imports  
3.1.1   Customs procedures and requireme nts 
3.1.  Iceland's Customs Law sets out the basic framework and rules for customs procedures, 
including valuation, tariff classification, warehousing, rules of origin, anti -dumping and 
countervailing duties, etc.1 It also contains the customs tariff and tariff quota information in its 
annexes. Some of these subjects and others in the Customs Law are supplemented or further 
clarified by regulations.  Since the last review, the Customs  Law has been amended sixteen times.2 
These amendments mainly concerned : the inco rporation of the amendments to the excise and VAT 
tax legislation ; changes to the rules for the allocation of tariff quotas , including rates of duty ; 
updates to the Customs Tariff in Annex I ; adoption of the World Customs Organization  (WCO) 
Authori zed Econ omic Operator (AEO) standard ; and rules for duty -free stores and bonded 
warehouses.  
3.2.  Customs duty revenue amounted to ISK 6.06 billion in 2014, before the autonomous 
liberalization of customs duties on non -agricultural products in 2016 and 2017.3 At that ti me, 
agricultural products, clothing and footwear, and other non -agricultural products amounted to 
about one -third of revenue each.4 With the tariff elimination implemented in 2016 -17, it is 
expected that customs revenue will decrease. In 2016, customs duty  revenue amounted to 
ISK 5.2 billion and it is estimated to be ISK 2.57 billion in 2017.5 Thus, customs revenues are 
relatively small and declining, accounting for about 0.3% of GDP in 2014 and 0.21% in 2016.6 
3.3.  According to the World Bank's Ease of Doing Bu siness rankings, Iceland ranked 66th in the 
category trading across borders  which is significantly worse than its overall rank of 20th.7 The 
lower ranking for trading is mainly due to very high border compliance costs for both imports  and 
exports.  The cost to export  (preparing the paperwork, border handling, customs clearance, etc. ) 
was US$655 for Iceland compared to US$ 115-150 for OECD high -income countries.  Also 
noteworthy was that Iceland's time to export was 2  hours , similar to OECD high -income countri es, 
while its time to import was twelve times that amount (24  hours ).  
3.4.  Iceland's Directorate of Customs (Tollstjori), under the Ministry of Finance and Economic 
Affairs, has the responsibility for administering customs matters for the importation, transit,  and 
exportation of goods in the customs territory of Iceland,  which includes the country, islands, and 
skerries, including 12 nautical miles of territorial waters and airspace above these areas.  Certain 
entities have exclusions from paying customs duties by law, including NATO, Partnership for Peace, 
and United States' forces.8 Customs operates 11 customs offices and designates 23 customs ports 
for the loading/unloading, storage, and customs control of goods. As an island nation, customs 
offices are locate d where there are major air or sea cargo facilities. The State Customs Committee, 
under the Directorate of Customs, was discontinued as of early 2015, with its functions (i.e. 
independent administrational committee) transferred to the Internal Revenue Boar d.9 As such, 
most disputes concerning customs (e.g. tariff classification) are now handled by the Internal 
Revenue Board but disputes concerning administrative matters are handled by the Ministry of 
Finance and Economic Affairs, and can ultimately be taken  to the courts. Traders must first appeal 
to the Directorate of Customs for a review/re -opening before taking the matter to the Board.  
                                                
1 Law No. 88/2005. Viewed at: https://www.tollur.is/library/Skrar/Enski -
vefurinn/Customs_law_11_3_2015.pdf .  
2 Law No. 16/2013, Law No. 21/2013, Law No. 22/2013, Law No. 141/2013, Law No. 5/2014, Law 
No. 123/2014 and Law No. 125/2014.  
3 Information provided by the authorities.  
4 Ministry of Finance and Economic Affairs, online information . Viewed at: 
https://www.fjarmalaraduneyti.is/frettir/nr/19725 .  
5 Information provided by the authorities.  
6 Information provided by the authorities.  
7 World Bank's Doing Business online information. Viewed at : 
http://www.doingbusiness.org/data/exploreeconomies/iceland#tra ding-across -borders .  
8 Customs Law. Viewed at : https://www.tollur.is/library/Skrar/Enski -
vefurinn/Customs_law_11_3_2015.pdf . 
9 Iceland Rulings and Opinions . View ed at: https://www.urskurdir.is/fjr/rikistollanefnd/  and 
http://www.althingi.is/altext/144/s/pdf/0480.pdf . WT/TPR/S/361 /Rev.1  • Iceland  
 
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  3.5.  During the review period, the Directorate of Customs had a number of major projects.  These 
included the introduction of a  risk management system, revision of the long -standing single 
administrative document (SAD), introduction of a quality control system, advances towards the 
establishment of an authori zed economic operator (AEO) programme, and work towards a single 
window a pplication and an electronic system for the clearance of vessels.10  
3.6.  Iceland commenced work on its Single Window project in 2014 by outlining the project, 
defining the benefits, and envisioning its future application. It is expected to be completed by 
2020.11 Iceland also worked on a  risk management application that  uses its electronic systems to 
determine risks in line with guidelines from the WCO.  
3.7.  In 2014 , Iceland introduced a quality control system adhering to the requirements of ISO 
9001 standard in orde r to harmoni ze procedures, facilitate improvements, improve efficiency and 
provide quality services. This work focused on the services and collection division with the 
introduction of a quality management system. Other aspects of the project included train ing and 
implementation of new systems.  In 2015 , it was completed and Iceland received this certification, 
thus improving work processes and predictability.  
3.8.  Iceland's import procedures require that upon arrival a cargo manifest be delivered to 
Customs; this  commences the customs clearance process. The manifest is to contain information 
about the vessel and on  the individual shipment such as ID number of importer, product 
description, quantity and type of packaging, cargo manifest number, etc.12 With the devel opment 
of electronic systems, i.e. electronic data interchange  (EDI), the import clearance process is 
increasingly conducted through electronic means (about 98%  of declarations) .13 Customs 
clearance further requires an entry form  – the SAD, with accompanyin g documents such as bill of 
lading , commercial invoice, invoices for determining c.i.f., and permits or certificates if applicable.  
3.9.  Iceland's new SAD was launched in 2014 and it is to replace the previous document that has 
been in place for over 40 years. As of May 2017, the new SAD was expected to be implemented in 
the near future but the exact implementation remained unclear. The new SAD was introduced to 
improve disclosure, breakdown and fee calculations.  Furthermore , it is applicable in the EEA and 
more compatible with other countries' standards and formalities.  The new SAD will be applicable to 
all types of customs clearance and is expected to better facilitate trade.  
3.10.   Iceland launched its AEO system in 2014 based on the WCO's SAFE framework and 
modelled  on relevant EU legislation.  This will allow trusted operators to receive certain benefits 
and special treatment at Customs. The AEO parameters were incorporated into the Customs Law  
by Act No. 112/2016 in 2016.14 These rules provide that traders can apply for AEO status from the 
Directorate of Customs if they have not been guilty of a serious offence in the last three years, 
have been financially solvent in the last three years, have accounting and supply chain systems for 
adequate customs control, and have  adequate internal security procedures. As of early 2017, the 
AEO was in a pilot phase with the framework still being established. It is expected to be 
operational in 2018.  
3.11.   Bonded warehouses, warehouses for duty -free supplies, and free zones are provided f or in 
Articles 91 -108 of the Customs Law and Regulation No. 1100/2006.15 Bonded warehouses may be 
                                                
10 Directorate of Custo ms, Annual Report . Viewed at: 
https://www.tollur.is/library/Skrar/sameiginlegt/arsskyrslur/%C3%81rssk%C3%BDrsla%202014.pdf  and 
information provided  by the authorities.  
11 Directorate of Customs, Annual Report . Viewed at: 
https://www.tollur.is/library/Skrar/sameiginlegt/arsskyrslur/%C3%81rssk%C3% BDrsla%202014.pdf . 
12 Regulation 1100/2006. Viewed at : http://www.stjornartidindi.is/Advert.aspx?RecordID=47456e07 -
71e5-4913-a444-18cf22ee8c8c .  
13 Directorate of Customs, online information. Viewed at : 
https://www.tollur.is/english/businesses/customs/procedural -aspects/importing -to-iceland/customs -
procedures/ .  
14 Stjornartidindi online information. Viewed at : 
http://www.stjornartidindi.is/Advert.aspx?RecordID=1ecb5df2 -60b6-4f0d-9725-72b19b2f4d83 .  
15 Stjornartidindi online information. Viewed at : 
http://www.stjornartidindi.is/Advert.aspx?RecordID=47456e07 -71e5-4913-a444-18cf22ee8c8c .  WT/TPR/S/361 /Rev.1 • Iceland  
 
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  established in Iceland by legal persons16 or registered companies granted a licen ce by Customs for 
the operation of such warehouses.  Other criteri a must also be  met such as payment of a security 
bond, adequate storage and inspection facilities, knowledgeable personnel, etc. Bonded 
warehouses are established for the storage of goods and no commerce, sales, or industrial 
processing can take place through bonded war ehouses except for simple repacking, labelling, 
assembling, testing, and cleaning that does not result in a change of customs classification of the 
goods.17 Both customs cleared and uncleared goods may be stored in the warehouses provided 
they are in separa te areas or can otherwise be sufficiently differentiated visually.  Recent changes 
to the rules on bonded warehouses provide that owners cannot operate their own bonded 
warehouses, thus there are only independent operators. Iceland's rules on free zones pro vide for 
the processing of uncleared goods and domestic goods beyond what is permitted in bonded 
warehouses. A similar type of licensing procedure as for bonded warehouses is required by 
Customs to operate free zones.18 Iceland has never had any free zones in operation although the 
customs legislation provides for them. According to the authorities, the bonded warehouse scheme 
sufficiently accommodates the import/export requirements of traders to date, thus no free zones  
have been  established.  
3.12.   The Customs La w also contains rules for customs brokers.  They are authori zed to represent 
importers or exporters before the customs authorities with respect to aiding in the completion  of 
customs documentation, completion of customs declarations,  requests for customs c learance, and 
payment of import charges.  The Customs Directorate licenses customs brokers on the condition 
that they are a legal person with at least two executive board members resident in Iceland or 
citizen s of EEA/EFTA countries or Faeroese citizens.  Furthermore, there shall be a day -to-day 
manager and employees must have attended a special course on customs matters by the Customs 
Academy.  According to the authorities, of the 559,000 annual customs declarations, the majority  
(426,000 ) were processed thro ugh brokers.  
3.1.1.1   Trade facilitation  
3.13.   Iceland submitted its instrument of ratification of the WTO Trade Facilitation Agreement  
(TFA)  on 31 October 2016.19 No laws were introduced or amended to implement the agreement. 
There have been no TFA notifications by Icela nd since that time. In October 2015, Iceland 
accepted the WCO's Revised Kyoto Convention (International Convention on the Simplification and 
Harmonization of Customs Procedures) which entered into force on 8 January 2016.20 Iceland has 
also been including t rade facilitation provisions in many recent FTAs.  
3.14.   Advance rulings are provided for customs classification in the form of binding classification 
opinions as set out in the Customs Law, Article 21. A request for a binding classification opinion is 
to be made  to the Director of Customs with the accompanying documentation necessary to 
determine the classification of the goods.  The Director of Customs is required to reply within 
30 days of receipt. The decision is binding on Customs and on the applicant for six years.  A 
decision may be appealed to the Internal Revenue Board.  The Directorate of Customs may revoke 
an opinion  based on the provisions of administrational law or due to legislative changes.21 There 
are no provisions for making binding classification opin ions available to the public.  There have 
been no advance rulings provided for origin determination to date, although it is possible to 
request  them. 
3.15.   Iceland has recently put in place a risk management system ( Section 3.1.1) and regularly 
performs post -clearance audit functions as outlined in Article 119 of the Customs Law . Post -
clearance audit encompass es all types of inspection activities to determine the accuracy of import 
                                                
16 At least two executive board members that are resident in Iceland or citizens of  EEA/EFTA countries  
or Faeroese citizens and have an unblemished record.  
17 Customs Law . Viewed at : https://www.tollur.is/library/Skrar/Enski -
vefurinn/Customs_law_11_3_2015.pdf . 
18 Customs Law . Viewed at : https://www.tollur.is/library/Skrar/En ski-
vefurinn/Customs_law_11_3_2015.pdf . 
19 WTO online information. Viewed at : http://www.tfafacility.org/ratifications . 
20 WCO online information. Viewed at : 
http://www.wcoomd.org/en/media/newsroom/2015/october/iceland -becomes -103rd -contracting -party -to-the-
wco-revised -kyoto -convention.aspx . 
21 Administrat ive Procedures Act, Act No. 37/1993.  Viewed at : https://eng.forsaetisraduneyti.is/acts -of-
law/nr/17 . WT/TPR/S/361 /Rev.1  • Iceland  
 
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  declarations. The Customs Law  also contains provisions for importers to amend an im port 
declaration after customs clearance. This option is valid for six years from the date of customs 
clearance pursuant to the provisions of Article 116 of the Customs Law . 
3.16.   Iceland has provisions for expedited shipments; these are contained in the Customs  Law 
(Articles 22 and 36 ) and Regulation No. 111/2006. The Act provides that expedited shipments may 
be released into circulation before the customs declaration documents have been submitted and 
that customs brokers may deliver express consignments before payment of customs charges by 
providing information about the consignor and the consignment, and paying a security deposit.  
3.17.   There are no pre -shipment inspection requirements for the import of goods into Iceland.  
3.1.2   Customs valuation  
3.18.   Customs valuation in Icela nd is provided for in the Customs Law, Articles 14 -19, and 
Regulation No. 1100/2006. The Customs Law provides for transaction value as the principle 
method of valuation, additions to the price actually paid or payable, and conditions on the use of 
transact ion value. The Regulation provides for the sequential application of the other valuation 
methods based on Article VII of GATT 1994. There have been no significant changes to the 
customs valuation framework during the review period. According to the authori ties, nearly all 
imports use transaction value as the methodology for valuation.  
3.19.   Since 2007 , Iceland has required the use of an official rate of exchange for customs 
clearance of goods.22 Thus, customs value is based on the official rate of exchange publish ed by 
the Central Bank each weekday. These exchange rates are posted on the Customs website.23 
Iceland values goods on a c.i.f. basis for imports and f.o.b. for exports.  
3.20.   Iceland's Regulation on the Custody and Customs Clearance of Goods provides additional 
rules on customs valuation.24 This in particular contains special provisions on the importation of 
vehicles classified in HS headings 8701 -8706, and 8711.  Icelandic Customs uses reference prices 
from foreign countries to determine the customs value if the t ransaction value deviates from the 
comparison value determined by Customs.  According to the authorities, these deviations are rare. 
Customs determines the f.o.b. price and then makes adjustments  to get an approximate retail 
price; they also use a depreciat ion method from new car prices to determine used car prices.   
3.21.   Iceland's law on the Production, Pricing, and Sale of Agriculture Products provides for the 
tariff to be set for agricultural products in ISK per kg, up to a certain maximum, based on the c.i.f.  
price and wholesale margin of the product.25 
3.22.   Iceland has previously notified to the WTO that the Interpretative Notes of the Agreement 
on Implementation of Article VII of the GATT 1994 have not been included in its respective laws 
and regulations and that the provisions of the Decision on the Treatment of Interest Charges in the 
Customs Value of Imported Goods has not been implemented.26 Iceland's current regulation on 
customs valuation, Regulation No. 1100/2006, has yet to be notified to the WTO.  
3.1.3   Rules of o rigin  
3.23.   Iceland's Customs Law sets out the basic framework for its rules of origin in Chapter XX 
(Article 145).  It provides for three basic methods:  change in customs classification, percentage of 
value, and methods of production or processing , but refers to  rules of origin published in the 
regulations.  At present, there are no Icelandic regulations on rules of origin, and therefore origin 
determination is pursuant to the various bilateral or plurilateral agreements. For non -preferential 
origin determination,  Iceland generally accepts what the importer has declared in the import 
documentation.  
                                                
22 Article 19, Customs Law.  
23 Directorate of Customs, online information. Viewed at : 
https://www.tollur.is/english/businesses/customs/import -duties/exchange -rates/ .  
24 Regulation 1100/2006. Viewed at : http://www.stjornartidindi.is/Advert.aspx?RecordID=47456e07 -
71e5-4913-a444-18cf22ee8c8c . 
25 Act No. 99/1993.  
26 WTO document G/VAL/N/2/ISL/1.  WT/TPR/S/361 /Rev.1 • Iceland  
 
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  3.24.   For preferential rules of origin, Iceland has a number of different rules depending on the 
agreement.  For FTAs that involve parties of the Regional Convention on pan -Euro-Mediterranean 
preferential rules of origin (PEM Convention),27 Iceland follows these rules.28 Origin under the PEM 
Convention provides for wholly obtained goods whereby a list of products or processes identifies 
these goods.29 When goods are not wholly obta ined, the Convention provides for origin to be 
conferred when the products are sufficiently worked or processed, as determined by processes 
listed in Annex II by HS chapter.30 Three  main criteria are used for the determination of sufficiently 
worked or proc essed:  value percentage, change of tariff heading, and specific rules. The PEM 
Convention also provides for bilateral and diagonal accumulation between the parties, and full 
accumulation between EEA partners. Previous origin rules under the EEA have been r eplaced by 
the PEM Convention and entered into force for Iceland in 2015.  
3.25.   Origin rules of many EFTA FTAs involving partners outside the  Euro-Mediterranean area, in 
particular developing countries, often involves simpler rules, i.e. more use of change of ta riff 
heading.  
3.26.   Iceland's recent FTA with China has defined originating goods as those wholly obtained in 
the territory of a Party, goods produced entirely in the territory of one or the other Party from 
originating goods, or goods from non -originating mate rials that conform to origin determination in 
the Agreement.  Annex IV lists the rules by HS heading; these mainly concern a change in tariff 
classification or regional value content rules, however, a process requirement or other rule 
specified in the Annex  may also be used.  The agreement also allows for accumulation between the 
parties, provides for de minimis  origin rules, and lists operations that do not confer origin.  
3.27.   For GSP, Iceland follows UNCTAD conventions for origin determination.  The first criteri on 
provides for "wholly obtained products" and secondly, if the wholly obtained  criterion  is not met, 
then sufficient work ing or processing is required.  The Regulation lists the criterion for wholly 
obtained  products  and references the processes for suffic ient work through the EEA Agreement 
which in turn references the PEM Convention rules of preferential origin. There are also provisions 
for insufficient working or processing; accessories, spare parts, and tools; and sets. Per UNCTAD 
guidance, Iceland eith er requires GSP Certificate of Origin Form A or an invoice declaration 
declaring origin per Iceland's rules for GSP eligibility.  
3.28.   Iceland's last notification to the Committee on Rules of Origin was in 2012 for the 
notification of preferential rules of orig in pursuant to the free trade agreement between Ukraine 
and the EFTA States.31 Certain other preferential rules of origin were notified in 1997 for EFTA free 
trade agreements in force at that time.32  
3.1.4   Tariffs  
3.29.   Iceland's Customs Law provides the main legal fra mework for tariffs.  Its annexes contain 
the applied tariffs by HS code and the basic information on tariff quotas (TQs). In addition, a 
number of regulations supplement the information on quotas by providing more detailed 
information. The main changes to t he legal framework for tariffs during the period were the 
changes in tariff nomenclature and rates, as outlined in detail below, and new regulations to adjust 
quota quantities or rates of duty.  
                                                
27 The EU, EFTA States, Faroe Islands, participants to the Ba rcelona Process (Algeria, Egypt, Israel, 
Jordan, Lebanon, Morocco, Palestine, Syria, Tunisia, and Turkey), participants in the EU's Stabilisation and 
Association Process (Albania, Bosnia and Herzegovina, the former Yugoslav Republic of Macedonia, 
Montenegr o, Serbia and Kosovo), and Moldova.  
28 The FTA with Ukraine also provides for PEM Convention rules of origin determination.  
29 European Commission online information. Viewed at : 
http://ec.europa.eu/taxation_customs/business/calculation -customs -duties/rules -origin/general -aspects -
preferential -origin/arrangeme nts-list/paneuromediterranean -cumulation -pem-convention_en .  
30 PEM Convention. Official Journal of the European Union, L 54, 26 Feb ruary  2013. Viewed at : 
http://eur -lex.eu ropa.eu/legal -content/EN/TXT/?uri=OJ:L:2013:054:TOC .  
31 WTO document G/RO/N/82.  
32 WTO document G/RO/N/15.  WT/TPR/S/361 /Rev.1  • Iceland  
 
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  3.1.4.1   Nomenclature and WTO bindings  
3.30.   Since 1 January 2017, Iceland h as implemented the latest (HS2017) Harmoni zed System 
(HS) changes from the WCO in its customs tariff, as contained in Annex 1 to the Customs Law. 
This Annex is updated periodically to keep the tariff current , with the most substantial change 
during the rev iew period being the HS2017 implementation. Since that revision, the tariff has been 
updated two more times to implement the tariff liberalization for non -agricultural products and to 
amend certain dairy tariffs to align with the consumer price index movem ents since 1995.33 Other 
changes to the tariff nomenclature during the review period were mainly for statistical purposes 
and due to changes in other taxes, i.e. recycling tax.  
3.31.   Iceland's WTO Schedule of tariff commitments is currently in the HS2002 nomencla ture. The 
submissions of the HS2007, HS2012, and HS2017 changes to its schedule were outstanding as of 
May 2017.34 Iceland is currently not covered by WTO waiver for these changes. Formal changes to 
Iceland's WTO schedule that were certified during the revi ew period were the HS2002 changes and 
the expanded ITA product coverage.35 These did not change the overall binding coverage or rates 
significantly, i.e. the additional ITA products lowered some of the bindings on these products and 
bindings were added to a  few unbound lines.  
3.32.   Iceland maintains 95% binding coverage of its tariff, remaining statistically unchanged since 
2012 (Table 3.1) . The unbound lines include certain fish, petroleum gas, fertili zer, tyre s, paper, 
books, wool, yarn, fibre, motor vehicle s, and airplane products. Iceland's bound rates offer 
considerable tariff protection, especially in agriculture and fisheries, where there are several ad 
valorem  bound rates in excess of 200%, and more than 150 bound at over 100%. When 
examining the bindings o f non-ad valorem  rates, they offer considerably more tariff protection with 
an ad valorem  component often exceeding 100%, and many over 500%, with a specific 
component that may allow the binding to go even higher, depending on which of the two 
components i s higher.  
3.1.4.2   Applied rates  
3.33.   As of 1 January 2017, Iceland removed the customs duties on all non -agricultural36 
products.37 This measure was implemented in two phases, with tariffs eliminated on clothing and 
footwear products on 1 January 2016 and the remaining p roducts on 1 January 2017. This 
initiative is expected to lead to a reduction in customs revenues of ISK 2.5 to 3.5 billion per year.38  
3.34.   As a result of this initiative, the simple average tariff rate has been reduced significantly 
from 8.3% in 2012 to 4.6% in 2017 (Table 3.1) . Agricultural products39 have also seen some 
reductions since 2012, i.e. 28.6% to 20.2% , but they remain high and prohibitive in certain 
HS chapters, in particular, the meat, dairy, and plant and flower chapters (Table 3.2) . However, 
nearly 90% of all tariff lines are now duty -free, an increase from 70% in 2012 (Chart 3.1 and 
Table 3.1) . 
3.35.   Iceland continues to maintain a significant number (4.4% ) of tariff lines with non -ad 
valorem  rates, a slight decrease from 5% in 2012, and these constit ute about 40% of all dutiable 
tariff lines.  Non-ad valorem  rates are mostly complex duties (3.7%), while 0.7% are specific duties 
(Chart 3.2) . For the purpose of tariff analysis, the ad valorem  equivalents (AVEs) were calculated 
and these result in signifi cantly high rates, averaging 75.8%, with more than one -fourth above 
100%, thus offering significant tariff protection.  In comparison, ad valorem  applied rates averaged 
21.6%.  The highest rate of 429.6% was for meat of swine, and the next highest was 322.6%  for 
milk and cream.  Thus, non -ad valorem  rates are concentrated in the sectors with highest tariff 
                                                
33 Act No. 102/2016.  
34 WTO online information. Viewed at : 
https://www.wto.org/english/tratop_e/schedules_e/goods_schedules_table_e.htm .  
35 WTO documents WT/Let/1003 and WT/Let/1202.  
36 Those in HS chapters 25 to 97.  
37 Ministry of Finance and Economic Affairs, online information. Viewed at : 
https://www.fjarmalaraduneyti.is/media/frettir/Skilagrein -starfshops -um-endurskodun -tollskrar.pdf .  
38 Iceland Monitor online information. Viewed at : 
http://icelandmonitor.mbl.is/news/politics_and_society/2015/07/09/customs_duties_abolished_from_2017/ . 
39 WTO definition.  WT/TPR/S/361 /Rev.1 • Iceland  
 
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  protection, i.e. meat and dairy (Table 3.2) . These two sectors are also the ones providing the most 
tariff peaks.  
3.36.   A comparison of Iceland's applied and boun d rates was undertaken.  While there were no 
cases of tariffs exceeding bindings when conducting a direct comparison of ad valorem  rates, there 
may be some inconsistencies in a few instances when comparison was undertaken using ad 
valorem  equivalents.40 It is noted that the methodology was not precise and difficulties remain 
with obtaining adequate trade statistical information for more than one year for some tariff lines.  
3.37.   Iceland's submission to the Integrated Data Base for tariff and trade data was last not ified 
in 2014, thus 2015 and 2016 submissions were outstanding as of March 2017.  
Table 3.1 Tariff structure of Iceland, 2012 and 2017  
 MFN applied  
 2012  2017  
Bound tariff lines (% of all tariff lines)  95.0 95.0 
Simple average rate  8.3 4.6 
   WTO agricultural products  28.6 20.2 
   WTO non -agricultural products  2.5 0.2 
   HS01 -24 22.1 15.5 
   HS25 -97 2.5 0.0 
Duty-free tariff lines (% of all tariff lines)  70.1 89.6 
Simple average of dutiable lines only  27.8 44.3 
Tariff quotas (% of all tariff lines)  .. 1.6 
Non-ad valorem  tariffs (% of all tariff lines)  5.1 4.4 
Domestic tariff "peaks" (% of all tariff lines)b 5.7 7.5 
International tariff "peaks" (% of all tariff lines)c 8.5 7.5 
Coefficient of variation  4.9 4.5 
Nuisance applied rates (% of all tariff lines)d 0.1 0.1 
   
Total number of tariff lines  8,513  8,971  
  Ad valorem  rates 8,075  8,580  
       Duty-free rates  5,965  8,037  
  Specific rates  53 61 
  Compound rates  385 330 
.. Not available  
a Includ ing ad valorem  rates and AVEs for non -ad valorem  rates. AVEs are calculated based on import 
figures taken from Iceland Statistics online information. Where  no import figures are available , ITC 
Market Access Map AVEs are used.  
b Domestic tariff peaks are de fined as those exceeding three times the overall simple average applied 
rate. 
c International tariff peaks are defined as those exceeding 15%.  
d Nuisance rates are those greater than zero, but less than or equal to 2%.   
Note:  All tariff calculations exclud e in-quota rates. The 2012 tariff is based on HS12 nomenclature, and the 
2017 tariff on HS17.  
Source:  WTO Secretariat calculations, based on data received by the authorities and based on Iceland 
Statistics online information as well as ITC Market Access Ma p online information.  
                                                
40 Products within HS heading 1905 . WT/TPR/S/361 /Rev.1  • Iceland  
 
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  Chart 3.1 Frequency distribution of MFN tariff rates, 2017  
(89.6%)
(2.7%) (2.8%)
(0.9%) (0.4%) (0.4) (1.0%) (1.1%) (1.2%)
80%82%84%86%88%90%92%94%96%98%100%
01,0002,0003,0004,0005,0006,0007,0008,0009,000
Duty free >0%-10% >10%-20% >20%-30% >30%-40% >40%-50% >50%-60% >60%-100% >100%Chart 3.[]  Frequency distribution of MFN tariff rates, 2017
Number of tariff lines
Cumulative %
Number of lines (% of total)
Note:    Including AVEs for non -ad valorem rates.
Source:  WTO Secretariat calculations, based on data provided by the authorities.
Note:  Including AVEs for non -ad valorem  rates.  
Source:  WTO Secretariat calculations, based on data provided by the authorities.  
Chart 3.2 Tariff distribution by type of duty, 2017  
 
Chart 3.1   Tariff distribution by type of duty, 2017
Source:  WTO Secretariat calculations , based on data provided by the authorities.Ad valorem
6.1%Duty free
89.6%
Non-ad valorem
4.4%
Compound duty
3.7%Specific duty
0.7%
Source:  WTO Secretariat calculations, based on data provided by the authorities.  WT/TPR/S/361 /Rev.1 • Iceland  
 
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  Table 3.2 Summary analysi s of Iceland's MFN tariff, 2017  
  Number 
of lines  Average 
(%) Range 
(%) Standard 
deviation 
(%) Non-ad 
valorem  
rates 
(%) Duty - 
free 
(%) 
Total  8,971  4.6 0-429.6  21.0 4.4 89.6 
By WTO category        
WTO agricultural products  1,990  20.2 0-429.6  40.8 19.6 59.0 
   Animals and products thereof  234 88.1 0-429.6  66.6 83.3 16.7 
   Dairy products  44 73.3 30.5-322.6  53.2 100.0  0.0 
   Fruit, vegetables, and plants  331 16.5 0-248.1  35.3 10.9 60.4 
   Coffee and tea  57 12.1 0-40.4 11.4 40.4 36.8 
   Cereals and prepa rations  292 12.9 0-144.8  22.8 27.7 54.5 
   Oils seeds, fats, oil and their products  134 4.9 0-55 15.1 3.0 89.6 
   Sugars and confectionary  50 5.4 0-55 12.5 0.0 80.0 
   Beverages, spirits and tobacco  631 6.9 0-43.8 9.5 1.3 63.5 
   Cotton  5 0.0 0.0 0.0 0.0 100.0  
   Other agricultural products, n.e.s.  212 5.2 0-55 15.7 0.0 89.6 
WTO non -agricultural products  6,981  0.2 0-10 1.3 0.0 98.3 
   Fish and fishery products  766 1.6 0-10 3.6 0.0 84.5 
   Minerals and metals  1,105  0.0 0.0 0.0 0.0 100.0  
   Chemical s and photographic supplies  1,261  0.0 0.0 0.0 0.0 100.0  
   Wood, pulp, paper and furniture  496 0.0 0.0 0.0 0.0 100.0  
   Textiles  674 0.0 0.0 0.0 0.0 100.0  
   Clothing  243 0.0 0.0 0.0 0.0 100.0  
   Leather, rubber, footwear and travel goods  234 0.0 0.0 0.0 0.0 100.0  
   Non-electric machinery  683 0.0 0.0 0.0 0.0 100.0  
   Electric machinery  318 0.0 0.0 0.0 0.0 100.0  
   Transport equipment  570 0.0 0.0 0.0 0.0 100.0  
   Non-agricultural products, n.e.s.  598 0.0 0.0 0.0 0.0 100.0  
   Petroleum  33 0.0 0.0 0.0 0.0 100.0  
By ISIC sectora       
   ISIC 1 - Agriculture, hunting and fishing  566 10.0 0-248.1  29.6 7.6 78.4 
   ISIC 2 – Mining  111 0.0 0-10 0.0 0.0 100.0  
   ISIC 3 – Manufacturing  8,293  4.3 0-429.6  20.3 4.2 90.2 
By stage of processing        
   First stage of processing  1,244  5.2 0-248.1  21.6 4.0 89.6 
   Semi-processed products  2,310  0.6 0-55 5.1 0.0 98.4 
   Fully processed products  5,417  6.2 0-429.6  24.5 6.3 85.8 
By HS chapters        
HS 01 -24 2,660  15.5 0-429.6  36.2 14.7 64.9 
HS 01 - Live anima ls 37 0.0 0 0.0 0.0 100.0  
HS 02 - Meat and edible meat offal  157 108.1  0-429.6  62.7 98.7 1.3 
HS 03 - Fish and crustaceans  632 0.4 0-10 2.1 0.0 95.6 
HS 04 - Dairy products; eggs; natural honey; etc.  57 70.0 0-322.6  53.1 93.0 7.0 
HS 05 - Products of anim al origins, n.e.s.  42 0.0 0 0.0 0.0 100.0  
HS 06 - Plants and flowers  58 48.1 0-213.7  52.7 44.8 19.0 
HS 07 - Vegetables and certain roots  92 23.7 0-248.1  36.8 8.7 20.7 
HS 08 - Fruit and nuts  76 0.0 0 0.0 0.0 100.0  
HS 09 - Coffee, tea, maté, spices  43 0.0 0 0.0 0.0 100.0  
HS 10 – Cereals  44 17.5 0-55 25.6 0.0 68.2 
HS 11 - Products of the milling industry  60 15.2 0-55 24.1 0.0 66.7 
HS 12 - Oil seeds and oleaginous fruit, etc.  64 1.7 0-55 9.6 0.0 96.9 
HS 13 - Vegetable sap and extracts  18 0.0 0 0.0 0.0 100.0 
HS 14 - Vegetable plaiting materials  6 0.0 0 0.0 0.0 100.0  
HS 15 - Animal or vegetable fats and oils  109 1.0 0-37.9 5.5 3.7 96.3 
HS 16 - Preparations of meat and fish  135 33.7 0-176.7  43.5 29.6 3.0 
HS 17 - Sugars and sugar confectionary  50 5.4 0-55 12.5 0.0 80.0 
HS 18 - Cocoa and cocoa preparations  39 14.1 0-40.4 11.6 59.0 25.6 
HS 19 - Preparations of cereals, flour, or milk  103 8.2 0-42.5 10.8 45.6 44.7 
HS 20 - Preparations of vegetables, fruit, nuts  220 14.1 0-76 13.2 0.9 35.9 
HS 21 - Misc. e dible preparations  86 7.7 0-47.8 11.7 29.1 51.2 
HS 22 - Beverages, spirits, vinegar  458 3.9 0-43.8 7.9 1.7 77.7 
HS 23 - Waste from the food industries  46 31.1 0-55 27.3 0.0 43.5 
HS 24 - Tobacco  28 0.0 0 0.0 0.0 100.0  
HS 25 -97 6,311  0.0 0.0 0.0 0.0 100.0 
a ISIC Rev.2 classification, e xcluding electricity (1 line).  
Note:  Excluding in -quota rates and including AVEs for non -ad valorem  rates. AVEs are calculated based on 
2016 or 2015 import data at the 8 -digit tariff line level taken from Iceland Statistics  online. Where  
no import figures are available, ITC Market Access Map 2016 AVEs are used.  
Source:  WTO Secretariat calculations, based on data received by the authorities.  WT/TPR/S/361 /Rev.1  • Iceland  
 
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  3.1.4.3   Special tariff treatment and duty suspensions  
3.38.   Iceland maintains a number of exemption s to the customs tariff for various reasons; these 
include gifts, temporary import, designated investments, products of designated monopolies, 
special projects, etc. (Table 3.3) . 
3.39.   Iceland's Customs Law  provides for duty suspensions on a few products. Accord ing to 
Article  7, duty suspensions apply to raw materials and certain grated cheese s, fresh potatoes, 
margarine s, and rusks and similar toasted products where the products are used in domestic 
production.41 
Table 3.3 Tariff exemptions  
Product/subject  Exemption  Law or reference  
Exemption of import duty  Write -offs decided by the 
Committee  Committee on the write -off of 
public expenditure  
Building material, plant equipment  Alcoa in Iceland import tax 
exemption  Law No. 12/2003  
Alcohol  State Monopoly Board exemption  Regulation  No. 505/1998  
Tobacco  State Tobacco Monopoly  Letter 20/12/95 and 08/10/98  
Building material, plant equipment  Duty exemptions for airport  Law No. 124/1999  
Building materials machinery and 
equipment and other capital goods  Data centre exemption  Law No. 57/2010  
Contracting expenses  EU contractors exemption  Law No.  53/2012  
Construction and raw materials  Bakki Silicon exemption  Law No. 52/2013  
Alloys  Icelandic railway exemption  Law No.  18/1977 
Source:  Directorate of Customs online information. Viewed at : 
https://www.tollur.is/atvinnurekstur/tollamal/adflutningsgjold/skilmalar/undanthagur/ .  
3.1.4.4   Tariff quotas (TQs) and administration  
3.40.   Iceland maintains a number of TQs on agricultural products. There are essentially three 
different types of quotas  – those pursuant to WTO multilateral rules (current and minimum 
access), those pursuant to FTAs (EU, EEA, and FTAs with third parties), and autonomous quotas. 
Determination of the quota amount, in -quota rate, and allocation is dependent upon the type of 
quota.  WTO quotas are established by the statutes, whereas autonomous quotas are determined 
by the Minister who administers agricultural affairs on the basis of the provisions in the statutes.  
3.41.   WTO TQs are contained in Annexes IIIA and IIIB of the Customs Law.  There are currently 
141 tariff lines with WTO TQs covering products in the meat & edible offal, dairy, and preparations 
of meat sectors.42 The Customs Law sets the in -quota tariffs at 32% and 30% of the base rate.  In 
a few cases, the in -quota rates are higher than out -of-quota rates.43 Quotas are allocated on a 
yearly basis based on the recommendation of a Co mmittee established under the Minister in 
charge of agriculture.  Allocation may be on the basis of drawing lots or based on the previous level 
of imports.  
3.42.   Autonomous quotas are contained in Annexes IVA and IVB and include meat, milk & milk 
products, butter , cheese, eggs, flowers & plants, potatoes, tomatoes, onion, cabbage, lettuce, 
carrots, cucumber, leguminous vegetables, and other vegetables. These quota levels and rates are 
determined by the Minister in charge of agriculture once domestic demand and pri cing parameters 
have been determined.  Annex V contains a subset of the Annex IV quotas for 23 tariff lines of TQs 
on products in HS chapters 2, 4, 6, and 7.  These have preferential duty rates but the quota 
volumes are as stated in Annex IV.  
                                                
41 Information provided by the authorities.  
42 HS chapters 2, 4, and 16.  
43 HS 0206.9009 and 0204.4309.  WT/TPR/S/361 /Rev.1 • Iceland  
 
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  3.43.   Iceland also ha s a number of bilateral TQs pursuant to FTAs; the quota quantity and 
in-quota rates are set by the specific agreement.  TQs for the European Union  are on beef, pig 
meat, poultry, meat , cheese, sausages, and processed meat products. Iceland also has quotas o n 
cheese and beef from EFTA States.44  
3.1.4.5   Preferential tariffs  
3.44.   Iceland's preferential agreements generally provide more market access for signatories 
through lower tariffs but this now only applies to agricultural goods as Iceland eliminated duties on 
industri al tariffs on an MFN basis.  With the exception of the Faroe Islands, Iceland only provides 
slight improvements in agricultural market access as most FTAs have tariff averages in agriculture 
near the MFN average of 20.2% (Table 3.4) . This indicates that Ice land continues to have 
sensitivities in certain agricultural products.  
3.45.   For GSP preferential imports, Iceland's Regulation on GSP provides for the product 
coverage.45 As with the other preferential agreements, GSP benefits now only apply with respect to 
agriculture on 323 tariff lines, as other lines previously benefitting are now MFN duty -free. About 
23% of agricultural product tariff lines are excluded from GSP, most being in the sensitive sectors 
of meat and dairy.  
Table 3.4 Summary analysis of the Icelandic preferential tariffs, 2016  
 Total  WTO agriculture  WTO non -agriculture  
 Average  
(%) Duty -free 
rates  
(%) Average  
(%) Duty -free 
rates  
(%) Average  
(%) Duty -free 
rates 
(%) 
MFN 4.6 89.6 20.2 59.0 0.2 98.3 
GSP 4.1 92.0 18.5 64.1 0.0 100.0  
Regional trade agreements:  
Albania  3.7 94.0 16.5 73.0 0.0 100.0  
Bosnia and Herzegovina  3.7 93.7 16.7 71.8 0.0 100.0  
Canada  3.4 95.0 15.1 77.4 0.0 100.0  
Central America – Costa 
Rica 3.4 94.9 15.2 77.2 0.0 100.0  
Central A merica – Panama  3.4 94.9 15.3 77.1 0.0 100.0  
Chile 3.8 94.1 17.0 73.5 0.0 100.0  
China  3.1 95.8 14.0 81.3 0.0 100.0  
Colombia  3.4 95.0 15.1 77.6 0.0 100.0  
Egypt  3.7 94.0 16.7 72.8 0.0 100.0  
Faroe Islands  0.0 0.0 0.0 100.0  0.0 100.0  
Gulf Cooperation Cou ncil 3.7 93.9 16.6 72.5 0.0 100.0  
Hong Kong, China  3.8 93.9 17.0 72.4 0.0 100.0  
Israel  3.9 93.9 17.6 72.6 0.0 100.0  
Jordan  3.9 93.2 17.7 69.2 0.0 100.0  
Korea, Rep. of  3.7 94.4 16.5 74.8 0.0 100.0  
Lebanon  3.8 93.9 17.2 72.5 0.0 100.0  
Mexico  3.8 94.1 17.2 73.5 0.0 100.0  
Montenegro  3.8 93.5 17.0 70.6 0.0 100.0  
Morocco  3.8 93.6 17.2 71.0 0.0 100.0  
Peru 3.4 94.7 15.1 77.6 0.0 99.6 
SACU  3.8 93.8 17 71.9 0.0 100.0  
Serbia  3.7 93.7 16.5 72.9 0.0 100.0  
Singapore  3.8 94.2 16.9 73.8 0.0 100.0  
                                                
44 Ministry of Finance and Economic Affairs, online information. Viewed at : 
https://w ww.fjarmalaraduneyti.is/auglysingar/nr/19485 ; and information provided by the authorities.  
45 Regulation No. 119/2002.  WT/TPR/S/361 /Rev.1  • Iceland  
 
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   Total  WTO agriculture  WTO non -agriculture  
 Average  
(%) Duty -free 
rates  
(%) Average  
(%) Duty -free 
rates  
(%) Average  
(%) Duty -free 
rates 
(%) 
The former Yu goslav 
Republic of Macedonia  3.9 93.5 17.5 70.8 0.0 100.0  
Tunisia  3.9 93.5 17.5 70.9 0.0 100.0  
Turkey  3.9 94.0 17.6 73.0 0.0 100.0  
Ukraine  3.7 94.0 16.9 72.9 0.0 100.0  
       
EU-28 2.7 95.1 12.2 77.7 0.0 100.0  
EEA – Switzerland  3.8 93.9 16.9 72.7 0.0 100.0  
EFTA 3.1 92.9 13.6 73.9 0.0 100.0  
Note:  Excluding in -quota rates and including AVEs for non -ad valorem  rates. AVEs are calculated based on 
2016 or 2015 import data at the 8 -digit tariff line level taken from Iceland Statistics online. Where 
no imp ort figures are available, ITC Market Access Map 2016 AVEs are used.  
Source:  WTO Secretariat calculations, based on data received by the authorities.  
3.1.5   Other charges affecting imports  
3.46.   Iceland's Directorate of Customs charges certain customs fees for its proc essing and 
clearance of goods. A fee structure is set out for the customs clearance of freight, cargo, ships, 
etc. on the Customs website for services provided at certain times, e.g. after office hours.46 Other 
fees are also set out for disposal of goods, t emporary imports, cargo security seals, customs 
inspection, etc.  
3.47.   Since 1 January 2006 , pursuant to Iceland's commitments under the  EU Directive on 
packaging and packaging waste47, Iceland has levied a recycling fee upon importation on all 
cardboard, paper,  and plastic packaging waste.48 Certain other categories of products (listed by 
HS code) are also subject to a recycling or disposal fee upon importation  – oil products, organic 
solvents, halogenated compounds, isocyanates and polyurethanes, paint, printing  inks, batteries 
and accumulators, photographic products, mercury products, pesticides, refrigerants, t yres, motor 
vehicles, synthetic fishing gear, and electrical and electronic equipment.49 Importers, at the time 
of importation , should declare the net wei ght of all packaging imported into Iceland on the basis of 
which a fee is levied and  collected by Customs. Exported packaging is exempt from the fee 
provided the exporter can demonstrate the packaging will be transported out of the country. The 
recycling f ees on domestic packaging are collected by regional tax authorities in the same manner 
as the excise tax.  The recycling fee is collected in a recycling fund which is managed by a 
seven -member board.  The fees are then channelled to cooperatives operated by local authorities 
to offset their costs of operating waste collection and disposal facilities.  The fund has been running 
a surplus in recent years and has set aside the additional amounts for future liabilities.50 The 
recycling fee varies depending on type of packaging or product concerned. The fees have been 
updated several times; as of January 2017 , the recycling fee for paper/paperboard packaging was 
ISK 15/kg and for plastic packaging ISK 16/kg; fees for other products vary considerably, e.g. 
ISK 0.20/kg  for certain oils, ISK 2,880/kg for certain photographic products, and ISK 707/piece for 
                                                
46 Directorate of Customs online information. Viewed at : 
https://www.tollur.is/library/Skrar/Gjaldskrar/gjaldskra.pdf , 
https://www.tollur.is/library/Skrar/Gjaldskrar/rate_list.pdf , and 
https://www.tollur.is/atvinnurekstur/tollamal/adflutningsgjold/skilmalar/urvinnslugjold/ .  
47 European Parliament and Council Directive 94/62 EC of 20 December 1994, OJ No. L 365/10. 
European Commission online information. Viewed at : http://eur -lex.europa.eu/legal -
content/EN/TXT/PDF/?uri=CELEX:31994L0062&from=en . 
48 Iceland Recycling online information. Viewed at : http://www.urvinnslusjodur.is/voruflokkar/#umbudir  
and http://www.althingi.is/lagas/nuna/2002162.html .  
49 The law (Act No. 162/ 2002) provides for a special exemption for manufacturers and importers of 
electrical and electronic devices if they have their own system for the collection of electric and electronic waste 
in the country and dispose of it appropriately.  
50 Annual Report on  Recycling 2015, online information. Viewed at : 
http://www.urvinnslusjodur.is/media/arsskyrslur/Arsskyrsla -2015-vef.pdf . WT/TPR/S/361 /Rev.1 • Iceland  
 
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  certain batteries for vehicles.51 In 2015, the recycling fees levied on imported goods amounted to 
ISK 1,147.2 million.52 
3.48.   In January 2014 , Iceland's new stamp duty law c ame into force and replaced the previous 
1978 law53; the new law  only applies to the transfer of ownership of real estate and ships over 
5 gross tons.  The stamp duty on the documents for the transfer is now 0.8% of the value for an 
individual or 1.6% for a legal entity (company).  For individuals purchasing real estate for the first 
time, the rate is 0.4%.  Historically, the stamp duty revenues were between 0.2 to 0.4% of GDP 
and mainly applied to the financial sector.54 With the new law, stamp duty is no longe r applied to 
insurance contracts, loan agreements, or rental of real estate; and the overall rate has been 
lowered.  
3.49.   Since 2014 , Iceland has launched reforms to simplify and improve efficiency in its VAT and 
excise tax systems. This has led to a reduction i n the gap between the general and lower VAT 
rates, and also to its broader application and the elimination of the general excise duty.  Since 
2016, pursuant to the reforms, the tourism sector is now subject to VAT whereas previously it was 
exempt.55  
3.50.   VAT has  undergone modernization and reform during the review period to lower the 
standard rate and increase the reduced rate, broaden the base, and increase the threshold. As of 
1 January 2017, the VAT threshold was raised to ISK 2 million per year, the standard rate was 
24% and the reduced rate was 11%.56 
3.51.   Following earlier reforms, in 2016 the Ministry of Finance and Economic Affairs launched a 
process for further reforms to the VAT . Draft legislation was circulated for comment on foreign 
enterprises selling elect ronically delivered services being able to  opt for simple registration for the 
return of VAT.57 This was still a draft and not a formal proposal as of May 2017. The Government 
was also examining the third phase of reforms and calling for proposals from the public to address 
these matters.58 Further changes were envisioned but had not been further developed or approved 
as of May 2017.  
3.52.   The general excise duty was abolished as of 1 January 2015.  However, a specific excise is 
still charged on certain motor vehicl es (e.g. rental cars, taxis, etc.), based on CO2 emissions. 
Further changes are due to take place in 2018 when the specific excise duty will be eliminated only 
on rental vehicles.  This is expected to increase government revenues by ISK 2.5 billion.59 Excise  
duty continues to be charged on imported and domestic alcohol and tobacco products.  
3.53.   There are a number of exemptions to the excise duty on vehicles, fuel, etc. for embassies 
and diplomatic missions,  and for international organi zations, and on tractors, sn owmobiles, 
self-loading or self -unloading trailers and semi -trailers for agricultural purposes, vehicles owned by 
the Government used for fire -fighting and ambulances, vehicles owned by the Government or 
                                                
51 Icelandic Recycling Fund  online information. Viewed at : http://www.urvinnslusjodur.is/media/log -og-
reglur/Log -nr-162-2002-med-breytingum -vefur-2017.pdf . 
52 Icelandic Recycling Fund , Annual R eport on Recycling 2015 . Viewed at : 
http://www.urvinnslusjodur.is/media/arsskyrslur/Arsskyrsla -2015-vef.pdf . 
53 Act No. 36/1978.  
54 Ministry of Finance and Economic Affai rs, Department of Taxation and Revenue, online information. 
Viewed at : http://nsfr.dk/uf/90000_99999/92226/4058da63b99ca5ba3aa54227ece64ecc.pdf .  
55 Ministry of Finance  and Economic Affairs  online information , "Fiscal Policy and Fiscal Strategy Plan, 
2017-2021" . Viewed at : https://www.mini stryoffinance.is/news/statement -of-fiscal-policy -and-fiscal-strategy -
plan-presented -for-the-first-time and http://fjarlog.origo.is/Opinber -fjarmal -2017-2021.pdf . 
56 Ministry of Finance a nd Economic Affairs online information. Viewed at : 
https://www.velferdarraduneyti.is/media/skyrslur2016/Fjarlagafrumvarp2017.pptx .  
57 Ministry of Finance and Eco nomic Affairs online information. Viewed at : 
https://www.fjarmalaraduneyti.is/media/frettatengt2016/Greinargerd -starfshops.pdf .  
58 Ministry of Finance and Eco nomic Affairs online information. Viewed at : 
https://www.fjarmalaraduneyti.is/frettir/greinargerd -starfshops -um-kaup-og-solu-a-voru-og-thjonustu -milli-
landa .  
59 Ministry of Finance and Economic Affairs online information. Viewed at : 
https://www.velferdarraduneyti.is/media/skyrslur2016/Fjar lagafrumvarp2017.pptx .  WT/TPR/S/361 /Rev.1  • Iceland  
 
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  municipal authorities specially equipped for moving disabled people, vehicles owned by persons 
with disabilities specifically equipped with wheelchair lift, etc.60  
3.54.   Other fees are charged on certain fire and electrical safety, and electrical goods by the 
Iceland Construction Authority.  The fee is collected b y customs on imported goods ' c.i.f. value at a 
rate of 0.15%; it is equally charged on domestic goods.61 A carbon tax is also charged on domestic 
and imported carbon based fuels as a specific duty per litre which varies by product based on its 
emissions.62 There is also a transport equalization fee applied on certain petroleum products such 
as gasoline, jet fuel, etc. to offset the transport costs within the country.  A specific duty per litre is 
charged depending on the product concerned. According to the aut horities, this is applied to 
imported products.63 
3.1.6   Import prohibitions, restrictions, and licensing  
3.1.6.1   Prohibitions and restrictions  
3.55.   Iceland maintains a number of measures that either prohibit or restrict imports.  Many of 
these measures are long -standing, altho ugh there have been a few developments during the 
review period as outlined below.  Eight categories of restrictions or prohibitions on imports are 
maintained and several relate to international agreements such as CITES, Montreal Protocol, etc. 
(Table 3.5) . Products prohibited due to sanctions or dual -use goods are not covered in this section 
(see Sections 3.1.8 and 3.2.3 respectively for the restrictions on these products).  
3.56.   Other developments during the period include changes to the product coverage and the  
enumeration of certain exemptions in 2014 to CITES.64 Certain sharks were added to the 
coverage, while certain whales, dolphins, porpoises, and sharks were excluded through the 
exemptions.  
3.57.   In its last notifi cation of  quantitative restrictions  in 2004 , Ice land notified the WTO 
Committee on Market Access that it did not maintain any quantitative restrictions.65 
Table 3.5 Prohibitions or restrictions on imports, 2017  
Product  Measure  Legislation  
Narcotic drugs  Prohibition  Act No. 65/1974 on Narcotics and Act No. 93/1994 on Medicinal 
Products ; also Regulations Nos. 233/2001 and 232/2001 on habit -
forming and narcotic substances and other controlled substances.  
Certain animal and plant 
species pursuant to CITES  Restriction  Regulation No. 813/2014 amending Regulation No. 829/2005.   
 
Asbestos and products 
containing asbestos  Prohibition  Act No. 61/2013, Chemicals  Act, amending Act 52/1988 on toxic and 
dangerous substances . 
Ozone -depleting 
substances  Prohibition  Act N o. 61/2013, Chemicals  Act, amending Act No. 52/1988 on toxic 
and dangerous substances ; Act No. 7/1998 on public health and 
pollution control ; and Regulation No. 586/2002 on substances that 
deplete the ozone layer  
PCBs Prohibition  Act No. 52/1988 on toxic and dangerous substances ; Regulation 
No. 489/1988 on the import, use and disposal of PCBs  
Weapons, firearms, 
ammunition  Prohibition  Act No. 16/1998 on Weapons ; Regulations No. 16/1978 on firearms 
and ammunition, No.  174/1979 , and No. 474/1988 amendments t o 
the regulation ; and No. 536/1988 on the sale and handling of 
fireworks  
                                                
60 Iceland Directorate of Customs online information. Viewed at : 
https://www.tollur.is/atvinnurekstur/tollamal/adflutningsgjold/ski lmalar/undanthagur/ .  
61 Information provided by the authorities and Regulation No. 678/2009.  
62 Information provided by the authorities and Act No. 129/2009.  
63 Information provided by the authorities, Act No. 103/1994, and Regulation No. 1164/2016.  
64 Reglu gerdasafan online information. Viewed at : http://www.reglugerd.is/reglugerdir/eftir -
raduneytum/atvinnuvega --og-nyskopunarraduneyti/nr/19238 .  
65 WTO document G/MA/NTM/QR/1/Add.10.  WT/TPR/S/361 /Rev.1 • Iceland  
 
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  Product  Measure  Legislation  
Textile products treated 
with certain chemical 
substances  Prohibition  Regulation No. 448/1996  
Batteries and 
accumulators containing 
above a certain 
percentage of mercury, 
cadmium, o r lead  Prohibition  Regulation No. 571/1997  
Source:  Iceland Directorate of Customs online information. Viewed at : 
https://www.tollur.is/atvinnurekstur/tollamal/ad flutningsgjold/skilmalar/bonn/ ; MAST online 
information. Viewed at : http://www.mast.is/english/frontpage/import -export/ ; WTO document 
G/LIC/N/1/ISL/1 ; and information provided by the auth orities.  
3.1.6.2   Licensing  
3.58.   Iceland imposes import licen ces on twelve categories of goods (Table 3.6) . Most of these 
measures are non -automatic licen ces and imposed for security or safety reasons. There have not 
been many changes to the products subject to licensin g requirements during the review period.  
3.59.   In 2013, Iceland was the first to ratify the new Arms Trade Treaty negotiated under the 
auspices of the United Nations  to regulate international trade in conventional weapons; it 
subsequently entered into force in 2 014. It creates a legally binding agreement to control the 
import, export, transit, trans -shipment, and brokering of these goods. While there are more 
requirements on exports, provisions on imports require each party to take measures for the 
regulation of imports which may include import systems. Iceland requires a licence for such 
products.  
3.60.   Amendments were made in 2013 to the Law on Radiation66, which  clarified a number of 
provisions related to nuclear and radioactive material/equipment.67 In particular, the  amendments 
prohibited the importation of certain goods (food, feed, toys, jewellery and cosmetics) to which  
radioactive substances have been added.    
3.61.   Iceland last notified the products subject to import licen ce to the Committee on Import 
Licensing in 2004 .68 
Table 3.6 Products subject to import licensing, 2017  
Product  Regime  Automatic/non -
automatic  Legislation  
Agricultural products (animal 
products, fishery products, 
certain foodstuffs, live 
animals, fish, aqu atic animals, 
insects, genes, feed, fertilizer, 
seeds, plants, soil, tree wood 
with bark, and  used fishing 
equipment and clothing)  To control the import of certain 
agricultural products  Non-automatic  Act No. 54/1990, Act 
No. 25/1993, Regulation 
No. 189/19 90, Regulation 
No. 448/2012  
Used agricultural machinery  Importation is prohibited , 
except under certain conditions 
such as disinfection certified by 
an official veterinarian  Non-automatic  Act No. 25/1993, Act 
No. 87/1995 , and 
Regulation No. 448/2012  
Toxic and hazardous 
substances  To ensure the safe handling of 
the materials and to control the 
quantity of imported goods  Non-automatic  Act No. 52/1988  
Conventional weapons  Pursuant to the Arms Trade 
Treaty  Non-automatic   
                                                
66 Law No. 44/2002. Viewed at : http://www.stjornartidindi.is/Advert.aspx?RecordID=a389af87 -39d6-
4580-bfd7-89215cfa4ed b.  
67 Law No. 121/2013. Viewed at : http://www.stjornartidindi.is/Advert.aspx?RecordID=c16b0669 -5869-
4561-b41c-97dd61d3bbe1 .  
68 WTO document G/LIC/N/3/I SL/3.  WT/TPR/S/361 /Rev.1  • Iceland  
 
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  Product  Regime  Automatic/non -
automatic  Legislation  
Machines for public works 
(mobile or  construction 
machinery)  Prior declaration and approval 
needed from the Administration 
of Occupational Safety and 
Health  Non-automatic  Regulation No. 388/1989  
Toys containing lead  Licences are required from the 
Food Agency for the import, 
production, and distribution of 
toys Non-automatic  Act No. 52/1988 and 
Regulation No. 520/1991  
Drugs and medicines  Importing, selling, or delivering 
complete medicines requires a 
licence for marketing 
authorization  Non-automatic  Regulation No. 462/2000  
Telecommunicatio ns 
equipment  Import of certain 
telecommunications equipment 
requires prior approval or 
recognition  Non-automatic  Law No.  73/1984, 
Law No. 32/1993, 
Regulation  No. 733/1983, 
Regulation  No. 322/1985, 
Regulation  No. 473/1989, 
Regulation  No.71/1991  
Ships, boat s, and floating 
structures  Subject to prior approval of the 
Transport Authority  Non-automatic  Regulation No. 708/2000, 
Regulation  No. 47/2003, 
Regulation  No. 168/1997, 
and Regulation  
No. 708/2000  
Weapons (including 
ammunition, fireworks, 
explosives)  Requi res prior approval of the 
National Police Commissioner 
for the regulation and control of 
the importation of weapons  Non-automatic  Act No. 16/1998, 
Regulation No. 16/1978, 
Regulation  Nos. 174/1979 
and 474/1988, 
Regulation  No. 536/1988, 
Regulation No. 684/19 99 
Nuclear and radioactive 
material/equipment  Requires prior approval and 
following the regulations of the 
Radiation Safety Authority  Non-automatic  Act No. 44/2002, 
Act No. 121/2013  
Laser and IPL devices  Importation requires prior 
notification of the Rad iation 
Safety Authority  Automatic  Regulation No. 1339/2015  
Source:  Iceland Directorate of Customs online information. Viewed at : 
https://www.tollur.is/atvinnure kstur/tollamal/adflutningsgjold/skilmalar/bonn/ ; and MAST online 
information. Viewed at : http://www.mast.is/english/frontpage/import -export/ . 
3.1.7   Anti-dumping, countervailing, and safeguard m easures  
3.62.   Iceland's regime on contingency measures has not undergone revision since the last review.  
The anti -dumping and countervailing duty legislation framework is contained in Articles 133 -139 of 
the Customs Law and in Regulation No. 351/1994 on the prep aration and application of the 
imposition and the collection of anti -dumping and countervailing duties , which  remain applicable. 
Article  139 of the Customs Law provides for the WTO's special agricultural safeguard (SSG) 
mechanism. Anti -dumping and counterv ailing duties can be applied to goods, including goods 
assembled or produced in Iceland containing imported materials, and services.69 There have been 
no anti-dumping or countervailing duty investigation s by Iceland to date.  Iceland last notified the 
Commit tee on Anti -Dumping Practices in 2012 that it had not taken any anti -dumping actions 
during the last six -month period.  A similar notification was made to the Committee on Subsidies 
and Countervailing Measures in 2006.  
3.63.   The legislation and the regulations pr ovide that the Minister of Finance and Economic Affairs 
can impose anti -dumping or countervailing duties  following the advice of a seven -member 
Advisory Committee established to hear complaints.  Temporary duties may be in place for a period 
of 12 months an d final duties for a period not longer than five years. Duties may be invoked 
retroactively under certain conditions.  
                                                
69 Regulation No. 351/1994.  WT/TPR/S/361 /Rev.1 • Iceland  
 
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  3.64.   Pursuant to EEA provisions, anti -dumping and countervailing duties are not applied between 
EEA member States.  In regard to FTAs, in partic ular EFTA FTAs, there is generally a provision to 
incorporate WTO anti -dumping and countervailing duty rules into the FTA, and in some of the 
more recent FTAs, the agreement goes further and often incorporates the "lesser duty " rule.  
3.65.   Iceland does not have  global safeguard legislation.  It notified the WTO to this effect in 
1995.70 It does however generally include safeguard provisions in free trade arrangements.  Most 
EFTA FTAs, e.g. those with Ukraine, Central America, and the Republic of Korea, have safegua rd 
rules. These include provisions related to global safeguards and bilateral safeguards.  The bilateral 
FTAs Iceland has concluded with China and the Faroe Islands also contain safeguard provisions 
similar to those of the EFTA Agreements. The global safegu ard provisions in its FTAs generally 
reaffirm the rights of the parties pursuant to Article XIX of GATT 1994 and exclude imports of the 
parties when taking such safeguard measures if these imports are not a substantial cause of 
serious injury or threat the reof. The bilateral safeguard provisions provide a remedy in the case 
where an increase in imports causes serious injury or threat thereof, but generally only during the 
transition period or for a limited period of time.  
3.66.   Iceland's provisions on safeguards  with the European Union  emanate from their 1972 FTA 
and the EEA Agreement.  Recently in 2015, the EU issued a new regulation on the safeguard 
measures between the EU and Iceland.71 This revised regulation updates certain provisions 
pursuant to the EU's cons olidation process and clarifies certain rules; it does not substantially alter 
the safeguard mechanism or procedures.72  
3.1.8   Other measures  
3.1.8.1   Sanctions  
3.67.   Iceland imposes a number of international sanctions on various countries or entities in order 
to maintain peac e or security in the world or to uphold human rights and freedoms. The basis for 
Iceland's numerous sanction regulations is the 2008 Act on the Implementation of International 
Sanctions.73 The Act provides for the enforcement of measures established by the UN Security 
Council or by other international organizations/groups of countries. The act lists the following 
types of enforcement measures that can be put in place by regulation:   
 ban on trade and investment;  
 ban on imports and exports;  
 freezing of funds  and other assets; prohibition of communication, including 
telecommunications and other exchanges;  
 ban on movement of persons and vehicles;  
 ban on the provision of services and training;  
 ban on providing economic and technical assistance;   
 prohibition of  activities and participation in the economy; and  
 other similar measures that are to maintain peace, security, or to ensure respect for 
human rights and fundamental freedoms.   
 
3.68.   Further to the Act, Iceland's Regulation on the Implementation of International  Sanctions 
provides the general provisions and definitions for the legislation.  Individual regulations are then 
issued for each measure which  list the measure to be put in place and who they are to be levied 
against.  
3.69.   Thus, most of Iceland's sanctions are p ut in place through regulation.  Many of them change 
or are amended frequently ; the measures currently in place can be found on the Ministry of 
                                                
70 WTO document G/SG/N/1/ISL/1.  
71 Regulation (EU) 2015/475 of the European Parliament and of the Council of 11 March 2015 on the 
safeguard measures provided for in the Agreement between the European Economic Community and th e 
Republic of Iceland. OJ L 83/1, 27 March 2015. Viewed at: http://eur -lex.europa.eu/legal -content/EN/TXT/PDF/ 
?uri=CELEX:32015R0475&from= EN . 
72 EU online information. Viewed at : http://publications.europa.eu/resource/cellar/daf9ab6e -9cfb-45dd-
a0c3-65e49fefb2d0.0006.02/DOC_2 .  
73 Act No. 93/2008. Viewed at : http://www.stjornartidindi.is/Advert.aspx?RecordID=3d1cce68 -39c9-
47d5-a0d0-75a802957813 . WT/TPR/S/361 /Rev.1  • Iceland  
 
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  Foreign Affairs' website ( https://www.mfa.is/foreign -policy/sanctions/ ). As of March 2017, 
measures relating to trade were in place for 21 entities.74 A majority of these were issued in 
respect of UN sanctions and concerned arms embargoes and bans on the provision of certain 
services.  In practice, Iceland is sues sanctions issued by the European Union  based on their 
relationship through the EEA and EFTA, and by the Organization for Security and Co -operation in 
Europe (OSCE).  
3.70.   Iceland also has in place export controls for goods, services, and investment relatin g to 
national security ( Section 3.2.3) and takes measures to combat money laundering and terrorist 
financing pursuant to  the recommendations of  its Steering Committee to Combat Money 
Laundering and the Financial Action Task Force (FATF).  
3.2  Measures Directly Affecting Exports  
3.2.1   Export procedures and requirements  
3.71.   Iceland's Customs Law also provides for the procedures on exportation.  Exporters are 
required to submit an export declaration through the EDI interface to the Directorate of Customs; 
this generally inclu des an invoice, bill of lading, freight bill, and other relevant documents such as 
a licen ce or certificate if necessary. The exporter is responsible for the accuracy of the information 
in the export declaration and for submit ting the necessary information  for special preferential tariff 
treatment if applicable.  
3.72.   There are simplified export procedures for postal trade exports on small consignments.  
These exporters can apply to the Directorate of Customs for a special licen ce to submit simplified 
export decla rations for their shipments pursuant to the provisions in Article 40 of 
Regulation  1100/2006. Special export procedures for the fishing sector allow for the reporting of 
catch to occur after the ship has returned to Iceland from a foreign market.  There hav e been no 
significant changes to the export procedures during the review period.  
3.73.   As of early 2017, the authorities had not made any decisions as to whether  Iceland's single 
window would also be extended to apply to exports.  
3.74.    Icelandic Customs maintains li sts for approved exporters that are allowed to provide proof 
of preferential origin pursuant to the provisions on origin in certain free trade agreements.  
3.75.   Since 2010 , Iceland has provisions on cargo security measures to improve maritime safety 
and reduce terrorism or other illegal activities.75 The Director of Customs has the role of certifying 
exporters, freight forwarders, cargo transporters and other companies as secure cargo handlers in 
respect of the cargo security measures.  At each port of export ther e are restricted cargo security 
areas and a place for customs to inspect goods.  Exported security containers and goods in bulk are 
required to have a cargo security declaration upon exportation. Depending on the type of cargo 
and container, they are genera lly then sealed for export.  
3.2.2   Export taxes, charges, and levies  
3.76.   Iceland does not have any export taxes, charges, or levies except for a fee on the export of 
horses ( Section 3.2.3) and a 5% levy on the export of unprocessed fish.76 
3.2.3   Export prohibitions, restric tions, and licensing  
3.77.   Export restrictions, prohibitions, and licensing continue to apply in a number of cases; and 
most have remained in place for many years without change (Table 3.7) .  
                                                
74 Afghanistan, Azerbaijan, Belarus, Central African Republic, Democratic Republic of Congo, C ôte 
d'Ivoire, Eritrea, Guinea, Iran, Iraq, Democratic People' s Republic of Korea, Lebanon, Liberia, Libya, Myanmar, 
the Russian Federation, Somalia, South Sudan, Sudan, Syria, foreign terrorist organi zations, Ukraine, and 
Zimbabwe.  
75 Act No. 141/2010.  
76 Act No. 116/2006.  WT/TPR/S/361 /Rev.1 • Iceland  
 
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  3.78.   The Law on the Export of Horses77 was adopted and entered into force in  2011, replacing 
the previous legislation on the exportation of horses.78 The new law slightly amends the previous 
law by removing certain restrictions and increasing the export fee which has increased three -fold.  
3.79.   Iceland provides certain services for the exportation of meat, live animals, and wood 
packaging pursuant to import requirements in foreign markets.79 For live animals, i.e. pet exports 
and live horses, Iceland provides an official veterinary certificate for exports destined for the EU, 
Norway, and Switzerland.80 Iceland follows the FAO Guidelines for regulating wood packaging 
material in international trade, International Standards for Phytosanitary Measures No. 15, and 
thus provides certification for the export of wood packaging.81  
3.80.   As a member of th e EEA, Iceland adopted EU legislation as it pertains to export controls of 
defence -related products and dual -use products.  Through its Law on the Control of Services and 
Items that may have Strategic Significance, No. 58/2010, Iceland has implemented the r elevant 
EU directives, regulations, and common position on the subject.82 Thus, exportation of these 
products requires an export licen ce from the Minister of Foreign Affairs. In 2016 and 2017 , Iceland 
issued new regulations pertaining to this legislation.83 The new regulations amend the earlier 
regulations, updating them to align with the relevant EU directives on the matter.  
3.81.   Iceland ratified the Arms Trade Treaty in July 2013, which subsequently entered into force 
on 24 December 2014.84 It focuses on the con trol of exports of conventional arms. The provisions 
of this agreement require parties to control exports, imports, transhipments, and dissemination of 
weapons, ammunition, and related components.  Iceland implements these provisions through its 
regulation and licensing provisions for dual -use goods.  
3.82.   Iceland is a participant in the Australia Group, Missile Technology Control Regime , Nuclear 
Suppliers Group, and Chemical Weapons Convention,  and follows the rules of the Wassenaar 
Arrangement but is not a memb er. Thus Iceland cooperates with these organi zations on 
monitoring or controlling exports of products under their respective purview.  
3.83.   Transporting waste outside Iceland is not permitted. Iceland prohibits the export of wastes 
except under certain condition s.85 For hazardous wastes and the removal of waste for recovery, an 
export licen ce is required from the Environment Agency of Iceland.  
3.84.   Other formalities or restrictions exist for the export of certain cultural objects or national 
treasures of significant cu ltural value.  Pursuant to the Cultural Heritage Act, Iceland restricts or 
otherwise requires a licence from the Ministry of Education, Science, and Culture for the export of 
certain cultural objects such as identified in the Act.86 
                                                
77 Act No. 27/2011. Viewed at : http://www.althingi.is/lagas/nuna/2011027.html .  
78 Act No. 55/2002.  
79 MAST online information. Viewed at : http://www.mast.is/english/frontpag e/import -export/ .  
80 MAST online information. Viewed at : http://www.mast.is/english/frontpage/import -
export/export/live -animals/ .  
81 MAST online information. Viewed at : http://www.mast.is/inn -ogutflutningur/vidarumbudir/krofur -og-
vottun/  . 
82 Directive 2009/43/EC of the European Parliament and of the Council of 6 May 2009 simplifying ter ms 
and conditions of transfers of defence -related products within the Community; Council Common Position 
2008/944/CFSP of 8 December 2008 defining common rules governing control of exports of military technology 
and equipment; and Council Regulation (EC) N o. 428/2009 of 5 May 2009 setting up a Community regime for 
the control of exports, transfer, brokering and transit of dual -use items.  
83 Regulation Nos. 361/2016 and 189/2017. Government of Iceland Regulations, online information. 
Viewed at : http://www.reglugerd.is/reglugerdir/eftir -raduneytum/utanrikisraduneyti/nr/20082  and 
http://www.reglugerd.is/reglugerdir/eftir -raduneytum/utanrikisraduneyti/nr/20457 .  
84 Ministry of Foreign Affairs online information. Viewed at : 
https://www.utanrikisraduneyti.is/malefni/lagamal/althjodasamningar -o.fl./oryggismal/  and 
https://www.utanrikisraduneyti.is/malefni/lagamal/utflutningseftirlit/att/ . 
85 Environment Agency of Iceland, online information. Viewed at : http://www.ust.is/atvinnulif/umsoknir -
og-eydublod/uflutningur -a-urgangi/ .  
86 Act No. 80/2012.  WT/TPR/S/361 /Rev.1  • Iceland  
 
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  Table 3.7 Prohibitions or restrictions on exports, 2017  
Product  Measure/Rational  Legislation  
Live horses  Requires prior inspection by the Chief Veterinary  
Officer  of the export port; fee of ISK 1,500 to be 
paid to the protection fund ; and a passport from 
the Farmer's association  Law No. 27/2011  
Narcotics  Export prohibition  Law No. 65/1974  
Ozone -depleting 
substances  Export prohibition (with some exceptions, for 
example, export for the purposes of waste 
disposal or recycling ; export to non -signatories 
of the Montreal Protocol (1987) is prohibited in 
all cases)  Regulation No. 586/2002 on Ozone 
Depleting Substances  
Consumer goods that 
are a danger to health  Export prohibition  Act on Product Safety No. 134/1995  
Wild animals and parts 
of wild animals, as well 
as eggs  Minister for the Environment shall in a regulation 
stipulate  the requirements for  the import and 
export of wild animals and their parts, as well as 
eggs Act on Protection and Hunting of 
Wild Birds and Animals, 
No. 64/1994  
Antiques and objects of 
historical value  Exports require a special licen ce to be granted by 
the Museum's Committee  Law on Export of Cultural Goods, 
No. 105/2001  
Natural artefacts, micro -
organisms and their DNA  Exports require a special licen ce from the 
Icelandic Institute for Natural History  Law on the National Institute for 
National History, No. 60/1992  
Dual-use items and 
defence -related products  Applies Council Regulation (EC) No. 428/2009 for 
dual-use items , and Directive 2009/43/EC on 
defence -related p roducts ; licences from the 
Minister of Foreign Affairs  are required  Act No. 58/2010 and Regulation 
800/2011 on Control of Services 
and Items that May Have Strategic 
Significance  
Plants and plant 
products  Exports require a special health certificate from 
the Agricultural Research Institute  Regulation No. 189/1990  
Source:  Information provided by the authorities ; and WT/TPR/S/273/Rev.1.  
3.2.4   Export support and promotion  
3.85.   Iceland's public -private partnership, Promote Iceland, also has a role in promoting Iceland's  
exports.  It provides consulting, workshops, and information to help Icelandic companies obtain 
business in foreign markets. Its activities include providing information on export processes, 
customs, free trade agreements, exhibitions, IP rights, procureme nt, business culture, and key 
figures on markets.  
3.86.   Iceland does not have any export processing zones.  
3.2.5   Export finance, insurance, guarantees  
3.87.   The New Business Venture Fund (NSA Ventures) is a state -owned venture capital fund that 
invests in new start -up comp anies.  It was established by parliament and operates under Law 
No. 61/1997.87 It provides finance for innovation and start -up businesses primarily through equity 
investments and small bridge loans.  Funding for its operations was initially by the State but s ince 
2005 it has been self -financed and not received any further support. It continues to have an 
Export Credit Guarantee Department to provide export credit insurance and guarantees to 
start-ups. According to the authorities, the export credit guarantee o peration has been more or 
less dormant for the last 10 years, as there  have not been any new credit guarantees since 2012.  
3.3  Measures Affecting Production and Trade  
3.3.1   Taxation  
3.88.   In 2016, total tax revenue in Iceland was ISK 794 billion and social contributions w ere 
ISK 87 billion compared to total government revenue of ISK  1,415 billion (ISK 1,031 after 
deducting ISK  384.3 billion in extraordinary revenue from the contribution from the estates of the 
failed banks). Taxes payable by individuals are the main contri butor to tax revenue, followed by 
taxes on sales and services. Over the past five years , several changes to the tax system have 
been implemented including simplification and broadening of the VAT system, and abolition of Act 
No. 97/1987 on Excise Tax. The increase in tax revenue in 2016 can be attributed to the changes 
to the VAT system as well as general economic growth ( Chart 3.3 ). 
                                                
87 Althingi online information. Viewed at : http:// www.althingi.is/lagas/nuna/1997061.html . WT/TPR/S/361 /Rev.1 • Iceland  
 
- 55 - 
 
  Chart 3.3 Tax revenue and social contributions , 2007 -16 
ISK billion  
 
Source:  Statistic s Iceland.  
3.89.   Corporations pay corporate income tax of 20% of net profits (including capital gains) plus a 
payroll tax. The payroll tax was increased from 5.34% of the wage bill to 8.65% following the 
financial crisis in 2 008 but has since been reduced to 6.85%. Financial enterprises pay an 
additional payroll tax of 5.5%, plus a 6% charge on profits over ISK 1 billion and a tax of 0.376%  
on debts exceeding ISK 50 billion. Property taxes are collected by municipalities and, for 
corporations, averaged about 1.64% in 2016.  
3.90.   Income taxes on individuals are levied by the central and local governments as progressive 
taxes. As regards  the central government  rate, the first ISK 1.79 million of income is tax -free and 
the maximum rate for income over ISK 10.02 million is 31.8%. Local government income tax rates 
vary from one municipality to another and average 14.44% of total income. Income of individuals 
from dividends, rents, interest and capital gains are taxed separately at 20%.  
3.91.   Value added tax is the main component of general taxes on goods and services which is the 
second biggest source of tax revenue after taxes payable by individuals ( Chart 3.3 ). The principal 
legislation on VAT is Act No. 50/1988 on Value Added Tax which was las t amended in 2016. The 
general rate for VAT is 24% with a reduced rate of 11% for food, accommodation, road tolls, 
books, newspaper and media subscriptions, audio recordings, indoor heating, and selected 
services. Enterprises with annual sales of taxable g oods and services of ISK 2 million or less are 
exempt from VAT, meaning they do not charge VAT for sales but must pay VAT for inputs.  
3.92.   VAT on imports is assessed based on the import price plus customs duties and other 
charges. Exports of goods and services  are zero -rated (i.e. VAT paid on inputs is refunded) as are 
some other goods and services including: transportation of goods between countries; design and 
planning of constructions based abroad; provisioning of inter -country vessels; sale and leasing of 
aircraft and ships; shipbuilding and maintenance of ships and aircraft; services to foreign fishing 
vessels related to landing and sale of fish in Iceland; direct payments to farmers; and 
telecommunications services.  
WT/TPR/S/361 /Rev.1  • Iceland  
 
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  3.93.   The main legislative acts for excise dut ies are: Act No. 29/1993 on Excise Duties on 
Vehicles, Fuel, etc. ; Act No. 96/1995 on Alcohol and Tobacco Tax; Act No. 129/2009 on 
Environmental and Resource Taxes; and Act No. 87/2004 on Oil Tax and Mileage Fee. An exception 
from excise duties for rental vehicles under Act No.  29/1993 is to end with effect from 
1 January  2018.88 
3.94.   Assessment for excise duties depends on the product and origin:  
 Excise duties on imports (except commercial imports of tobacco) are assessed and 
collected by the Customs Directorate  and paid at the point of import;  
 Excise duties on domestic production and sales are assessed by the Internal Revenue 
Directorate at the point of leaving the factory; and  
 Excise duties on tobacco products and domestic production of alcoholic beverages are  
assessed when they leave the production centre.   
3.95.   In general, excise duties and other similar charges are applied to alcoholic beverages, 
mineral fuels, and vehicles as set out in Table 3.8. 
Table 3.8 Excise duties and related taxes , 2017  
Product  Excise duty rate  
Alcohol products   
Beer and ale containing more than 2.25% 
alcohol  ISK 117.25/cl of pure alcohol  
Wine and fermented beverages up to 15% 
alcohol  ISK 106.80/cl of pure alcohol  
Other alcohol  ISK 144.50/cl of pure alcohol  
Tobacco   
 Cigarettes  ISK 481.40/pack of 20 cigarettes  
 Snuff ISK 26.75/g  
 Other tobacco  ISK 26.75/g  
Excise duties on vehicle fuel   
Petrol  
 General excise duty  
 Special excise duty   
ISK 26.80/litre  
ISK 43 .25/litre (unleaded)  
ISK 45.85/litre (other)  
Diesel  ISK 60.10/litre  
Biofuels  Reduction based on the proportion of biofuel  
Environment tax   
Petrol  ISK 5.50/litre  
Diesel  ISK 6.30/litre  
Mineral oils  ISK 6.90/kg  
Fuel oil  ISK 7.75/kg  
Excise duties on p rivate motor vehicles  
Emissions in grams of CO 2/km Standard %  Taxis and rental cars %  
  Depending on CO 2 rating  0-65% 0-30% 
Excise duties on motor vehicles other than private automobiles  
Large goods vehicles, large special -
purpose vehicles, tractors, agriculture 
trailers, large snow -mobiles, amphibious 
vehicles, competition cars and 
motorbikes, vehicles for transport of 
disabled persons, rescue vehicles, large 
coaches  Exempt  
Small goods vehicles, small special -
purpose vehicles, vehicles over 40 years 
old, motor vehicle bodies  13% 
Small coaches, motorbikes, other vehicles  30% (5% on small coaches owned by concessionaires)  
Semi -annual road tax  
 0-3,500 kg   
  Emissions  of 0-120 g of CO 2/km ISK 5,810  
 Emissions greater than 120 g of  
CO2/km ISK 5,810 + 139/g of CO s/km over 121 g of CO 2/km 
 More than 3,500 kg  ISK 54,420 + 2.32/g over 3,500 g up to a maximum of ISK 
85,660  
Vehicle disposal charge  
 ISK 350 every six months for 15 years, ISK 15,000 refund 
when scrapped  
                                                
88 Act No. 125/2015 on various budget proposals for 2016, Article 31.  WT/TPR/S/361 /Rev.1 • Iceland  
 
- 57 - 
 
  Product  Excise duty rate  
Weight distance tax (payable ever y six months)  
 Vehicles  
  Progressive based on weight  of 10 tonnes 
and more   
 ISK 0.30 -13.87/km  
 Trailers  
 Progressive based on weight  of 5 tonnes 
and more   
 ISK 9.10 -38.17/km  
Source:  Althingi, Legal Code, Chapter 13. Viewed at: http://www.althingi.is/lagasafn/kaflar/nuna/13.html  
[May 2017].  
3.3.2   Incentives  
3.96.   According to the EFTA Surveillance Authority, Iceland provided about €60 million in state aid 
in 2015, 81% of which was in the form of g rants and 14% as tax concessions. About half the aid 
was for research, development and innovation (R&D&I), 23% for culture and heritage 
conservation, and 20% for regional development and cohesion. Most of the aid for R&D&I was 
provided through the Icelandi c Centre for Research (Rannis) which provides public support for 
scientific research.89  
3.97.   Under Act No. 99/2010 on Incentives for Initial Investments in Iceland and accompanying 
regulations90, a number of incentives were available for investment throughout Ic eland and 
regional aids for investment outside of Reykjavik and surrounding municipalities. The Act expired 
on 31 December 2013. Six investment projects were approved under the Act and were eligible for 
grant aid, which was provided through reductions in v arious taxes and charges. In October 2014, 
the EFTA Surveillance Authority found that the aid provided under some of these projects was 
incompatible with the EEA Agreement and directed the Icelandic authorities to recover the aid.91 At 
end-May 2017, recover y amounts had been calculated for the three companies concerned and 
recovery orders issued and put into formal procedures.  
3.98.   Under Act No. 41/2015 on Regional Incentives, which applies to Iceland outside the 
Reykjavik area, investment projects may qualify fo r tax incentives. These incentives include: an 
income tax rate ceiling of 15% for 10 years; accelerated depreciation allowances for real estate, 
equipment and moveable assets; reduction in property tax and the general social security charge 
by 50% for 10 y ears; and exemption from customs duties  and excise duties  for construction 
materials, machinery and equipment, and other capital goods. In addition , the State and 
municipalities may allow for leasing a site for the project at reduced rates. The Act expires  on 
1 July 2020.  
3.99.   To qualify for incentives under Act No. 41/2015, the investment project must meet criteria 
which include:  
 annual turnover of at least ISK 300 million or creation of at least 20 permanent jobs in 
the first two years;  
 commencement of the pr oject after signing the investment contract;  
 minimum 20% equity from the investor; and  
 minimum operation period in Iceland of 10 years.  
3.100.   The incentives are not available for investments in financial services, airports or energy 
production. The general ceili ng for aid is limited to 15% of the initial investment cost although this 
may be increased to 25% for medium -sized enterprises and 35% for small enterprises where: a 
small enterprise is defined as one employing less than 50 persons, with an annual turnover  of 
€2 million or less, and total assets of €10 million or less; and a medium -sized enterprise is defined 
as employing 50 -250 persons, with an annual turnover  of €50 million or less, and total assets  of 
€43 million or less.  
                                                
89 EFTA Surveillance Authority (2017), State Aid Scoreboard 2016 for the EEA EFTA States , March, 
pp. 12-13. 
90 Ministry of Industry, Regulation No.  985/2010 and Regulation No. 1150/2010 . 
91 EFTA Surveillance Authority Decision No . 404/14/COL, 8 October 2014 on the Investment Incentive 
Scheme in Iceland [2016/340].  WT/TPR/S/361 /Rev.1  • Iceland  
 
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  3.101.   In addition, under Act No. 152/ 2009 on Support for Innovation Companies, tax credits may 
be provided for 20% of the research and development expenses, up to a maximum total cost of 
ISK 300 million for internal research and development or ISK 450 million for R&D cooperation 
between two c ompanies. Direct grants for R&D for up to 50% of the cost , up to ISK 45 million over 
three years , are available through the Technology Development Fund administered by Rannis , and 
Landsbanki provides innovation grants to companies of up to ISK 10 million p er year.  
3.3.3   Technical barriers to trade  
3.102.   As part of the EEA, Iceland applies EU legislation on technical regulations, standards, 
conformity assessment, certification, and accreditation, including harmoni zed technical regulations, 
and standards, and CE marking.92 Under the EEA Agreement , Iceland is required to notify draft 
technical regulations , before they are adopted , to the EFTA Surveillance Authority, which publishes 
them on its website93, and to DG GROW in the European Commission, which includes them in the 
TRIS database94. In March 2016 , in a reasoned opinion, the EFTA Surveillance Authority stated 
that Iceland "still has not notified a number of the technical regulations in question, adopted in 
2012, and is thus still in breach of its obligations under Direct ive 98/34[95] with respect to a 
number of these  […]. Furthermore, Iceland has not enacted a rule of non -enforceability concerning 
technical regulations adopted without following the due notification procedure in Directive 98/34 
and the corresponding Iceland ic implementing measures".96 In July 2016, the Authority reiterated 
its assertion that non -enforceability rules should be implemented and the Government of Iceland 
again rejected this opinion in a letter dated 13 January 2017.  
3.103.   Several ministries are respon sible for policy and legislation on technical regulations, 
standards, and related issues , including the Ministry of the Interior, the Ministry for the 
Environment and Natural Resources, the Ministry of Industries and Innovation, and the Ministry of 
Welfare .  
3.104.   Icelandic Standards (IST) is the national standards body. Under Act No. 36/2003 on 
Standards, all standards must be approved by IST before they become applicable in Iceland and 
IST is responsible for representing Iceland in international standards organ izations. Four 
sector -specific committees operate under IST: BSTR in the building sector, FIF in the fishing 
sector, FUT in the information technology sector, and RST in the electrotechnical sector.97 
3.105.   IST is a member of the International Organization for St andardization (ISO), an associate 
member of the International Electrotechnical Commission (IEC), a member of the European 
Committee for Standardization (CEN) and the European Committee for Electrotechnical 
Standardization (CENELEC), and an associate member  of the European Telecommunications 
Standards Institute (ETSI).  
3.106.   The Icelandic Board for Technical Accreditation (ISAC), an independent department in the 
Icelandic Patent Office, is responsible for accreditation of inspection bodies, certification bodies, 
laboratories (testing and calibration) and notified bodies, in accordance with the relevant IST EN 
ISO/IEC 17000 series of standards and guides and the harmoni zed IST EN 45000 series of 
European standards. Additionally ISAC is the responsible body in Icelan d for good laboratory 
practice (GLP). The legal basis for ISAC's status and responsibilities is set out in Act No. 24/2006 
on Accreditation, etc.98 ISAC is a full member of the European co -operation for Accreditation (EA). 
A list of accredited bodies in Ice land is available from ISAC.99 
3.107.   Under Act No. 91/2006 on Measurements, Measurement Standards and Weights, the 
Consumer Agency has legal responsibility for metrology and calibration services. The Agency was 
                                                
92 See WTO document WT/TPR/S/317/Rev.1, 21 October 2015, Section 3.1.8.  
93 Online informa tion. Viewed at:  http://www.eftasurv.int/internal -market -affairs/notifications/draft -
technical -regulations/notifications -lists/ [March 2017].  
94 Online information. Viewed at:  http://ec.europa.eu/growth/tools -databases/tris/en/  [March  2017].  
95 Directive 98/34/EC of the European Parliament and of the Council of 22 Jun e 1998 laying down a 
procedure for the provision of information in the field of technical standards and regulations . 
96 EFTA Surveillance Authority Reasoned Opinion Case No . 74074, Document No. 807036, Decision 
No. 153/16/COL. Viewed at: http://www.eftasurv.int/media/esa -docs/physical/807036.pdf  [March 2017].  
97 Icelandic Standards online information. Viewed at: http://www.stadlar.is/verslu n/ [March 2017].  
98 ISAC online information. Viewed at: http://www.els.is/en/about -isac [March 2017].  
99 ISAC online information. Viewed at: http://www.els .is/en/accredited -bodies  [March 2017].  WT/TPR/S/361 /Rev.1 • Iceland  
 
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  established under Act No. 62/2005 on the Consumer Ag ency and Consumer Spokesman , under the 
Ministry of the Interior , with responsibility for market surveillance of business operators, good 
functioning and transparency of the markets in respect to safety and consumers ' legal rights , as 
well as enforcement of  legislation for protection of consumers ' health, legal and economic rights.100 
3.108.   The Icelandic Construction Authority, established under Act No . 160/2010 on Construction, 
is responsible for market surveillance for electrical equipment (except low -voltage cons umer 
appliances), power plants and electrical installations, buildings and construction works.  
3.109.   Several other agencies, including the Icelandic Medicines Authority, the Environment 
Agency, and local health authorities, have specific responsibility for surve illance and enforcement 
for products for which they have competence , while the Customs Directorate is responsible for 
verifying conformity of imports with Icelandic legislation.  
3.110.   Under the TBT Agreement, Iceland's enquiry point for technical regulations is the Institute 
for Accreditation, Legal Metrology, Market Surveillance, Metrology and Electrical Safety and the 
enquiry point for standards is Icelandic Standards.  The External Trade Department in the Ministry 
for Foreign Affairs has also been notified as a n enquiry point. No specific trade concerns have been 
raised by other WTO Members about TBT measures taken by Iceland.101 Iceland has made only 
two notifications to the WTO on TBT issues, the last in 2000.102 
3.111.   From 1 January 2012 to 30 April 2017, Iceland made 22 notifications to the EFTA 
Surveillance Authority and the DG GROW TRIS database of draft technical regulations.  
3.112.   As of 1 December 2010, almost 22,620 European standards (i.e. nearly all standards by 
CEN, CENELEC, and ETSI) had been transposed in Iceland.103 Legislation on technical issues, often 
including conformity assessment, is generally found in the sector -specific law adopted by relevant 
ministries in order to transpose EU Directives, for example, Regulation Nos. 627/2013 and 
1296/2013 on the entry int o force of EU Regulations on medical devices and Regulation 
Nos. 424/2015, 385/2015, and 384/2015 on certain construction products. At end -November 
2016, eight EU regulations and 19 EU directives relating to goods  technical barriers had not yet 
been transp osed by Iceland.104  
3.113.   As a member of the EEA, products placed on the market in accordance with harmoni zed 
technical regulations may circulate freely throughout the EEA and, when the EU negotiates mutual 
recognition agreement s it does so on the basis that the third country will conclude a parallel MRA 
with the EEA. Through EFTA, Iceland has mutual recognition agreements with:  
 New Zealand (2000) covering pharmaceuticals (good manufacturing practices, GMP), 
medical devices, telecommunications terminal equipment, low voltage equipment, 
electromagnetic compatibility (EMC), machinery, and pressure equipment;  
 Australia (2000) covering electromagnetic compatibility (EMC), pharmaceuticals (good 
manufacturing practice, GMP), medical devices, telecommunications terminal 
equipment, automotive product, pressure equipment, machinery, and low voltage 
equipment;  
 Canada (2001) covering telecommunications terminal equipment, electromagnetic 
compatibility (EMC), electrical safety, recreational craft, pharmaceuticals (good 
manufac turing practices, GMP), and medical devices;  
 Switzerland (2002) covering machinery, personal protective equipment (PPE), safety 
of toys, medical devices, gas appliances and boilers, pressure equipment, 
telecommunications terminal equipment, equipment and protective systems intended 
                                                
100 Consumer Agency online information. Viewed at: http://www.neytendastofa.is/english  [March 2017].  
101 WTO TBT Information Management System online database.  Viewed a t: http://tbtims.wto.org/  
[March 2017].  
102 WTO document G/TBT/Notif.00/71, 15 February 2000.  
103 European Commission (2011) , Chapter 1 – Free Movement of Goods, p. 3.  
104 EFTA Surveillance Authority (2017), Internal Mark et Scoreboard , No. 39 , EEA EFTA States of the 
European Economic Area, Brussels, pp. 4 -5. WT/TPR/S/361 /Rev.1  • Iceland  
 
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  for use in potentially explosive atmosphere (ATEX), electrical safety and 
electromagnetic compatibility, construction plant and equipment, measuring 
instruments and pre -packages, motor vehicles, agricultural and forestry tractor s, good 
laboratory practice (GLP), good manufacturing practice (GMP) inspection and batch 
certification, construction products, lifts, biocidal products, cableway installations, and 
explosives for civil use;  
 United States, the first (2005) covering  marine  equipment, and the second (2006) 
covering  telecommunications equipment, electromagnetic compatibility, and 
recreational craft;  and 
 Turkey (2011) covering all sectors.105 
3.3.4   Sanitary and phytosanitary requirements  
3.114.   During the period under review, the legal and i nstitutional framework for sanitary and 
phytosanitary (SPS) requirements in Iceland remained largely unchanged.106 The Icelandic Food 
and Veterinary Authority (MAST), under the Ministry of Industries and Innovation,107 is responsible 
for implementing legislati on concerning food safety, animal health and welfare, control of feed, 
seed and fertili zers, plant health , and water for human consumption. According to the authorities, 
the Ministry of Industries and Innovation is the national notification authority and M AST is the 
enquiry point in the WTO for Iceland's SPS measures.  
3.115.   During the review period, a number of amendments were made to the legislation affecting 
SPS measures:  
 Act No. 54/1990 on the Importation of Animals was amended in 2013 through 
Act No. 60/2013 on the Protection of Nature requiring that before a certain species of 
animal or plant that is foreign to Iceland can be imported, a licen ce from the 
Environment Agency of Iceland must be obtained,  as well as a licen ce from the Ministry 
of Industries and I nnovation;  
 Act No. 54/1990 was further amended by Act No. 48/2015 authorizing MAST to grant 
licences for the importation of genetic material for beef cattle, if certain requirements 
are fulfilled. These requirements are related, for example, to the origin of the genetic 
material and to an investigation of the health standards of the animals born in the 
quarantine station. MAST was also granted powers to set standards for the farms 
receiving these animals. In the event that these requirements are not met, or  if MAST 
considers  there to be  a risk of infectious diseases, MAST shall revoke the licence, 
destroy the genetic material and euthanize the animals; and  
 Act No. 25/1993 on Animal Diseases and their Prevention was amended by Act 
No. 71/2015 transferring  the processing of applications for imports of raw products of 
animal origin from the Ministry of Industries and Innovation to MAST in order to simplify 
import procedures for these products.  
3.116.   Iceland notified two regular SPS measures to the WTO between 1  Januar y 2012 and 
30 April 2017.108 The notifications covered the inspection procedures for imports of animal 
products originating outside of the European Economic Area (EEA), and measures on importation 
of animal products. Iceland did not notify any emergency meas ures during the review period.  
                                                
105 EFTA online information. Viewed at: http://www.efta.int/eea/mras  [March 2017].  
106 Legislation on SPS measures is availabl e in Icelandic on the Icelandic Food and Veterinary Authority 
(MAST) website. MAST online information, "Lög og reglur". Viewed at: http://mast.is/matvaelastofnun/log -og-
reglur/ .  
107 The Ministry of Industries and Innovation was established in September 2012 following the 
amalgamation of the Ministry of Fisheries and Agriculture, the Ministry of Industry, Energy and Tourism and 
part of the Ministry of Economic Affairs. The competences originally falling under the Ministry of Fisheries and 
Agriculture have been assumed by the Ministry of Industries and Innovation since its creation.  
108 WTO documents G/SPS/N/ISL/8 and G/SPS/N/ISL/9, 15 November 2012.  WT/TPR/S/361 /Rev.1 • Iceland  
 
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  3.117.   Iceland is a member of the World Organi sation for Animal Health (OIE) and the Codex 
Alimentarius Commission, and a contracting party to the International Plant Protection Convention 
(IPPC).  
Sanitary  
3.118.   Iceland, as a member of t he EEA, has adopted EU legislation on SPS measures including 
foodstuffs, feed , and other food chain related issues , but maintains national rules on live terrestrial 
animals, germplasm (e.g. ova, embryo, and semen), and plant health. Measures on live aquati c 
animals follow EU legislation. MAST is the national European Food Safety Authority (EFSA) focal 
point and the contact point for the EU's Rapid Alert System for Food and Feed (RASFF).  
3.119.   Most EU food safety rules are implemented in Iceland. All food business  operators in the 
primary production of food and feed, irrespective of animal origin, must be registered with and 
approved by MAST.109 Imported food must comply with the relevant requirements that are at least 
equivalent to those set forth in the EU food law  and animal and plant health rules. EU legislation 
on novel foods110 was adopted in Iceland through Regulation No. 990/2015 on novel foods.  
3.120.   Imports of live animals and animal products are subject to controls through an import 
permit system. Under Act No. 54/ 1990 on Importation of Animals, Act No. 25/1993 on Animal 
Disease Prevention, and related regulations (e.g. Regulation No. 448/2012 on the prevention of 
animal diseases and contaminated products), import prohibitions are maintained on live terrestrial 
animals, raw meat, raw eggs, and animal products not for human consumption111 (e.g. meat and 
fat meal, raw skins and hides which have not been disinfected, and animal wastes). However, the 
Minister for Fisheries and Agriculture may grant permits for imports, bas ed on a positive 
recommendation from MAST.  
3.121.   Imports of used agricultural machinery, riding gear, and fishing gear are subject to similar 
import permit requirements provided they meet the cleaning and disinfection conditions set by 
MAST. However, some used riding equipment112 and used fishing equipment113 are strictly 
prohibited from importation.  
3.122.   Permit requests for first -time imports of live animals (i.e. new species) and products of 
animal origin (raw or unsterilized) must undergo  a risk assessment by MAST. Th e authorities 
indicated that risk assessments follow international standards such as those laid down by the OIE, 
and are based on the information from exporting countries, OIE and other international institutions 
concerning animal and public health issues.114  
3.123.   Import permits are applied to animal products. Imports of raw meat and meat products 
that have not been fully heat treated must be accompanied by certificates confirming that the 
meat was stored for at le ast one month at -18˚C or colder, and are free of salmonella and 
contaminants. Some products that have been treated with methods that are deemed equivalent to 
full heat treatment, including some cheeses and meat sausages and salted, dried or smoked meat, 
can be imported without the freezing requirements.  Meat must be derived from animals that are 
slaughtered and processed in the establishments approved by the EU or authorized in the EEA. 
Products originating from outside the EEA must be accompanied by offic ial certificates showing: 
origin and health, and that the animals from which the products were derived were not given 
growth -promoting substances.  
3.124.   When an application is submitted for the first time to import raw or unsterilized product s, 
an importer must provide the MAST with the necessary information on the product for 
consideration and approval before the product is dispatched from the country of export. However, 
                                                
109 A list of approved establishments is available on MAST website. MAST online information, "Listi yfir 
starfsstöðvar" . Viewed at: https://skyrslur.mast.is/ .  
110 Regulation (EC) No . 258/97 of the European Parliament and of the Council of 27 January 1997 
concerning nov el foods and novel food ingredients . 
111 Article 3, Regulation No. 448/2012.  
112 Used riding equipment includes saddles, bridles, nosebands, pads, rugs, whips, and riding gloves.  
113 Used fishing equipment includes fishing rods, reels, hooks/lures/flies, waders  and nets.  
114 MAST online information, "Import & Export". Viewed at: 
http://www.mast.is/english/frontpage/import -export/  [31/03/2017].  WT/TPR/S/361 /Rev.1  • Iceland  
 
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  if the importer submits exactly the same application as previously, MAST can issue an import  
permit once the products have been stored for at least one month at -18˚C or less, and that 
storage can take place in Iceland. Live animals, including pets, cannot be dispatched from the 
exporting country until all requirements have been met and the impor t permit has been issued.   
3.125.   In addition to meeting health requirements such as vaccinations and testing, pets are 
subject to quarantine at the isolation station for four weeks upon arrival. Fur animals have been 
imported in recent years, but are subject to a longer quarantine period at a special isolation 
station. Iceland employs the EU's Trade Control and Expert System (TRACES)115 for its sanitary 
measures. All imports of animal products from outside the EEA are subject to health check at an 
approved Border I nspection Post (BIP).116 Importers must notify the BIP through TRACES at least 
24 hours prior to the arrival of the imports. MAST is responsible for the control at the BIP.117  
3.126.   Feed imports may only be conducted by registered importers. Imported feed must be 
accompanied by documentation showing the ingredients, their chemical composition, and, if any 
ingredient is of animal origin, a health certificate stating the sanitary procedures used in 
production, packing, and handling (e.g. method of sterilization, autoc lavation, etc.), and the 
absence of micro -organisms.  
Phytosanitary  
3.127.   The main legislation concerning phytosanitary measures is Act No.  51/1981 on Prevention 
of Diseases and Pests of Plants, and Regulation No. 189/1990 on Import and Export of Plants and 
Plant Products and its succeeding amendments.118 MAST is the national plant protection 
organization of Iceland and is responsible for plant health and seed quality.  
3.128.   Entry into Iceland is prohibited for harmful organisms listed in Appendix I and plants listed 
in Appendix III of the Regulation; entry is permitted subject to specific requirements for plants 
listed in Annex IV; and Appendix II lists pests that may be present in a very small proportion of 
plants intended for future breeding. The Appendices were amende d on 27 March 2015 and entered 
into force on 1 June with the addition of Phytophthora ramorum  to Appendix I, firs ( Abies spp ) to 
Appendix III, and azaleas ( Rhododendron spp ) to Annex IV (except Rhododendron simisii and 
plants from areas where Phytophthora ramorum  does not exist).  
3.129.   Iceland maintains controls of quarantine organisms on potato and the export of wood 
packing materials. Iceland has implemented the EU legislation on seed.  
3.130.   All imported plants and plant parts are subject to phytosanitary checks and phytosanitary 
certificates are required.  
3.131.   With regard to genetically modified organisms (GMOs), Iceland has implemented the EU 
Directive 2001/18/EC on the deliberate release of GMOs into the environment. EU Regulation s (EC) 
Nos. 1829/2003 and 1830/2003 on the marketing, labelling and traceability of genetically modified 
food and feed have not been incorporated into Icelandic legislation. Regulation No. 1237/2014 on 
traceability and labelling of GM food and GM feed applies to food and feed when  more than 0.9%  
of each ingredient is produced from GMOs.  
3.3.5   Competition policy and price controls  
3.132.   During the period under review, there has been no substantive change to policy or 
legislation concerning competition in Iceland. The main legislation governing competition pol icy 
continues to be Competition Law No. 44/2005, as amended by Act s Nos. 52/2007, 94/2008, and 
                                                
115 A description of the Trade Control and Expert System  (TRACES) can be found on the European 
Commission website. European Commission online information, "TRACES: TRAde Control and Expert System". 
Viewed at: http://ec.europa.eu/food/animals/traces_en .   
116 There are seven approved border inspection posts in Iceland. MAST online information, "Import & 
Export: Animal products". Viewed at: http://www.mast.is/english/frontpage/ import -export/import/rawmeat/ .  
117 Iceland Customs is responsible for checks on personal luggage of travellers. The coast guard is 
responsible for the monitoring  of vessels in national waters.  
118 MAST online information, "Import to Iceland: Plant s". Viewed at: 
http://www.mast.is/english/library/Reglugerðir/Regulation189_1990importexportplants.pdf .  WT/TPR/S/361 /Rev.1 • Iceland  
 
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  14/2011. The Law is administered by the Icelandic Competition Authority  (ICA), which is an 
independent agency under the Ministry of Industries and Innovation.119 The Competition  Authority 
reports to the Minister of Industry and Innovation.   
3.133.   The Law prohibits anti -competitive agreements and practices by businesses, abuse of a 
dominant position and agreements between businesses that restrict competition. Furthermore, the 
Competition Authority must be notified of mergers where the total turnover of the undertakings in 
question is ISK 1 billion or more. Under the provisions of the Law, the ICA may set conditions for 
mergers, prevent them from taking place or annul them a fter they have been concluded if it 
determines that they would obstruct effective competition.  
3.134.   As a member of the EEA, Iceland's competition policy is aligned with that of the European 
Union . Both national and EEA rules are applied in tandem. If restrictiv e practices affect trade 
between EEA countries, EEA rules apply. National decisions should not inhibit EEA rules. 
Furthermore, Iceland 's membership of the EEA requires that the ICA enforce the prohibition rules 
(collusion and ban on abuse of a dominant pos ition) of the EEA  Agreement. This is done in close 
cooperation with the EFTA Surveillance Authority (ESA). ESA ensures that the investigations and 
decisions of the ICA provide for an effective implementation of the EEA  Agreement. Iceland has 
also subscribe d to competition provisions within the context of the EFTA Convention and in each of 
EFTA's free  trade agreements with third countries. Additionally, the ICA cooperates with the 
authorities from other Nordic countries (Norway, Denmark, Sweden, Finland, the  Faroe Islands, 
and Greenland) . There is also a formal agreement on exchange of confidential competition -related 
information between  the authorities of Denmark, Iceland, Norway, and Sweden. According to the 
authorities, this formal agreement is under revie w and a new, fuller agreement is expected to be 
signed in 2017 or 2018 and is likely to also include Finland, Greenland and the Faroe Islands.  
3.135.   ICA's policy objectives are to contribute to increased competition in the domestic sector 
and public services. Ba sed on these objectives, the ICA has prioritized important markets, such as 
the financial market, groceries and agriculture, construction, the public sector, as well as 
transportation. With respect to the public sector, the ICA advocates for competition in centives 
being used to increase efficiency and quality in public services, such as waste management, health 
care and education.  
3.136.   During the period under review, the ICA published 181 decisions and handled 36 appeals. 
Between 2008  and 20 11, the number of pen ding cases had risen from around 100 to 170 ; this 
number  has since been reduced and currently stands at around 80.120 Since 2012 , the ICA  has 
prevented one merger and imposed conditions on a further 25 mergers, and has fined 
17 companies a tot al of over €22 million for collusion or abuse of a dominant position.  
3.137.   Some of the important measures taken by the ICA during the review period have included 
reaching settlements with each of the three largest banks in Iceland and the two largest payment 
card companies in 2014. These settlements brought significant changes to the payment market, 
including reduced interchange fees. In March 2015, the ICA issued a report on competition in the 
groceries market. In the report , the ICA identified many obstacles t o competition. The report 
summarized earlier recommendations and interpretations, concerning competition in the market 
and the conduct of companies. The compilation also addresses desirable changes in the 
agricultural sector, advocating for more competitio n. In 2014, the ICA fined two of the largest 
hardware store chains in Iceland for serious violations of the ban on collusion. In 2015, the ICA 
fined MS (dominant Icelandic dairy) for abusing its dominant position in the market. In 2015, the 
ICA also conduc ted a market investigation into the fossil fuel market in Iceland. According to the 
preliminary findings, there were signs of restrictions to competition in important sections of the 
market.  
                                                
119 Prior to September 2012, policy and legislation on compe tition was the responsibility of the Ministry 
of Economic Affairs, which took over most of the functions of the Ministry of Business, including responsibility 
for the Competition Authority and the Financial Supervisory Authority (FSA). These two authoritie s are 
responsible for implementing policy in their respective areas. In September 2012, the functions of the Ministry 
of Economic Affairs were divided between the Ministry of Finance and Economic Affairs and the Ministry of 
Industr y and Innovation.  
120 OECD , Annual Report on Competition Policy Developments in Iceland 2015 . WT/TPR/S/361 /Rev.1  • Iceland  
 
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  3.138.   In 2015, the ICA issued an opinion, which found that due to the s lot allocation 
arrangements at Keflavik Airport, the incumbent competitor, Icelandair, has enjoyed a de facto  
priority as concerns the most vital slot times. This also applies to the allocation of new slots that 
have become available. The arrangement has t herefore limited the ability of other competitors to 
compete with Icelandair. The ICA has informed the Minister of the Interior and the Icelandic 
Transport Authority of these concerns and requested that this issue be addressed.  
Price controls  
3.139.   According to  the authorities , Iceland has no price controls except in the dairy market 
(Section 4.1.1.3.2.1).  
3.3.6   State trading, state -owned enterprises, and privatization  
3.3.6.1   State trading  
3.140.   As per the definition under GATT Article XVII, the only state trading enterprise notif ied by 
Iceland is the State Alcohol and Tobacco Company of Iceland (ÁTVR) , which was established under 
Act No. 63/1969 on the Sale of Tobacco and Alcoholic Beverages.121 Since June 2011 , ÁTVR has 
operated in accordance with the provisions of Act No. 86/2011 on the Sale of Tobacco and 
Alcoholic Beverages. Act No. 86/2011 has however been amended twice, by law No. 126/2011 and 
No. 69/2014. Under the provision of the Act and its amendments , the ÁTVR, which is wholly 
state-owned , has the exclusive right to the re tail sale and distribution of all alcoholic beverages 
with an alcohol content of more than 2.25% , as well as the exclusive right to the wholesale of 
tobacco to retailers.  
3.141.   The Act stipulates that the ÁTVR is required to sell alcohol products at the same pri ces in 
each of its 49 retail outlets. Under the Act, the mark -up above wholesale prices permitted for 
retail, is fixed at 18% for beverages with 22% alcohol by volume or less and 12% for beverages 
with more than 22% alcohol. Similarly, the mark -up for whol esale of tobacco is fixed at 18%.   
3.142.   Additionally, other regulations provide details on the terms of purchase and sale by the 
ÁTVR, such as Regulation No. 1106/2015 on ÁTVR Selection, Purchase and Distribution of Alcohol, 
and Regulation No. 496/2012 on ÁTVR Selection and Sale of Tobacco and Trade Terms with 
Suppliers.122 
3.3.6.2   State -owned enterprises and privatization  
3.143.   Due to the nature of the country and the economy, state involvement in the economy is 
quite prevalent and the near collapse of the financial sector in 2008 necessitated a state takeover 
of banks. At the start of 2016, the State had a majority stake in 34 enterprises. Furthermore, 
during the period under review, the Government's stake in the banks has increased, with the State 
having a  98% share in Landsb anki, 13%  share in Arion Banki, and complete ownership of 
Islandsbanki. The increased shareholding has come about due to the signing of the "composition" 
agreements in late 2015, whereby the banks assigned most of their ISK assets to the State (17% 
of GDP) , so that they could immediately distribute liquid foreign assets to foreign claimants (for 
details please see Section 4.3 .1.1).  In a draft of an updated ownership policy for its financial 
services institutions, the Government has outlined plans to privati ze Islandsbanki when the 
economic conditions are right, and the State will also sell a large stake in Landsbanki in due 
course. The Government's stake in Arion Banki will be sold as soon as possible, probably at the 
time the majority owner exits. The exact  timeframe for the privatization has not been provided. 
The Government of Iceland had acquired a considerable stake in many companies through its 
shares in the banks, but these holdings have been exited for the most part as the banks have sold 
their stakes  in these companies. The governance of SOEs is set out in the Government's ownership 
policy, which is modelled on the relevant OECD guidelines. Under the policy, the ownership 
function is centralized within the Ministry of Finance and there is a clear sepa ration of roles and 
responsibility between the State, as the owner, and the boards and management of the 
                                                
121 WTO document G/STR/N/S/ISL, 1 October 1999.  
122 For the laws, regulations, and rules governing pricing, sale, advertising, and other aspects of trade in 
alcohol and tobacco, see ÁTVR online  information (most ly in Icelandic only). Viewed at: 
http://www.vinbudin.is/english/heim/um_atvr/loeg -og-reglur.aspx . WT/TPR/S/361 /Rev.1 • Iceland  
 
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  enterprises. According to the authorities, work is under way to update the ownership policy to 
better reflect the updated OECD guidelines.  
3.144.   The general  policy concerning state involvement in the business sector has not changed 
during the review period. The central Government's current holdings include businesses involved in 
the production and distribution of electricity, postal services, the Housing Fina ncing Fund, the 
Student Loan Fund, and some smaller financial institutions. In addition, Isavia, a wholly 
government -owned entity under the Ministry of the Interior, owns and operates all airports (see 
Section 4.3.3 .1). Local government holdings are mainly  in geothermal production of heating and 
electricity, as the municipalities own almost all of the geothermal power companies, which supply 
heating to most homes in Iceland and, on an increasing scale, electricity to the aluminium 
industry. There is free co mpetition in the energy market, with consumers free to choose their 
supplier ( Section 4.2 ). However, FDI in critical sectors like energy is likely to be met with demands 
for Icelandic ownership, either formally or from overwhelming public opinion. For exam ple, in 
2008, Sudurnes Energy Company was split up into two separate companies, H.S Orka and H.S 
Veitur, with the former an energy production company and the latter a distribution company. In 
2010, Canadian company Magma Energy acquired a 95% stake in the energy production company, 
H.S Orka, but sold a 33.4% stake to the Icelandic pension funds after considerable public 
pressure. In 2012, the company received an offer to buy out its stake, but negotiations were 
unsuccessful. In addition, several local gover nments own harbours and operating companies for 
harbours. The authorities also stated that the Government intends to add a special section to cover 
governance and ownership strategy in the energy sector in the update to the general ownership 
policy.  
3.145.   The au thorities stated that private enterprises have the same access to financing as SOEs 
through the banking system. However, in exceptional circumstances , the State does provide 
financial guarantees or even direct loans to SOEs, but these have been mostly rela ted to 
restructuring activities following the financial crisis, as well as situations where a limited liability 
company has been set up to conduct public policy initiatives, such as providing a loan to a special 
purpose vehicle for building a new state hos pital. One exception would be financial guarantees on 
certain loans for Landsvirkjun (National Power Corp.), but these are being phased out.   
Table 3.9 Large SOEs , 2016  
Company  Government stake 
(%) EBIT (ISK b illion)  Operating revenue 
(ISK billion)  
ISAVIA*  100 4 26 
Landsbanki  98 25 48 
Arion Banki  13 27 53 
Islandsbanki  100 22 53 
Landsvirkjun  100 20 46 
*Accounts for ISAVIA are for 2015     
Source:  Various annual reports . 
3.3.7   Government procurement  
3.146.   Iceland's le gal framework underwent  substantial revision during the review period with the 
adoption of the new Act on Public Procurement (PPA).123 There are a number of other laws and 
regulations that also came into force as a result of the new Act (Table 3.10) . It was implemented 
by Iceland to reflect new EEA rules on public procurement based on EU Directives Nos. 
2014/23/EU,  2014/24/EU, and 2014/25/EU . Further, Iceland had fully imple mented the Utilities 
(2014/23/EU ) Directive and was in the process of implemen ting the  Concessions (2014/25/EU ) 
Directive through Regulations as of early 2017. Public procurement in Iceland amounted to 
ISK 167 billion (excluding municipalities) in 2015 , and was estimated at ISK 250 billion when 
including municipalities.124 
                                                
123 Act No. 120/2016. Viewed at : https://w ww.rikiskaup.is/media/rammavefur/Act -on-Public -
Procurment -No.-120-2016.pdf . 
124 Ministry of Finance and Economic Affairs online information. Viewed at : 
https://www.fjar malaraduneyti.is/frettir/betri -opinber -innkaup -i-forgangi  and information provided by the 
authorities.  WT/TPR/S/361 /Rev.1  • Iceland  
 
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  3.147.   Responsibility for public procurement in Iceland is divided among a number of entities.  The 
Ministry of Finance and Economic Affairs has the overall responsibility for the legal framework and 
policy, and the Central Purchasing Body (Ríkiskaup) is responsible for coordinating  the 
procurement process.  The Government Construction Contracting Agency, Icelandic Road and 
Coastal Administration, and Icelandic Maritime Administration have their own procurement 
functions for their particular areas, although their tenders are also ofte n listed at the Central 
Purchasing Body. The Central Purchasing Body aims to promote maximum efficiency in 
procurement for state operations focusing on effective competition, equality and innovation.  It 
provides guidance and expertise to government departm ents and agencies for the procurement 
process and prepares framework agreements on behalf of the State. 
Table 3.10 Public procurement legal framework, 2017  
Law or regulation  Legal reference  
Act on Public Proc urement  Act No. 120/2016  
Public procurement of clean and energy -efficient vehicles  Law No. 70/2012  
Procurement covered by social services and other specialized services 
under the GPA  Regulation 1000/2016  
The standard form for the single European qualifi cation statement and 
standard forms for the publication of notices of public procurement 
above the EEA threshold  Regulation 971/2016  
Public procurement requirements for information to be included in 
advertisements and other notices, supporting evidence fo r the 
economic and financial situation, and technical requirements for tools 
and the electronic receipt  Regulation 955/2016  
Thresholds for public procurement in the EEA under the WTO GPA  Regulation 904/2016  
Procurement agencies in the field of defence an d security  Regulation 845/2014, updated by 
Regulation 221/2016  
Procurement procedures of entities operating in the water, energy, 
transport and telecommunications sectors  Regulation 340/2017  
Thresholds for public procurement in the EEA under the WTO GPA  Regulation 223/2016  
Procurement procedures  Regulation 260/2016  
Source:  Compiled by the WTO Secretariat from the State Trading Centre . Viewed at:  
https://www.rikiskaup.is ; Stjornartidindi . Viewed at:  http://www.stjornartidindi.is/# ; and the 
sources in the table.  
3.148.   Since 2014 , Iceland has placed a priority on improving procurement.125 In 2015, Iceland's 
Ministry of Finance and Economic Affairs created a special working gr oup to examine and promote 
effective cooperation between the Government and the private sector on procurement. The 
working group suggested new ideas for public procurement and made the following 
recommendations:  
 Examine long -term needs for procurement and link to the budget;  
 Government to apply procurement procedures in a targeted manner, e.g. through joint 
purchases, mini -tendering, auctions, and contracting with fewer suppliers;  
 Include additional information so that the Government has a better overview o f its 
purchases in order to further optimize  procurement ; 
 Create an incentive scheme for institutions and suppliers; and  
 Better incorporate market rent prices for institutions in order to optimi ze their office 
rents.126 
 
3.149.   The working group estimated that int roducing these reforms would save the Government 
between ISK 2 to 4 billion a year in public procurement.127 Thus, some of these have been 
incorporated in the new PPA by incorporating better framework contracts, i.e. by focusing on joint 
procurement and sing le supplier framework contracts.  
                                                
125 Ministry of Finance and Economic Affairs online information. Viewed at : 
https://www.fjarmalaraduneyti.is/frettir/betri -opinber -innkaup -i-forgangi .  
126 Ministry of Finance and Economic Affairs online information. Viewed at : 
https://www.fjarmalaraduneyti .is/frettir/nr/19149  and 
https://www.fjarmalaraduneyti.is/media/frettatengt2015/2015 -03-19-Nyjar -aherslur -i-innkaupum.pdf .  
127 Ministry of Fina nce and Economic Affairs online information. Viewed at : 
https://www.fjarmalaraduneyti.is/frettir/nr/19149 .  WT/TPR/S/361 /Rev.1 • Iceland  
 
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  3.150.   The new Act on Public Procurement sets out to ensure the equal treatment of economic 
operators, encourage efficiency in public sector operations through active competition and to 
promote innovation and development in public  procurement of supplies, works and services.  It 
applies to the State, local authorities, their institutions and other public entities.  
3.151.   All public procurement, above domestic thresholds, is subject to  the same general 
provisions regarding scope of applicat ions, exceptions, general principles etc. Overall, the PPA is 
modelled on EEA Law. It incorporates developments in case law, interpretative communications, 
etc., that have a direct relevance for the interpretation of the Act.  
3.152.   The new thresholds for domest ic public procurement went into effect as of 
28 October  2016 and for the EEA as of 1 November 2016 (Table 3.11 and Table 3.12).  Article  23 
of the PPA provides that procurement of goods and services over ISK 15.5 million and construction 
over ISK  49 million  shall be awarded according to the procedures set out in Chapter IV.  These 
apply to public bodies  and agencies, including local governments. However, for local governments, 
implementation takes effect only from 31 May 2019, but local authorities will need to advertise 
tenders above these thresholds from 2017.  Previously, local governments were only obliged to 
follow the public procurement law above EEA thresholds.  
3.153.   For procurement under the domestic thresholds, the PPA specifies that the procurer shall 
ensur e efficiency and make comparisons among as many economic operators as possible, and this 
must be done electronically. Provisions on technical specifications and equality must also be 
respected.  As set out in Chapter IV, when the threshold is exceeded, proc urement is to be made 
on the basis of an open procedure (all economic operators may submit a tender following  
publication of a contract notice) or a restricted procedure (economic operators can apply for 
permission to participate in a procurement procedure  following publication of a contract notice by 
submitting information for qualitative selection). According to the authorities, the open 
procurement procedure is the most common procurement method.  Almost 98% of procurement 
subject to the GPA carried out b y the Central Purchasing Body on behalf of all state institutions 
was subject to open procedures during 2015 and 2016 , according to the authorities.  
Table 3.11 Domestic thresholds: central Government (and sub -central Government from 
2019)  
 Threshold in GPA in 
SDR Threshold in GPA in 
ISK Applied threshold in 
domestic regulation 
in ISK  
Supplies  102,650  15,500,000  15,500,000  
Service s 102,650  15,500,000  15,500,000  
Construction Services  324,500  49,000,000  49,000, 000 
Source:  Information provided by the authorities.  
Table 3.12 EEA thresholds, 2017  
 Threshold in GPA in 
SDR Threshold in GPA in 
ISK Applied threshold in 
domestic regulation 
in ISK  
Central government entities: 
Supplies  130,000  23,214,852  20,811,600  
Service s 130,000  23,214,852  20,811,600  
Construction services  5,000,000  892,878,916  805,486,000  
Sub-central government entities:  
Supplies  200,000  35,715,157  32,219,440  
Service s 200,000  35,715,157  32,219,440  
Construction services  5,000,000  892,878,916  805,486,000  
Other entities:  
Supplies  400,000  71,430,313  64,438,880  
Service s 400,000  71,430,313  64,438,880  
Construction services  5,000,000  892,878,852  805,486,000  
Source:  Information provided by the authori ties. 
3.154.   Iceland's PPA has provisions on electronic means of procurement.  It allows for the use of 
electronic auctions but does not make it mandatory. However, a new rule to come into effect in 
2018 would establish the use of electronic methods for all procur ement. It also establishes an WT/TPR/S/361 /Rev.1  • Iceland  
 
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  electronic dynamic purchasing system for making commonly used purchases; however, this is not 
widely used at present. For the communication and submission of documents, the PPA indicates 
that this will be conducted through ele ctronic means.  As of early 2017, the authorities confirmed 
that all tender documents are available electronically and are free of charge.  
3.155.   For procurement disputes, Iceland continues to use the Public Procurement Complaints 
Commission which operated under the old law and is also contained in the new PPA without 
change. It is established as an independent body under the Ministry of Finance and Economic 
Affairs to rule or decide on complaints of alleged violations of the PPA.  The Commission has the 
right to i mpose administrative fines if violations are found.  During the last three years, there have 
been between 25 -30 complaints filed per year with the Complaints Commission; and the average 
procedure time for dealing with these complaints was between 100 and 12 5 days.128 The process 
allows for  the right to appeal.   
3.156.   Iceland has been a party to the WTO GPA since 2001 and has since also completed the 
procedures for becoming a party to the revised GPA, which entered into force for Iceland on 
6 April 2014.  Iceland's co mmitments under the new agreement provide the same or similar 
coverage with no significant changes according to the authorities.  
3.157.   GPA parties are required to notify the WTO of their laws and other relevant implementing 
legislation, including revisions there of. Iceland had notified its original legislation in 2002, and 
most recently, in April 2017, notified its updated legislation.129 Furthermore, pursuant to Article 
XVI:4, parties are to notify procurement statistics.  As of early 2017, Iceland had notified suc h 
statistics for the years 2015 and 2016.130 
3.158.   Iceland's FTAs generally have provisions on government procurement.  
3.3.8   Intellectual property rights  
3.159.   There were several developments in the field of intellectual property (IP) in Iceland during 
the review period.  These developments include new legislation on geographical indications (GIs), 
amendments to trademark law,131 and a new fee structure. Intellectual property is covered by the 
EEA, thus Iceland has implemented relevant EU regulations and directives in the field of IP. 
However, further changes are foreseen in the near future to incorporate recently added EEA 
legislation, in the areas of patents, trademarks, and trade secrets.  
3.160.   Iceland's Patent Office (Einkaleyfastofan  – ELS/IPO)132 is the main agency involved in 
intellectual property issues; it covers patents, trademarks, design, related rights and 
accreditation.133 Also, since September 2012 , the Ministry of Industries and Innovation has general 
oversight of the Patent Office and is responsible for overall policy matte rs on industrial intellectual 
property rights.134 Copyright matters are under the responsibility of the Ministry of Education, 
Science and Culture.  
3.161.   Iceland adheres to the key IP international agreements, e.g. Paris Convention for the 
Protection of Industrial  Property, Protocol Relating to the Madrid Agreement Concerning the 
International Registration of Marks, and Patent Cooperation Treaty, etc.135 During the last five 
years, Iceland ratified two new treaties that entered into force: Singapore Treaty on the Law  of 
Trademarks and Convention on the Rights of Persons with Disabilities.136 
                                                
128 Information provided by the authorities and Ministry of Justice online informati on. Viewed at : 
https://www.urskurdir.is/fjaramala/kaerunefndutbodsmala/ .  
129 WTO document GPA/144.  
130 WTO documents GPA/137/Add.6 and GPA/142/Add.2.  
131 Act No. 44/2012.  
132 As of spring 20 17, a bill of law, changing the name of the IPO to Hugverkastofan (i.e. Intellectual 
Property Office) was presented and was being discussed.  
133 ISAC Accreditation is an independent department within the IPO, not IPR related. Accreditation aims 
to determine technical competence of a body to perform specific tasks as outlined in Act No. 24/2006.  
134 Althingi online information. Viewed at : http://www.althingi.is/lagas/nuna/2017001.html .  
135 For the ful l list see: http://www.els.is/en/international -cooperation  
orhttp://www.wipo.int/wipolex/en/profile.jsp?code=IS .  
136 WIPO online information. Viewed at : http://www.wipo.int/wipolex/en/profile.jsp?code=IS .  WT/TPR/S/361 /Rev.1 • Iceland  
 
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  Table 3.13 Main intellectual property laws and regulations, 2017  
 Law Reference  
Patents  Patents Act  Act No. 17/1991  
Act respecting Employees' Inventions  Act No. 72/2004  
Fees for Patents  Regulation No. 818/2016  
Patent applications  Regulation No. 477/2012 amended with 
Regulation No. 938/2013  
Compulsory licen ce for the export of drugs to 
developing countries and countries plagued  by 
severe health problems  Regulation No. 1011/2006  
Copyright Act  Act No. 73/1972  
Copyright  Trademark Act  Act No. 45/1997  
Trademarks  Trademark Amendment Act  Act No. 44/2012  
Trademark Amendment  Article 42 of Act No. 130/2014  
Trademark Regulation  Regulation No. 310/1997  
Trademark Amendment Regulation  Regulation No. 511/2012  
Collective Marks  Act No. 155/2002  
Fees for trademarks and collective marks  Regulation No. 818/2016  
Classification of goods and services for 
trademarks  Announcement No.  130/2017  
Registration of trademarks and certification 
marks owned by the employer in certain foreign 
countries  Announcement No. 228/1990  
Design Act  Act No. 46/2001  
Designs  Design Regulation  Regulation No. 706/2001  
Fees for Designs  Regulation No. 8 18/2016  
Protection of topographies for semiconductors  Act No. 78/1993  
GIs Act on the protection of product names as 
designation s of origin, geographical indications 
or traditional specialt ies Act No. 130/2014  
Regulation on the registration of product names  Regulation No. 596/2016  
Other  Collection of Evidence Relating to Alleged 
Violations of Intellectual Property Rights  Act No. 53/2006  
Provisions for hallmarks  Act No. 138/2011  
Board of Appeal of Industrial Intellectual 
Property Rights  Regulation N o. 275/2008  
Source:  Icelandic Patent Office . Viewed at:  www.els.is . 
3.162.   Intellectual property activity in Iceland trended slightly upward during the period 2012 -16 
(Table 3.14) . There has been a steady rise in European patent  (EP) validations of patents. 
Regarding trademarks, there has been a slight increase in national applications and registrations, 
but a slight decrease in Madrid system applications in recent years. For patents, during 2012 -14 
there was a backlog of patent applications and since that time, a balance has been reached.  Thus, 
in Iceland there are 52,000 registered trademarks owned by foreigners and 7,300 owned by 
Icelanders as of the end of 2016.137 Furthermore, a report that examined intellectual property 
trends  in Iceland states that the number of trademark listings in Iceland is comparable to other 
Western countries taking into account the size of the country and market, but patent and design 
applications by Icelanders has generally trended downward in recent y ears and this has created 
some concerns.138 
Table 3.14 Trends in intellectual property, 2012 -16 
 2012  2013  2014  2015  2016  
Patents       
Patent applications:       
  National applications  39 41 38 38 36 
  PCT a pplications  5 5 11 2 2 
  Requests for EP validations  881 911 908 1,006  1,226  
Patents granted:       
  National applications  47 43 54 17 22 
  EP validations  881 911 908 1,006  1,226  
Supplementary protection certificate s:      
  Applications  12 18 23 40 33 
  Issued  6 4 6 15 22 
Trademarks       
                                                
137 Statistical information from the Icelandic Patent Office.  
138 Ministry of Industries and Innovation, online i nformation. Viewed at : 
https://www.atvinnuvegaraduneyti.is/media/Acrobat/160610 -Hugverkastefna -vefutgafa.pdf . WT/TPR/S/361 /Rev.1  • Iceland  
 
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   2012  2013  2014  2015  2016  
Trademark applications:       
   National  1,274  1,133  1,300  1,194  1,424  
   Madrid  2,277  2,585  2,373  2,734  2,368  
Trademark registrations:       
   National  1,194  1,067  981 907 1,299  
   Madrid  2,181  2,217  2,224  2,116 2,120  
Designs       
Applications for registration of 
designs:       
   National  36 31 31 17 33 
   International  85 87 66 73 85 
Registration of designs:       
   National  36 34 25 18 29 
   International  95 83 71 68 87 
Source:  Iceland Patent Office . Viewed at:  http://www.els.is/en/ ; and information provided by the authorities.  
3.163.   In 2016 , Iceland's Ministry of Industries and Innovation issued the "Intellectual Property 
Policy, 2016 -2022" following the recommendatio n of a working group established to examine 
intellectual policy matters.139 The policy acknowledges that intellectual property creates a strong 
competitive environment, increases value creation, drives economic growth, and that innovation 
plays a key role in  the betterment of society. The policy made the following proposals:  
 Establish a Technology Transfer Office (TTO);  
 Public research grants to take into account IP potential;  
 Strengthen patent technology development grants to cover costs of the patent proces s; 
 Assist SMEs to protect IPR;  
 Explore the adoption of utility models;  
 Increase awareness of IP in the business community;  
 Promote education and training in IPR;  
 Improve the Patent Office appeals procedure;  
 Review the provisions on corporate names;  
 Review the rules on inventions by employees; and  
 Increase emphasis on monitoring IP infringement.  
 
3.164.   While no annual status report has been issued at this time, the authorities have reported  
that work has begun  to establish a TTO, and also with respect to increasi ng awareness of IP with 
the cooperation of government agencies and changing the name of the IPO.140 
3.3.8.1   Patents  
3.165.   Iceland's main patent law dates from 1991 and there have been no amendments or 
changes to it during the review period. However, in 2012 and 2013 there  were changes to the 
Patent Regulation. Iceland also introduced new fee schedules for patents in 2014 and 2016 (also 
applicable to trademarks, designs and appeal procedures).141 The 2014 regulation raised the fees 
for Patent Office applications and related f ees and simplified the overall fee structure, whereas a 
slight increase was introduced in 2016.  
3.166.   The changes made in 2012 were outlined in  the last trade policy review .142 The new patent 
regulation that entered into force in May 2012 introduced several chang es, but mostly clarified the 
established patent application procedures and requirements. The changes from 2013 were minor 
changes only correcting misspellings and wording, and one correcting the period of validity of 
Supplementary Protection Certificates a s well.  
                                                
139 Ministry of Industries and Innovation, online information. Viewed at : 
https://www.atvinnuvegaraduneyti.is/media/Acrobat/160610 -Hugverkastefna -vefutgafa.pdf .  
140 Iceland online information. Viewed a t: http://ttoiceland.hi.is/audna/ .  
141 Regulation 818/2016. Iceland Patent Office, online information. Viewed at : 
http://els.is/sites/els.is/files/atoms/files/regulation_on_fees_for_patents_trade_marks_designs_etc._no_818.2
016.pdf .  
142 WTO document, WT/TPR/S/273/Rev.1, para. 105.  WT/TPR/S/361 /Rev.1 • Iceland  
 
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  3.167.   Iceland cooperates with other Nordic countries on patent matters through the Nordic 
Patent Institute which coordinates matters between Nordic States and offers patent search and 
analysis services to businesses.  
3.3.8.2   Copyright  
3.168.   There have been several cha nges to the legal framework on copyright during the review 
period; thus the 1972 Copyright Law remains applicable with these amendments. The Copyright 
Law was amended four times in 2016 in relation to : authors' exclusive rights and collective 
agreements, i mplementation of a directive regarding orphan works, prolongation of the protection 
period for sound recordings, and copying for personal use.143 Pursuant to the copyright reform 
initiative, the Copyright Act continues to be amended and updated in stages as the different 
sections are prepared and incorporated in legal texts.  
3.169.   There is no registration of copyright in Iceland.  
3.3.8.3   Trademarks  
3.170.   Iceland's trademark law underwent  amendment in 2012 and 2014 for minor changes.144 
The 2012  changes were outlined in the last trade policy review ; they mainly result ed from the 
ratification of the Singapore Treaty but , in addition,  invalidation procedures were introduced and 
the Icelandic procedures were aligned with Nordic legislation.145  
3.171.   In 2014 , a new Act No. 130/2014 on the prot ection of product names as designation s of 
origin, geographical indications or traditional specialt ies entered into force. In addition to providing 
for registration of product names (usually referred to as GIs) by the Food and Veterinary 
Authority, it intr oduced a new Article 14(1)(10) in the Trademark Act. According to the provision, 
the IPO is responsible for verifying if there is a registered GI or if a prior GI application has been 
filed when examining the registration possibilities for trademarks.  
3.172.   In 2017, Iceland introduced revised rules on the classification of goods and services for 
trademarks.146 These rules follow the changes made in the 11th edition of the Nice Agreement and 
make other corrections. Previously, Iceland had incorporated changes from t he 10th edition of the 
Nice Agreement in 2016, but these were superseded, and the 2017 rules are currently applicable.  
3.3.8.4   Designs  
3.173.   There were no amendments to the Act on Designs during the review period; therefore 
designs continue to follow the provision in th e 2001 Design Act, as last amended in 2011.  
3.3.8.5   Geographical indications (GIs)  
3.174.   During the review period , Iceland enacted its first Act specific to GIs, Act No. 130/2014 on 
the protection of product names as designation s of origin, geographical indications or t raditional 
specialt ies;147 it also has an accompanying Regulation No. 596/2016.148 The Act and Regulation 
apply to food, wine, spirit drinks, and other products (i.e. wool, feathers, skin/fur, leather, horns 
and bones, cotton, cork, hemp, wicker, natural rubbe r and resins, natural pigments, flowers, 
essential oils, tobacco, and mixtures for animal feed) listed in Annex I of the regulation.149 The 
product name may be protected if the product is originating in a specific region, place or country; 
                                                
143 Act Nos. 9/2016, 10/2016, 11/2016, and 109/2016.  
144 Law No. 44/2012 and 130/2014.  
145 WTO document, WT/TPR/S/273/Rev.1, para. 111.  
146 Stjornartidindi online information. Viewed at : 
http://www.stjornartidindi. is/Advert.aspx?RecordID=e695e31e -63ca-4f6e-8ccb-29a6fabed8ad .  
147 Unofficial English translation provided by the Ministry of Industries and Innovation.  
148 Althingi online information. Viewed at : http://www.althingi.is/lagas/144a/2014130.html ; and 
Regulation  No. 596/2016 . Viewed at:  http://www.reglugerd.is/reglugerdir/eftir -raduneytum/a tvinnuvega --og-
nyskopunarraduneyti/nr/20163 .  
149 Regulations online information. Viewed at : 
https://www.stjornartidindi.is/Do cumentActions.aspx?ActionType=Open&documentID=4fc01bcc -4a8b-4602-
933e-963bdfde901f .  WT/TPR/S/361 /Rev.1  • Iceland  
 
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  it has qualit ies or characteristics of the geographical area; and the production, processing and 
preparation of the product takes place in the defined geographical area. A name referring to a 
territory may also be protected. The law provides that the name will be protected against any 
misuse, imitation, and misleading associations or any other activity that could mislead consumers.  
In order to protect a GI, a registration process must be follow ed as outlined in the law and 
regulation, accompanied by a fee of ISK 75,000.  GIs are registered by the Icelandic Food and 
Veterinary Authority (MAST), with fees regulated by Regulation 596/2016.  
3.175.   As part of the agreements reached with the European Union  on agriculture in 2015, 
Iceland also concluded an agreement on geographical indicati ons (Section 2.3.2.2) . As a result of 
this agreement, a  list of 1,150 protected agricultural products and foodstuffs of the European 
Union  will receive the same level of protection in Iceland as in the EU market. As of the first 
quarter 2017, the agreement  had not yet entered into force.150 
3.3.8.6   Appeals and enforcement  
3.176.   Iceland has provisions for appeals in several of its intellectual property laws.  For example, 
the laws on patents, trademarks and designs have articles that pertain to the settling of disputes. 
Furthermore, the Regulation on the Board of Appeal of Industrial Intellectual Property Rights, 
No. 275/2008, provides that appeals must be filed with the Ministry of Industries and Innovation 
within the statutory time  limit, which is two months from the date o f the decision of the IPO. Then 
the matter is referred to the Board of Appeal to examine the matter through submissions and 
hearings.  A ruling is then taken by the Board and sent to the parties of the dispute. Following the 
appeals procedure, parties may b ring the disputed matters to national courts.  
3.177.   Provisions relating to IP infringement are to some extent provided for in Icelandic laws on 
IP rights. Furthermore, Act No. 31/1990 relating to Attachment of Property, Restraining Orders 
etc.; Article 132 of th e Customs Law ; and Act No. 53/2006 on Collection of Evidence Relating to 
Alleged Violations of Intellectual Property Rights provide for the procedures in relation to IP 
infringement.  Apart from the right  holder's initiative in such matter s, IP infringement  matters in 
Iceland can in general first be addressed by a district magistrate/sheriff to invoke an injunction.  In 
general, IP infringement matters are heard before the Reykjavik District Court. For copyright 
infringement, Article 59a provides that copyrig ht collecting societies may file for an injunction 
against intermediaries such as internet service providers to block users' access to web sites 
containing infringing material. There were no available statistics on IP enforcement.  
3.178.   Iceland accepted the amen dment to the TRIPS Agreement on patents and public health on 
12 October 2015; it subsequently entered into force in January 2017.151 Upon accepting the 
amendment, Iceland reviewed the relevant provisions of the Patent s Act and since the provisions 
were alrea dy considered to be in line with the TRIPS amendments it was not considered necessary 
to make any legislative changes. Iceland did not make  any notifications to the WTO on IP during 
the review period.  
 
                                                
150 Information provided by the authorities.  
151 WTO online information. Viewed at : 
https://www.wt o.org/english/tratop_e/trips_e/amendment_e.htm .  WT/TPR/S/361 /Rev.1 • Iceland  
 
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  4  TRADE POLICIES BY SE CTOR  
4.1  Agriculture and fishing  
4.1.1   Agriculture  
4.1.1.1   Features  
4.1.  Agriculture is a relatively small part of the economy in Iceland. Agriculture, hunting, and 
related services contributed 1.1 -1.2% to GDP in 2013 -16, and it remains small compared to 
fishing and aquaculture ( Section 4.1.2). The manufacture  of food products, beverages and tobacco 
products (less fish processing) contributed a further 1.7% to GDP. In employment terms, in 2014, 
agriculture employed about 3,900 people or 2.2% of employed persons, a decline from 
5,000  people in 2011.1 
4.2.  After sever al years of steady increases, the value of agricultural output (in producer prices) 
was relatively stable from 2014  to 20 16 at ISK 50 to ISK 52 billion. Production of animals and 
animal products dominates total production with milk representing about 21% o f the total value of 
all agricultural products, and sheep and goats about 12%. Crop output represents about one -third 
of total output, but most of this is forage production linked to livestock ( Table 4.1). 
Table 4.1 Agriculture: employment and output , 2010 -16 
ISK thousand in producer prices, unless otherwise stated  
  2010  2011  2012  2013  2014  2015  2016  
Contribution to GDP  %        
 Agriculture, hunting, 
related services   1.1 1.1 1.1 1.2 1.1 1.1 1.1 
Manufacture of food 
products, beverages 
and tobacco products 
(less fish)   2.0 1.9 1.8 1.9 1.8 1.7 1.7 
Number employed  persons  4,900  5,000  4,800  4,700  3,900  .. .. 
Value of output  ISK 000  36,384  41,477  46,394  48,814  52,346  50,198  51,068 
of which          
 Crop output  ISK 000  12,840  14,034  16,560  18,000  20,483  16,727  17,491  
 of which          
  Forage plants   ISK 000  9,003  10,143  11,883  13,443  15,213  11,815  12,129  
Vegetable and 
horticultural  ISK 000  2,585  2,644  2,870  3,044  3,070  3,144  3,467  
  Potatoes  ISK 000  568  668  849  807  1,341  1,314  1,498  
 Animal output  ISK 000  23,544  27,443  29,834  30,814  31,863  33,471  33,577  
 of which          
  Sheep and goats  ISK 000  4,935  5,889  6,381  6,678  6,648  7,349  6,535  
  Cattle  ISK 000  2,098  2,450  2,743  2,683  3,410  3,416  4,152  
  Pigs ISK 000  1,696  2,086  2,231  2,993  2,864  2,815  2,594  
  Poultry  ISK 000  2,692  3,149  3,629  4,073  4,033  4,421  4,527  
  Milk ISK 000  8,609  9,193  9,567  9,709  10,521  11,570  12,16 3 
.. Not available.  
Source:  Statistics Iceland.  
4.3.  Only about 1% of Iceland's land area of 103,022 km2 is suitable for cultivation and about 
25% is suitable for grazing, some of which can also be used to grow fodder crops. In 2010, there 
were about 2,592 f arms, practically all family owned and operated. Most farms tend to be small in 
business terms: in 2013, there were about 43 cows on the average dairy farm.2 
4.4.  In addition to the harsh climate and lack of suitable land, the scope for increasing 
productivity in Iceland is limited to some extent by the narrow genetic base:  there is only one 
dairy breed, one sheep breed, and one horse breed. These breeds have developed in isolation from 
                                                
1 Statistics Iceland, online database. Viewed at: http://statice.is/  [May 2017].  
2 Statistics Iceland, online database. Viewed at: 
https://hagstofa.is/talnaefni/atvinnuvegir/landbunadur/bureikningar/  [May 2017].  WT/TPR/S/361 /Rev.1  • Iceland  
 
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  the rest of the world and are vulnerable to transmittable diseases, making it difficult to safely 
introduce new genetic material.3  
4.1.1.2   Trade  
4.5.  Iceland is a net importer of agricultural products (WTO definition4) with, in 2016, exports of 
US$95 million and imports of US$492 million. The main exports are water, sheep meat products, 
and pure-bred horses. Exports of mink skins declined by nearly three -quarters in 2014 compared 
to 2013 but recovered in 2016 – although still less than in 2013. According to the authorities, the 
fluctuations in export values for furskins were linked to prices on the Copenhagen Fur market 
where the majority of skins are sold. Imports are more broadly based than exports and increased 
from US$402 million in 2012 to US$492 in 2016. The increase in the US dollar value of imports of 
animal feed preparations was linke d to increased production of milk, poultry and pigs and the 
stronger króna ( Table 4.2). 
Table 4.2 Trade in agricultur al products , 2012 -16 
US$ million  
  2012  2013  2014  2015  2016  
Total  agricultur al exports  77.8  85.3  74.7  71.1  94.7 
of which       
220190  Water not containing added sugar or other 
sweetening matter nor flavoured; ice and snow  
- Other  7.6  7.7  9.9  10.6  15.8  
010121  Live animals - Horses - pure bred breeding 
animals  6.2  5.4  5.2  4.9  6.3  
430110  Raw furskins - Of mink, whole, with or without 
head, tail or paws  12.7  16.3  2.9  3.6  6.2  
050510  Feathers of a kind used for stuffing; down  4.1  5.0  4.2  4.5  5.8  
230990  Preparations of a kind used in animal feeding .  
- Other  0.3  0.2  0.1  0.5  5.7  
020442  Other meat of sheep, frozen: - Other cuts with 
bone in  4.8  6.6  7.5  5.1  4.7  
040610  Fresh (unripened or uncured) cheese  2.0  2.7  3.0  3.6  4.1  
020430  - Carcasses and half -carcasses of lamb, frozen  5.7  6.4  5.5  4.3  4.1  
230910  - Dog or cat food, put up for retail sale  0.9  1.1  1.7  2.4  4.0  
220300  Beer made from malt  0.6  1.1  2.1  2.3  3.4  
Total agricultural imports  402.1  436.7  463.7  446.5  491.9  
of which       
210690  Food preparations not else where specified or 
included  
- Other  29.8  34.3  38.1  31.5  37.2  
230990  Preparations of a kind used in animal feeding  
- Other  7.8  12.9  19.6  26.2  35.0  
190590  Bakers' wares,  
- Other  14.8  16.1  17.6  16.6  19.4  
220421  Wine of fresh grapes - Other wine; grape with 
fermentation prevented or arrested by the 
addition of alcohol: - In containers holding 2 
litres or less  12.8  13.7  15.1  14.2  15.3  
240220  Cigarettes containing tobacco  13.8  12.7  14.0  13.3  14.1  
090121  Coffee roasted: - Not decaf feinated  11.5  11.3  11.3  13.0  12.4  
190410  Prepared foods obtained by the swelling or 
roasting of cereals or cereal products  13.5  13.4  12.9  11.0  12.4  
210390  Sauces and preparations therefor; mixed 
condiments and mixed seasonings; mustard flour 
and meal and prepared mustard.  
- Other  10.9  10.9  10.8  10.5  11.2  
                                                
3 Jóhannesson, T. (2010), Agriculture in Iceland: Conditions and Characteristics. Agricultural University 
of Iceland, p. 15. Viewe d at: 
http://www.lbhi.is/sites/default/files/gogn/vidhengi/thjonusta/utgefid_efni/RitLbhi/Rit_31_ICELANDIC_AGRICU
LTURE.pdf  [May 2017].  
4 For the purposes of this section of the report, agricultural products are those set out in Annex I of the 
Agreement on Agriculture where fish and fish products are under HS 2012 headings 02840, 03, 050800, 
050900, 051191, 121229, 1504, 1603, 1604, 1605, and 230120. Trade in fisheries products is addressed in 
Section 4.2.2.  WT/TPR/S/361 /Rev.1 • Iceland  
 
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    2012  2013  2014  2015  2016  
220210  Waters, including mineral waters and aerated 
waters, containing added sugar or other 
sweetening matter or flavoured  6.2  6.8  7.2  8.2  9.1  
020230  Meat and edible meat offal - Meat of bovine 
animals, frozen  
- Boneless  2.4  2.7  7.7  7.5  7.7  
Source:  UNSD Comtrade . 
4.1.1.3   Agriculture policies  
4.6.  Agriculture policy is the responsibility of the Ministry of Industries and Innovation, which was 
formed in September 2012 by the amalgamation of  the Ministry of Fisheries and Agriculture, the 
Ministry of Industry, Energy and Tourism and part of the Ministry of Economic Affairs. In 
January  2008, the Icelandic Food and Veterinary Authority ( Matvælastofnun  - MAST) was 
established as an inspection and  administrative body with responsibilities that include: food safety; 
plant and livestock quality, and health -related matters; feed, seed, and fertilizer services; 
administration of organic production; and monitoring of animal welfare.5  
4.7.  The Farmers' Assoc iation of Iceland (BI) represents farmers in discussions and negotiations 
with the Government in developing general and sectoral policies as well as providing extension and 
advisory services to farmers through the Agricultural Consultation Centres (RML). B I's members 
are agricultural associations representing farmers in different regions and farming companies most 
of which represent specific agricultural sectors, such as the Association of Egg Producers, the 
Association of Poultry Farmers, the Association o f Sheep Farmers, and the Federation of Dairy 
Farmers.6   
4.8.  The overall objective of agriculture policy is to maintain and strengthen a diverse agricultural 
sector, as far as natural and marketing conditions allow. The main emphases of policy are: to meet 
domestic demand to the extent that this goal is realistic; to maintain sustainable production of 
high quality and healthy products; to improve efficiency and competitiveness; to improve farmers' 
incomes; to improve creativity and create job opportunities; and  to sustain livelihoods in rural 
areas.  
4.9.  The legal basis for agriculture policy is set out in several legislative acts, including:  
 Act No. 99/1993 (last amended in 2016) on Agricultural Produce, which sets out the 
policy framework, the legal basis for prod uction controls, and provisions for slaughter and 
processing, pricing and support measures; and  
 Act No. 70/1998 (last amended in 2016) on Agriculture, which provides the legal basis 
for development projects, extension services, and livestock improvements.7 
4.10.   Under Act No. 99/1993, the Government and the Farmers' Association of Iceland (BI) 
negotiate multiannual agreements on agricultural policy and support for agriculture. Following the 
expiration of the previous agreements between the Government and the Farm ers' Association, new 
agreements were concluded for the ten year period from 2017 to 2026 with extensive reviews in 
2019 and 2023. These agreements called for a revision of Act No. 99/1993, which entered into 
force on 1  January 2017. The agreements are imp lemented with regulations which include a 
general regulation on support for agriculture and three sector -specific regulations:  
 Regulation No. 1240/2016 on horizontal support for agriculture;  
 Regulation No. 1150/2016 on support for cattle;  
 Regulation No. 1234/2016 on support for horticulture; and  
 Regulation No. 1151/2016 on support for sheep.8 
                                                
5 MAST online information. Viewed at: http://www.mast.is/english/frontpage/about -mast/  [May 2017] . 
6 Farmers ' Association online information. Viewed at: http://www.bondi.is/um -bi/ [May 2017].  
7 Iceland Government, Legal Code, Chapter 34. Viewed at: 
http://www.althingi.is/lagasafn/kaflar/nuna/34.html  [May 2017].  WT/TPR/S/361 /Rev.1  • Iceland  
 
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  4.1.1.3.1   Trade policies  
4.11.   Tariffs on agricultural products (WTO definition) vary considerably within and among 
product groups averaging 20%, varying from zero to nearly 430%, a nd with a standard deviation 
of 41. Nearly 41% of the 1,990 tariff lines for agricultural products, and nearly all under 
HS headings 02 (meat an d edible meat offal) and 04 (dairy products, eggs, etc.) are non -ad 
valorem , mostly with ad valorem  and specific  duty components (Section 3.1.4).  
4.12.   Iceland reserved the right to use the special agricultural safeguard on 390 tariff lines but it 
has never applied it to any tariff line.9 
4.13.   According to a notification by Iceland to the WTO on imports under tariff quotas, Ic eland has 
nine minimum access quotas and 78 current access quotas. Out of the total of 87 tariff quotas, 
57 had imports greater than 100% of the tariff quota quantity in the year ending 30 June 2016 
and 59 in the year ending 30 June 2015. However, the noti fication also notes that, for a range of 
products under tariff quota commitments, the applied tariff for all imports is equal to, or less than 
the in -quota tariff although the notification lists all bound tariff quotas and the import level. 
Therefore, thes e quotas do not have a specific administration or allocation system.10 
4.14.   For other quotas, including quotas applicable under agreements with the European Union , 
Norway and Switzerland, the Ministry of Industries and Innovation posts invitations for applicatio ns 
for TQ allocations and the results of the allocations on its website.11  
4.15.   In June 2016, the Ministry of Industries and Innovation amended the system for 
administering the WTO tariff quotas for meat, butter, cheese, eggs and their products, and meat 
prepar ations by requesting applications for allocations for the six month period ending 
31 December  2016 instead of a twelve month period. Once awarded, an allocation is not 
transferrable.12  
4.16.   In September 2015, Iceland and the EU reached an agreement on trade in agricultural 
products, and the protection of geographical indications. Under the agreement, Iceland:  
 granted duty -free access for a range of agricultural products (mostly processed 
products but also live animals, and some fresh fruits and vegetables);  
 expanded existing tariff quotas for beef, pig meat, poultry, cheese, and certain meat 
products;  
 reduced tariffs on imports of meat, some vegetables, and some other products; and  
 provides protection for EU -listed GIs.  
4.17.   In return, under the Agreement, the EU gra nts duty -free access for a range of products and 
opens or expands tariff quotas, including an expansion of the existing quota for skyr from 380 to 
4,000 tonnes over four years.  
4.18.   According to the European  Commission, the agreement will mean that 99% of the v alue of 
trade in EU processed agricultural products and 91% of basic agricultural products will be duty free 
                                                                                                                                                  
8 Iceland Government Laws, regulations, online information. Viewed at: http://www.reglugerd.is/  
[May 2017].  
9 WTO documents: G/AG/N/ISL/38 , 18 May 2017 ; G/AG/N/ISL/34, 16 September 2014; 
G/AG/N/ISL/27, 27 July 2009; G/AG/N/ISL/23, 29 July 2003; G/AG/N/ISL/21, 30 October 2002; 
G/AG/N/ISL/18, 23 February 2001; G/AG/N/ISL/13, 26 January 1999; and G/AG/N/ISL/7, 15 July 1997.  
10 WTO document G/AG/N/ISL/37, 13 Dece mber 2016.  
11 Ministry of Industries and Innovation online information . Viewed at: 
https://www.atvinnuvegaraduneyti.is/verkefni/malaflokkar/ landbunadur/innflutningur -landbunadarafurda/  
[May 2017].  
12 Ministry of Industries and Innovation online information . Viewed at: 
https://www.atvinnuvegaraduneyti.is/sjavarutvegs -og-landbunadarmal/frettir/auglysing -um-wto-tollkvota -
vegna -innflutnings -a-kjoti-smjori -ostum -fuglseggjum -og-afurdum -theirra -og-unnum -kjotvorum  [May 2017].  WT/TPR/S/361 /Rev.1 • Iceland  
 
- 77 - 
 
  and Iceland will afford the same level of protection to the 1,150 agricultural products and 
foodstuffs on the GI list.13 
4.19.   According to the notificati ons by Iceland to the WTO, export subsidies for agricultural goods 
have not been provided since the year ending 31 August 1998.14 
4.1.1.3.2   Domestic policies  
4.1.1.3.2.1   Dairy and beef  
4.20.   A quota system for milk production was first introduced in 1980 based on individual 
non-transf errable quotas for milk producers and went through a number of reforms until, in 1992, 
the current system of freely transferable quotas was introduced and production subsidies were 
linked to the quota and paid directly to the farmer. The introduction of fr eely transferable quotas 
resulted in a considerable level of trade in quotas and concentration of production: between 1995 
and 2005 the number of dairy farmers fell by 50% and average production per farm increased by 
100%.15  
4.21.   Regulation No. 1150/2016 and th e Agreement on the operating environment for the cattle 
sector represent a change in policy for dairy and cattle farming in Iceland.16 The Agreement states 
that the 2019 revision will consider the feasibility of abolishing production quotas, based on a vote  
by milk producers. Furthermore, the system of "support entitlements" (basic payments to all active 
dairy and cattle farmers) is to be phased out over the duration of the Agreement while payments 
per litre of milk produced are to be de -linked from support entitlements and increased while a new 
system for supporting beef production is introduced.  
4.22.   The total production quota for milk for 2017 was set at 144 million litres which is divided 
among the individual quota holders. Production in excess of the quota mu st be exported (Article 11 
of Regulation No. 1150/2016). Payments to farmers are made in equal monthly payments of one -
twelfth of annual quota.  
4.23.   Minimum prices paid by dairies for milk delivered within the production quota are decided by 
the government -chaired Agricultural Pricing Committee (Verdlagsnefnd buvara) which includes 
representatives of the Farmers' Association and, on behalf of consumers, the labour union. Since 
1 January 2017, the minimum price has been ISK 87.40 per litre.  
4.24.   In addition to payment s for milk delivered to dairies, headage payments are provided for 
dairy and beef cows, initially for a total of 25,000 dairy and 3,000 beef cows with the number 
revised annually. The payment per cow is subject to a reduction factor depending on the number  
of cows on the farm.  
4.25.   Other programmes covered by the Regulation and Agreement include a breeding 
programme, investment aids, measures to help balance production and demand, and support for 
beef production. The measures to balance production and demand are  discretionary and are to be 
allocated when there is a need to respond to changes in supply and demand. These measures 
could include improved marketing of cattle products, support for diversification, temporary farm 
support, and compensation for slaughteri ng. The measures for beef production include a slaughter 
premium and ISK 100 million in 2017 for a quarantine facility for imports of genetic material 
(Table 4.3).  
                                                
13 DG GROW online information. Viewed at: http://ec.europa.eu/growth/tools -
databases/newsroom/cf/itemdetail.cfm?item_id=84 59&lang=en  [May 2017].  
14 WTO documents: G/AG/N/ISL/39, 18 May 2017 ; G/AG/N/ISL/35, 16 September 2014; 
G/AG/N/ISL/28/Add.1, 31 July 2009; G/AG/N/ISL/28, 27 July 2009; G/AG/N/ISL/17/Rev.1, 26 August 2003; 
G/AG/N/ISL/17, 28 February 2001; G/AG/N/ISL/15/Corr. 1, 8 September 1999; G/AG/N/ISL/15, 
2 September  1999; G/AG/N/ISL/10, 13 March 1998; and G/AG/N/ISL/6, 9 June 1997.  
15 Bjarnadottier E, Kristofersson DM (2008), The cost of the Icelandic transferable dairy quota system , 
Icelandic Agricultural Sciences, 21 -2008. Viewed at: 
http://www.ias.is/landbunadur/wgsamvef.nsf/key2/iascontents  [May 2017].  
16 Ministry of Industries and Innovation online information. Viewed at: 
https://www.atvinnuvegaraduneyti.is/media/Acrobat/Cattle -Sector -Agreement ---English.pdf  [May 2017].  WT/TPR/S/361 /Rev.1  • Iceland  
 
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  Table 4.3 Dairy an d beef cattle support , 2017 -26 
ISK million  
 2017  2018  2019  2020  2021  2022  2023  2024  2025  2026  
Support entitlements  1,942  1,934  1,927  1,633  1,355  1,074  798  527  260  -    
Milk payments  2,629  2,619  2,609  2,688  2,949  3,193  3,431  3,665  3,894  4,117  
Headage – dairy cows  1,175  1,171  1,166  1,298  1,293  1,282  1,271  1,259  1,248  1,237  
Headage – beef cows  141  140  140  156  155  154  152  151  150  148  
Production -demand 
balance  99  98  98  97  97  96  95  94  93  92  
Breeding  197  196  196  193  193  191  189  188  186  184  
Investment aid  193  192  191  189  188  187  185  183  182  180  
Beef production  173  98  121  143  166  186  184  182  181  179  
Total  6,550  6,449  6,448  6,398  6,396  6,363  6,305  6,249  6,193  6,138  
Source:   Agreement on the operating environment for the cattle sector, Annex I . 
4.26.   The 2016 amendments to Act No. 99/1993 included a provision to change the specific duties 
for certain cheese and milk powder products17 based on changes to the SDR/ISK exchange rate 
from 1995 to 2016 effective from 1 March 2017 and annually thereafter based on the annual 
change in the exchange rate.18  This resulted in a reduction in the specific duty component of the 
tariff on these products as the ISK had appreciated relative to the SD R, for example, the tariff on 
HS 0406 2000 (grated or powdered cheese) was 30% + 715 ISK/kg which was reduced to 30% + 
635 ISK/kg.  
4.1.1.3.2.2   Sheep  
4.27.   Programmes relating to sheep production are set out in the Agreement on the operating 
environment for the sheep sector and Regulation No. 1151/2016 on support for sheep.  
4.28.   As for dairy farming, the support entitlements for sheep farming are to be phased out by 
end-2025 and replaced by quality assurance premiums for farmers for sheep meat meeting 
requirements relating to, inter alia , animal welfare, sustainable land use, and quality.  
4.29.   Headage payments for winter -fed sheep will be introduced from 1 January 2020 with higher 
payments for new entrants. In addition, starting in 2018, farm support payments, also based on 
the number  of winter -fed sheep, will be paid to producers keeping over 100 winter -fed sheep. The 
farm support payments range from ISK 20,000 for farms with 101 -120 sheep up to a maximum of 
ISK 320,000 for farms with more than 800 sheep.  
4.30.   In addition, support under th e Agreement is also available for wool production, regional 
support for some regions, investment aid, and promotion of higher value sheep products ( Table 
4.1). 
Table 4.4  Support for sheep farming , 2017 -26 
ISK million  
 2017  2018  2019  2020  2021  2022  2023  2024  2025  2026  
Support entitlements  2,506  2,267  2,205  1,944  1,635  1,319  1,046  777  422  .. 
Quality assurance 
premiums  1,714  1,679  1,674  1,652  1,816  1,970  2,120  2,268  2,504  2,482  
Headage paymentsa 20  .. .. 95  225  355  445  534  621  1,033  
Farm support   194  242  239  238  235  233  231  229  227  
Utilization of wool  446  437  436  430  428  424  420  417  413  409  
Investment aid  .. 48  48  95  95  94  93  93  92  91  
Regional support  99  145  145  143  143  141  140  139  138  136  
Higher value sheep 
products  148  145  145  95  95  94  93  93  92  91  
                                                
17 HS headings 0402 1010, 0402 1090, 0402 2100, 0402 2900, 0402 9100, 0402 9900, 0406 2000, 
0406 3000, 0406 4000, and 0406 9000.  
18 Act No. 102/2016 amending Agricultural Products Act, the Equipment Act, Customs Act and Animal 
Welfare Act, Article 53.  WT/TPR/S/361 /Rev.1 • Iceland  
 
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   2017  2018  2019  2020  2021  2022  2023  2024  2025  2026  
Total  4,932  4,916  4,896  4,694  4,675  4,633  4,591  4,550  4,510  4,470  
.. Not available.  
a Headage payments in 20 17 relate to residual payments under an earlier scheme . 
Source:  Agreement on the operating environment for the sheep sector, Annex I . 
4.1.1.3.2.3   Horticulture  
4.31.   The programmes relating to horticulture are set out in the Agreement on the operating 
environment for the horticultur e sector  and Regulation No. 1234/2016 on support for horticulture.  
4.32.   Under the Agreement, producers of tomatoes, cucumbers and bell peppers are supported by 
direct payments based on estimates of production which may be adjusted depending on actual 
production. In addition, electricity subsidies are available for illumination of greenhouses (which 
are heated by geothermal energy) of up to 95% of the cost of the transfer and distribution of 
electricity ( Table 4.5). 
Table 4.5  Support for horticulture , 2017 -26 
ISK million  
 2017  2018  2019  2020  2021  2022  2023  2024  2025  2026  
Direct paymentsa 274 273 272 268 267 265 263 260 258 256 
Electricity subsidies  278 278 278 278 278 278 278 278 278 278 
Total  551 550 549 546 545 543 540 538 535 533 
a Direct payments are for tomatoes (49%), cucumbers (37%), and bell peppers (14%) . 
Source:  Agreement on the operating environment for the horticulture sector, Annex I . 
4.1.1.3.2.4   Other policies and sectors  
4.33.   In addition to support under sector -specific agreements and regulations for dairy, beef, 
sheep, and horticulture, there is a separate Agreement on the general operating environment for 
the agricultural sector and Regulation No. 1240/2016 on public support for agriculture.  
4.34.   In addition to several programmes for agriculture in general, the Agreement and Regulation 
include sector -specific programmes for pig and goat farming, and forestry. The general 
programmes include advisory services, breeding projects, the Gene tic Resource Council, 
vegetation resources, new entrants (recruitment), and rural employment under the Agricultural 
Productivity Fund. In addition, the programme for land cultivation provides subsidies for cultivated 
land, including cultivation of forage c rops.  
4.35.   Under Regulation No. 1240/2016, support for goat farming is divided among headage 
payments (up to 60% of the total), slaughter premiums (up to 17% of the total), goat -milk 
subsidies (up to 8% of the total), and support for breeding (up to 15% of the  total). Support for 
pig farming includes subsidies to improve pig housing including investment support for new 
construction and the demolition of existing buildings.  
Table 4.6  General operating environment f or agriculture , 2017 -26 
ISK million  
 2017  2018  2019  2020  2021  2022  2023  2024  2025  2026  
Advisory services  519  503  486  467  450  432  414  396  378  356  
Breeding projects  60  59  59  58  58  58  57  57  56  56  
Land cultivation payments  369  366  365  361  359  356  353  350  347  344  
Agricultural productivity 
fund 128  128  128  128  128  128  128  128  128  128  
Agricultural development 
projects  92  91  91  90  90  89  88  87  86  86  
Organic production  35  34  34  34  34  33  33  33  33  32  
Farmland payments  247  246  245  342  341  339  337  335  333  331  
Assessment of vegetation 
resources  30  30  29  29  29  29  28  28  28  28  
Recruitment  128  127  126  125  124  123  122  121  120  119  WT/TPR/S/361 /Rev.1  • Iceland  
 
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   2017  2018  2019  2020  2021  2022  2023  2024  2025  2026  
Genetic Resource Council  7  7  7  7  7  7  7  7  7  6  
Investment subsidies for 
pig farming  99  98  98  97  48  -    -    -    -    -    
Goat farming  15  15  15  15  14  14  14  14  14  14  
Forestry products  15  15  15  15  14  14  14  14  14  14  
           
Total  1,743  1,719  1,699  1,766  1,697  1,622  1,595  1,569  1,542  1,516  
Source:  Agreement on the operating environment for the cattle sector, Annex I . 
4.1.1.3.3   Domestic support levels  
4.1.1.3.3.1   WTO notifications  
4.36.   In September 2014, Iceland provided a notification to the WTO on domestic support for the 
calendar years 2004 to 201219 and in May 2017, a notification on domestic support for calendar 
years 2013 to 2015.20 For this Report, the Ministry of Industries and Innovation also provided 
estimates for 2016. In current Icelandic króna  terms, support under the Amber  Box increased 
steadily from 2004 to 2016, apart from a decline in 2015 before growth resumed in 2016 when it 
reached ISK 21,265 million. Throughout 2004 -16, most Amber Box support was to dairy farmers 
from direct payments (ISK 5,622 million in 2016) and m arket price support (valued at ISK  12,874 
million in 2016). The market price support element is based on the difference between the 2016 
applied administered price of ISK 103.2 per kg and the external reference price of ISK  6.30 per kg 
(from supporting tab les to Iceland's Uruguay Round commitments21). In comparison, the external 
reference price used in the OECD's estimates of support was ISK  36.95/kg in 2015.  
4.37.   Total support under the Green Box in 2016 was ISK 5,807 million, most of which was for 
general servi ces and decoupled income support. Since 2004, Green Box support has fluctuated 
although, after a fall in 2011 compared to 2010, it followed an upward trend to 2016. Blue Box 
support started in 2006 and, after an initial peak in 2007, increased steadily to ISK 670 million in 
2016. All Blue Box payments are for bovine animals ( Chart 4.1). 
                                                
19 WTO document G/AG/N/ISL/33, 10 September 2014 . 
20 WTO document G/AG/N/ISL/40, 2 2 May 2017 . 
21 WTO document G/AG/AGST/Vol.2, 22 March 1995 . WT/TPR/S/361 /Rev.1 • Iceland  
 
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  Chart 4.1 Domestic support notifications , 2004 -16 
ISK million  
 
Source:  WTO Secretariat based on WTO notifications . 
WT/TPR/S/361 /Rev.1  • Iceland  
 
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  4.1.1.3.3.2   OECD monitoring and evaluation of agricultural policies  
4.38.   Compared to the methodology used to calculate the level of support provided under the 
Amber, Blue, and Green Boxes in the WTO, the OECD's annual monitoring and evaluation reports 
on agricultural policies in OECD countries use a different methodology to calculate the value of 
support which is expressed in a number of indicators, including: the Producer  Support Estimate 
(PSE) for gross transfers from consumers and tax payers to agricultural producers; the Total 
Support Estimate (TSE) for transfers to the agricultural sector in general; and the Single 
Commodity Transfers (SCT) for transfers to specific commodities. As previously noted, the PSE 
represents the valu e of transfers to producers, unlike support under the Amber Box, Blue Box and 
Green Box which measure compliance with WTO commitments. Therefore, the value of support as 
notified to the WTO is neither compatible nor comparable with the values calculated by  the 
OECD.22 
4.39.   According to the OECD, the TSE had been relatively stable from 2006 to 2013, but then 
increased in the following two years reaching nearly ISK 27 billion in 2015, compared to a total 
value of production of ISK 34 billion. While the TSE represen ts total transfers to producers, 
including government support for research, the PSE represents total transfers to producers 
resulting from government policies , and the PSE, at nearly ISK 26 billion in 2015, accounted for 
most of the TSE. At 56% of gross fa rm receipts, the PSE for Iceland was the third highest among 
OECD countries.23 Market price support, which is largely the result of high tariffs and high 
domestic prices, was the main element of support ( Chart 4.1). 
Chart 4.2  OECD estimates of support to agriculture , 2004 -15 
ISK million  
 
Source:  OECD Producer and Consumer Support Estimates database. Viewed at: 
http://www.oecd.org/chile/producerandconsumersupportestimatesdatabase.htm  [March 2017].  
4.40.   The degree of support to producers from high domestic prices is reflected in the Producer 
Nominal Protection Coefficient (NPC ), where a coefficient greater than one indicates the degree to 
                                                
22 WTO document WT/TR/S/284/Rev.2, 28 November 2013, paragraph 4.34.  
23 OECD (2016), Agricultural Policy Monitoring and Evaluation 2016 , OECD Publishing, Paris , p. 44. 
Viewed at: http://dx.doi.org/10 .1787/agr_pol -2016-enOECD  [March 2017].  
WT/TPR/S/361 /Rev.1 • Iceland  
 
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  which domestic prices exceed the reference price. In Iceland, the Producer NPC varies from one 
commodity to another and averages 2.02 overall – indicating that, on average, domestic prices of 
supported commodities are twice the external price.  
4.41.   Most support for agriculture is provided to specific commodities, as shown by the Specific 
Commodity Transfers (SCT) to producers ( Chart 4.2). In terms of gross farm receipts, the SCT 
varies from 73% for poultry meat to 28% for beef (Table 4.7).  
Table 4.7 OECD indicators for support to agriculture in Iceland, 2009 -15 
(ISK million (except producer NPC))  
 2009  2010  2011  2012  2013  2014  2015  
Total         
 Value of production  23,981  24,933  27,008  30,447  32,004  33,956  34,429  
 TSE 17,452  16,484  17,433  20,254  18,913  23,455  26,979  
 PSE 16,144  15,184  16,217  18,928  17,901  22,401  25,884  
 SCT 15,735  14,781  16,064  18,629  17,509  22,130  25,575  
 MPS 6,836  5,540  6,443  8,500  6,762  11,141  14,361  
 Producer NPC  1.68  1.54  1.56  1.63  1.50  1.75  2.02  
Milk        
 Value of production  9,106  9,030  9,618  9,280  9,697  10,909  11,756  
 SCT 8,256  7,103  7,747  8,752  7,061  9,927  12,390  
 MPS 3,072  1,722  2,103  2,826  966  3,649  6,030  
 Producer NPC  2.27 1.88 1.93 2.24 1.72 2.26 3.02 
Sheep meat         
 Value of production  3,322  3,708  4,608  5,192  5,571  5,742  5,541  
 SCT 3,331  3,433  3,563  3,770  3,875  3,977  4,041  
 MPS 0.00 0.00 0.00 0.00 0.00 0.00 0.00 
 Producer NPC  1.00 1.00 1.00 1.00 1.00 1.00 1.00 
Poultry meat         
 Value of production  2,244  2,251  2,650  3,299  3,435  3,500  3,720  
 SCT 1,555  1,590  1,840  2,356  2,420  2,578  2,706  
 MPS 1,555  1,546  1,810  2,335 2,416  2,577  2,702  
 Producer NPC  3.26 3.19 3.15 3.42 3.37 3.79 3.65 
Pork         
 Value of production  1,798  1,749  2,188  2,449  2,758  2,783  2,777  
 SCT 162  375  658  821  990  1,208  1,242  
 MPS 162 374 657 818 990 1,208  1,242  
 Producer NPC  1.10 1.27 1.43 1.50 1.56 1.77 1.81 
Beef        
 Value of production   1,605  2,228  1,986  2,235  2,382  2,307  2,528  
 SCT  136  300  146  154  158  532  744  
 MPS  -    161  -    -    -    369  579  
 Producer NPC  1.00 1.08 1.00 1.00 1.00 1.19 1.30 
Note: Total support estimate (TSE) is the annual monetary value of all gross transfers from taxpayers and  
consumers arising from policy measures that support agriculture, net of associated budgetary 
receipts, regardless of their objectives and impacts on far m production and income, or consumption 
of farm products.  
 Producer support estimate (PSE) is the annual monetary value of gross transfers from consumers 
and taxpayers to agricultural producers, measured at the farm -gate level, arising from policy 
measures  that support agriculture, regardless of their nature, objectives or impacts on farm 
production or income.  
 Single commodity transfer s (SCT) is the annual monetary value of gross transfers from consumers 
and taxpayers to agricultural producers, measured at  the farm -gate level, arising from policy 
measures directly linked to the production of a single commodity such that the producer must 
produce the designated commodity in order to receive the transfer.  
 Market price support (MPS) is an indicator of the ann ual monetary value of gross transfers from 
consumers and taxpayers to agricultural producers arising from policy measures creating a gap 
between domestic producer prices and reference prices of a specific agricultural commodity 
measured at the farm -gate le vel. 
 The Producer Nominal Protection Co -efficient (Producer NPC) is an indicator of the nominal rate of 
protection for producers measuring the ratio between the average price received by producers (at 
farm-gate), including payments per tonne of current ou tput, and the border price (measured at 
farm-gate level).  
Source:  Icelandic authorities and OECD Producer and Consumer Support Estimates database. Viewed at: 
http://ww w.oecd.org/chile/producerandconsumersupportestimatesdatabase.htm  [March 2017].  WT/TPR/S/361 /Rev.1  • Iceland  
 
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  4.1.2   Fisheries  
4.1.2.1   Features  
4.42.   Fisheries are an important part of the economy of Iceland contributing over 5% to GDP in 
2015, with fish processing contributing an additional 3.1%. In 2014,  4,400 people were employed 
in fishing and 4,700 in fish processing.  
4.43.   The value of the total catch was ISK 133 billion in 2016, down from a peak of 
ISK 159 billion in 2012. Cod remains the most important species in terms of value, representing 
nearly 44% of  total value of catch in 2016, while mackerel has increased in importance, from 
negligible levels in 2005 to ISK 18 billion in 2011 and ISK 11 billion in 2016 ( Table 4.8). Of the 
total value of catch of ISK 151 billion in 2015, IS K 137 billion was caught in Iceland's 200 mile 
EEZ.24  
Table 4.8 Fisheries in the economy , 2010 -16 
  2010  2011  2012  2013  2014  2015  2016  
Contribution to GDP 
(%)         
 Fishing and 
aquaculture  % 6.3 6.6 6.5 5.6 5.0 5.1 4.6 
 Fish processing  % 3.5 4.0 4.0 4.0 3.2 3.2 2.7 
Number employed          
 Fishing  persons  5,300  5,200  4,900  3,600  4,400  .. .. 
 Fish processing  persons  3,300  3,800  4,200  5,000  4,700  .. .. 
Value of catch           
 All species  ISK million  132,979  153,872  159,273  152,752  136,310  151,301  133,021  
 Cod  ISK million  44,582  46,387  49,506  47,341  53,040  60,964  58,002  
 Redfish  ISK million  12,016  14,973  14,536  13,876  13,167  13,443  11,122  
 Mackerel  ISK million  7,824  17,846  14,433  15,403  15,264  10,360  10,897  
 Haddock  ISK million  15,236  11,992  12,212  12,097  10,336  11,467  9,279  
 Saithe  ISK million  8,480  9,139  9,448  9,805  7,872  9,529  8,477  
 Greenland halibut  ISK million  6,682  7,635  8,396  7,796  5,144   7,463  6,810  
Quantity of catch          
 All species  000 tonnes  1,063.47  1,148.87  1,448.55  1,362.79  1,076.87  1,319.40  1,067.36  
 Cod  000 tonnes   178.52  182.03  204.65  236.05  237.76  243.87  264.15  
 Redfish  000 tonnes   56.31  56.78  55.42   60.37  57.61  58.09  63.53  
 Mackerel  000 tonnes   122.03  158.64  151.94  153.81  170.46  168.25  169.86  
 Haddock  000 tonnes   64.95  51.30  47.68  45.47  35.81  40.71  38.47  
 Saithe  000 tonnes   53.89  50.49  50.98  57.42  46.05  48.17  49.62  
 Greenland halibut  000 tonnes   13.31  13.21  13.76  15.00  9.91  12.45  12.73  
.. Not available  
Source:  Statistics Iceland.  
4.44.   After several years of decline up to 2008, the fishing fleet increased and has remained 
relatively stable since 2012. However, mos t of the increase between 2008 and 2012 was in small 
undecked vessels which account for a small portion of the total catch. The numbers in other size 
categories have declined or remained stable (Chart 4.3 and Chart 4.4). In addition there are two 
registere d whaling vessels although neither was active in 2016.  
                                                
24 Statistics Iceland online database . Viewed at:  https://www.statice.is/  [May 2017].  WT/TPR/S/361 /Rev.1 • Iceland  
 
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  Chart 4.3 Number of fishing vessels by size category , 2005 -16 
 
Source:  Statistics Iceland.  
4.45.   Although the majority of vessels a re less than 10 GT or undecked, these categories account 
for a relatively small amount of the value and volume of catch , while the 45 vessels (including 
trawlers) of over 1,000 GT account for two -thirds of the volume of catch. In terms of value, 
vessels un der 1,000 GT account for over half the value of total catch as they specialize in 
higher -value -per-kilogram fish ( Chart 4.4). This reflects that the largest vessels hold most of the 
quotas in small pelagics, i.e. capelin, herring and mackerel, while the higher -value species are 
mostly demersal, including cod.  
Chart 4.4 Volume of catch by vessel size category , 2005 -15 
 
Source:  Statistics Iceland.  
4.46.   In terms of  fish processing, several long -term trends appear to have come to an end in the 
2010-17 period. The quantity of fish for oil and fishmeal production, which had been in steady 
decline since the early 2000s when it accounted for about two -thirds of total fis h processing, has 
fluctuated since 2010 reflecting reductions in capelin catch which had been mostly used for meal 
WT/TPR/S/361 /Rev.1  • Iceland  
 
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  and oil production. On the other hand, the quantity of frozen fish had increased steadily to over 
half of the total by 2010 , but has since de clined to 40% in 2015 ( Chart 4.5). According to the 
authorities, the change from long -term trends in the mid -2000s is due to climate change and 
mackerel and capelin stocks moving further north.  
Chart 4.5  Fish processing , 2000 -15 
Tonnes  
 
Source:  Statistics Iceland.  
4.47.   Aquaculture is much smaller than the capture subsector but it has been growing 
significantly in recent years. In 2016, about 15,000 tonnes of fa rmed fish were produced – an 
increase of 80% compared to 2015. Salmon are the main species produced (8,000 tonnes) 
followed by Arctic char (4,200 tonnes).  
Table 4.9 Aquaculture production , 2010 -16 
Tonnes  
 2010  2011  2012  2013  2014  2015  2016  
        
Atlantic salmon  1,068  1,083  2.923  3,018  3,965  3,260  8,000  
Arctic char  2,427  3,021  3,089  3,215  3,471  3,937  4,200  
Rainbow trout  88 226 422 113 603 728 2,500  
Tilapia  0 2 0 1 0 1 1 
Cod 1,317  877 892 282 310 72 0 
Halibut 72 33 13 0 0 0 0 
Turbot  46 20 28 58 0 0 0 
Senegal sole  0 0 0 0 0 290 500 
Source:  Icelandic Aquaculture Association. Viewed at: http://www.lf.is/is/hagtolur/  [May 2017].  
WT/TPR/S/361 /Rev.1 • Iceland  
 
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  4.1.2.2   Trade  
4.48.   According to UN Comtrade,  total exports of fish and fish products were US$ 1,925 million in 
2016, representing 43% of exports of goods, while imports were US$ 134 million.25 Furthermore, 
imports of some products, such as shrimp, are processed in Iceland and the processed products 
exported. Thus, in 2016, US$  44 million in frozen shrimp (HS 030616) were imported and 
US$ 78 million of prepared shrimp (HS 160521) were exported. The applied tariff on imports of all 
fish and fisheries products is zero, except for imports of meat of whale s and other cetaceans, 
which are subject to an applied tariff of 30% plus ISK 363/kg.  
4.49.   According to Statistics Iceland, total exports of fish and fish products were ISK 265 million 
in 2015. Exports of cod and products of cod have traditionally been greatest , at ISK  100 million in 
2015, followed by capelin, redfish, and haddock. Changes in the value of exports have been driven 
by changes in prices more than changes in quantities, for example, the value of shrimp exports 
more than doubled from 2007 to 2015, wh ile the quantity exported fell by nearly one -third ( Table 
4.10). 
Table 4.10 Exports of fish products , 2007 -15 
 
Value ISK million, quantity  000 tonnes  
 2007  2008  2009  2010  2011  2012  2013 2014  2015  
All species           
 Value  127.6  171.3  208.6  220.5  251.6  268.6  272.5  244.0  264.6  
 Quantity  619.5  696.9  668.9  632.0  672.2  748.6  785.7  654.5  631.9  
Cod          
 Value  49.6 59.5 75.5 72.5 77.2 83.1 87.8 89.6 100.5  
 Quanti ty 100.7  88.3  109.5  95.8  94.7  100.6  120.8  117.8  121.7  
Capelin           
 Value  9.9  10.3  2.9  12.4  18.3  29.7  33.8  15.3  29.1  
 Quantity  103.9  75.6  17.9  57.2  99.8  177.7  181.7  76.3  115.7  
Redfish           
 Value  8.2  11.7  16.0  16.5  19.4  19.3  17.6  14.7  15.0  
 Quantity  43.9  47.4  45.4  42.3  38.5  37.5  39.4  34.6  33.5  
Haddock           
 Value  16.6  19.8  20.3  19.2  16.1  16.4  15.7  13.2  14.7  
 Quantity  47.5  53.1  42.0  30.5  22.9  20.9  19.4  15.1  16.0  
Shrimp           
 Value  6.4  9.2  9.8  11.3  11.3  11.1  9.4  10.7  14.2  
 Quantity  15.6  17.6  12.6  15.0  12.2  10.5  9.0  9.3  9.4  
Saithe           
 Value  6.0  8.9  12.1  12.6  12.6  12.5  13.5  11.9  12.9  
 Quantity  29.8  29.9  30.2  27.4  24.2  23.2  27.2  22.9  20.8  
Mackerel           
 Value  0.0  0.6  2.4  8.5  24.1  19.6  21.3  23.7  12.7  
 Quantity  0.1  3.6  13.2  53.7  109.6  106.7  112.6  130.1  85.5  
Herring           
 Value  9.2  18.8  25.7  20.7  24.1  25.6  23.5  17.4  10.5  
 Quantity  140.3  183.6   208.9  159.7  129.7  114.7  116.9  91.0  56.2  
Greenland halibut           
 Value  2.5  3.9  8.2  7.3  8.0  9.5  10.3  7.1  9.8  
 Quantity  8.3  8.7  12.5  9.8  9.5  11.3  13.9  10.2  11.2  
Blue whiting           
 Value  2.7  3.4  3.3  3.6  0.4  2.8  3.1  6.7  7.4  
 Quantity  38.6  45.8  32.2  29.5  3.5  27.1  16.5  35.3  40.6  
Source:  Statistics Iceland.  
4.50.   The main destination for exports is the United Kingdom (18.3% of total exports of fish), 
followed by Spain (8.8%), France (8.8%), Norway (7.6%), and t he United States (6.9%). 
However, the authorities noted that some of the larger fish exporters export to large cold stores 
and the fish products may then be re -exported to other countries , but they do not have data on 
these re -exports.  
                                                
25 For the purposes of this paragraph, fish and fish products are those under HS 2012 headin gs 02840, 
03, 050800, 050900, 051191, 121229, 1504, 1603, 1604, 1605, and 230120. Trade in agricultural products is 
addressed in Section 4.1.1.  WT/TPR/S/361 /Rev.1  • Iceland  
 
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  4.1.2.3   Policies  
4.51.   The Departm ent of Fisheries and Innovation in the Ministry of Industries and Innovation is 
responsible for developing policies and preparing legislation. The Directorate of Fisheries, which is 
run as a separate entity within the Ministry, is responsible for implement ing government policy, 
running the management system, monitoring and controlling  fishing activities, collecting data, and 
imposing penalties for illegal catches. The Icelandic Coast Guard's responsibilities include 
inspection, control , and enforcement of t he laws at sea. The Marine and Freshwater Research 
Institute (MRFI) in the Ministry is responsible for research and advising the Government on 
sustainable use of marine resources. Both the directorate and the MRFI provide information on 
fisheries to the au thorities, the fishing sector, and the public in their respective fields.26 The main 
stakeholders in the industry include Fisheries Iceland (which was formed in 2014 from the merger 
of the Federation of Icelandic Fishing Vessel Owners and the Federation of Icelandic Fish 
Processing Plants), and the National Association of Small Boat Owners. These stakeholders 
represent the fisheries and processing industries in policy discussions with the Ministry.27   
4.52.   The principal legislation regulating fishing in Iceland i ncludes:  
 Act No. 116/2006 (last amended 2016) on Fisheries Management;  
 Act No. 71/2008 (last amended 2015) on Aquaculture;  
 Act No. 151/1996 (last amended 2012) on Fishing Outside Icelandic Jurisdiction;  
 Act No. 57/1996 (last amended 2015) on the Treatment  of Commercial Marine Stocks; 
and 
 Act No. 74/2012 (last amended 2015) on Fishing Fees.  
4.53.   Under these acts, the Ministry issues numerous regulations (58 in 2016) which provide 
details for many of these laws including setting catch quotas.  
4.54.   The Fisheries Manage ment Act consolidated most of the existing legislation on fisheries 
management, including Act No. 38/1990 on Fisheries Management. The Act states that fish 
resources are the property of the nation and that the policy objective is to promote conservation 
and efficient utilization of these resources to ensure stable employment and settlement. The Act 
provides the legal basis for the Minister to establish, through regulations, total allowable catches 
(TACs) for individual marine stocks which are allocated to i ndividual vessels under the individual 
transferable quota (ITQ) systems. There are two quota systems: the general system; and a 
system that applies to small boats (less than 15 GRT) which may only fish with hand lines or 
longlines. The Ministry reserves pa rt of the TACs for fishing companies that have been affected by 
significant shocks due to a fall in catches or quotas and for vessels from disfavoured areas that are 
heavily dependent on fishing.28 
4.55.   The MRFI is responsible for assessing marine stocks and the se assessments are reviewed by 
the International Council for the Exploration of the Sea (ICES). Based on these assessments, the 
Ministry establishes a TAC for each species.  
4.56.   For some fish stocks that are shared with other countries, international and/or bil ateral 
agreements may apply and under them Iceland has a quota share:   
 Iceland is a contracting party to the Northeast Atlantic Fisheries Commission (NEAFC) 
that administers stocks in the international area in the Northeast Atlantic. Icelandic 
vessels fis h blue whiting, North east Atlantic mackerel, Atlanto -Scandian (Norwegian 
spring -spawning) herring, and deep -sea redfish in the NEAFC convention area;  
                                                
26 Marine Research Institute online information. Viewed at: http://www.hafro.is/undir.php?ID=1&REF=1  
[May 2017].  
27 Fisheries Iceland online information. Viewed at: http://www.sfs.is/english/more/general -information  
[May 2017].  
28 Directorate of F isheries (2010), The Icelandic Directorate of Fisheries – Responsibilities and main 
tasks. Viewed at: http://www.fiskistofa.is/media/utgefid_efni/DOF.pdf  [May 2017].  WT/TPR/S/361 /Rev.1 • Iceland  
 
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   Iceland has an agreement with the Russian Federation and Norway for fishing cod in the 
Barents Sea, subjec t to a TAC;  
 Iceland is a contracting party to the International Commission for the Conservation of 
Atlantic Tuna (ICCAT) and has a quota share for East  Atlantic blue fin tuna; and  
 Iceland is a contracting party to the Northwest Atlantic Fisheries Organizat ion (NAFO) 
and has a share in the northern shrimp catch.  
4.57.   The TACs established by the Ministry and the international/bilateral arrangements are 
distributed among ITQ holders and assigned to specific vessels. The system covers all economically 
important spec ies, about 95 -97% of total catch in value terms.  
4.58.   In addition to the TAC and ITQ system , a number of other effort and gear restrictions apply 
including permanent closure of nursery areas; closure of spawning areas for cod during the 
spawning period; tempora ry closure of areas with excess juveniles; a 12 -mile exclusion limit for 
large trawlers; and mesh -size limits and other equipment -related measures to reduce by -catch 
and catch of juveniles.  
4.59.   After the TAC for the fishing year is decided, 5.3% of the allowab le catches of all species is 
deducted and reserved, inter alia : for support for rural communities deemed to be in a 
"vulnerable" position regarding population development; for coastal fisheries; and for areas that 
experience a sudden or drastic decline in fishing opportunities.  
4.60.   With a stated aim of reinforcing regional settlement, a coastal fisheries option was initiated 
within the fisheries management system in 2008. The coastal fisheries operate in  the summer 
months (May to August) with a common pool quo ta. The total pool quota is allocated for each 
month for four geographical regions. The vessels that can apply for a coastal licen ce are small 
vessels using hand lines only, fishing mostly cod, haddock and saithe. Coastal fishing boats are not 
allowed to t ake part in the general commercial part of the management system during the coastal 
operational season. In 2016 , the total quota for the coastal fisheries amounted to 8,600 tonnes of 
demersal species.  
4.61.   Discards of commercial species are prohibited and all catches of commercial species must 
be retained and landed.29 Furthermore, vessel owners may not leave port to fish unless they have 
an adequate quota for the trip.  
4.62.   Each landing must be registered and information on the catch sent to the Directorate of 
Fisheries, with about 85,000 landings registered each year. There are several flexibility options 
within the system to support the landing obligation including provisions for transferring quota to 
the following year (up to 15%), and for catching in excess of qu ota (5%, which is taken from the 
following year's quota).  
4.63.   Under the ITQ system, up to 50% of a quota may be transferred to (an)other vessel(s) in 
any year, and the quota is lost if the vessel catches less than 50% of total quota for two 
successive years. There are limits to the amount of quota which any single fishing company, or 
group of companies linked by ownership may own: 12% of the quota share for cod; 20% for 
haddock, saithe and Greenland halibut; 35% for redfish; 20% for herring and capelin; and 20 % for 
offshore shrimp. Furthermore, a fishing company or a group of linked companies is not permitted 
to hold more than 12% of the value of the combined quota shares for the stocks utilized by TAC 
allocations.30 However, consolidation of quotas has continue d, with the ten largest quota holders 
responsible for 50% of the total of all TACs (measured in cod equivalents) and the twenty largest 
responsible for 71%.31 
                                                
29 TACs and quotas are available online from the Directorate of Fisheries at: 
http://www.fiskistofa.is/english/quotas -and-catches/  [May 2017].  
30 Icelandic Fisheries online information. Viewed at: http://www.fis heries.is/management/fisheries -
management/individual -transferable -quotas/  [May 2017] . 
31 Runólfsson, B (2016), The Icelandic ITQ system – development and prospects , University of Iceland, 
Faculty of Economics, presentation in Tórshavan, Faroe Islands 31 May . WT/TPR/S/361 /Rev.1  • Iceland  
 
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  4.64.   Under Act No. 74/2012, vessel operators must pay a fishing fee to offset the cost of services 
provided by the State and as a tax on the exploitation of marine resources. The fee is based on 
total earnings before tax (EBT) plus a portion of EBT for processing operations under a 
methodology set out in the Act. The fees for each fishing season in ISK per kilogram of ungutted 
catch are set out in regulations by the Ministry of Industries and Innovation.32 In quota year 
2016/17 , the total fee was estimated to be ISK 5.2 billion, or about 3% of the 2015 catch value.  
4.65.   In addition to the regular fees applicable to all vessels using a harbour, fishing vessels pay 
harbour fees which vary from 0.7% to 2.3% of landed value, the lower rates applying to sea 
products that are frozen or processed at sea. Fishing vessels also pay fees for registration of 
landing weights a nd species by harbour employees. This information is sent to the Directorate's 
online database and the fees are intended  to cover the costs of registration. Under Act 
No. 116/2006 an export levy of 5% is applied to exports of unprocessed fish by the Direct orate of 
Fisheries.  
4.66.   There are no direct government financial transfers to the fisheries sector, including fishing 
processing and, with tariffs on nearly all fishing products at zero, no consumer transfer to the 
sector either. A tax concession for the crew  of fishing vessels was phased out in 2013.33 
Government support to the fishing sector is through research, management, and regulation. 
According to the OECD, the fisheries support estimate (FSE) for Iceland was negative for 2012 -14, 
indicating a net averag e annual contribution of ISK 4.4 billion from the fisheries sector as fees 
were greater than the estimates of support. In 2015, there was a net contribution to the sector of 
ISK 0.8 billion as general services support was ISK 4.2 billion while cost recover y charges (fees) 
were ISK 3.4 billion (from ISK 8.1 billion the previous year).34  
4.67.   As noted in the previous review, foreign ownership of fishing operations and primary fish 
processing (defined as salting, freezing, drying, and other processing to protect fr om decay, and 
the production of fish  oil or fishmeal) is limited to no more than 25% direct and 49% combined 
direct and indirect ownership. In certain circumstances, direct foreign ownership of up to 33% may 
be permitted.35 
4.2  Mining and Energy  
4.68.   The unique geog raphy and natural terrain provide Iceland with an unusual energy profile. 
Iceland is the world's largest green energy producer per capita and also has the world's highest 
share of renewable energy in any national total energy budget. Currently, hydro and g eothermal 
sources supply almost all of Iceland's electricity and 85% of Iceland's total consumption of primary 
energy (Chart 4.6) ; the remainder comprises fossil fuels (refined oil), which are used entirely for 
transport and fisheries.  
4.69.   Hydropower is respon sible for nearly three quarters of electricity generation, while the rest 
is produced through geothermal means. Around 80% of the electricity generated is consumed by 
the industrial sector (mainly aluminium); residential consumption is around 5%. Around 90 % of 
space heating is through direct geothermal energy.  
4.70.   Electricity prices for industrial consumers are low compared to other European countries: in 
the second half of 2015 the average price for ind ustrial consumers was €0.029 per kWh, the 
lowest in the EEA, while electricity prices for households were €0.127 per kWh which was fourth 
lowest in the EEA.36 
                                                
32 Regulation No. 580/2016 on the amount, assessment and collection of the fishing fee for fishing year 
2016/2017.  
33 OECD (2015), OECD Review of Fisheries: Policies and Summary Statistics 2015 , OECD Publishing. 
Viewed at: http://dx.doi.org/10.1787/9789264240223 -en [May 2017].  
34 OECD Fisheries Support Estimate. Online database. Viewed at: 
https://stats.oecd.org/Index.aspx?DataSet Code=FISH_FSE#  [May 2017].  
35 WTO document WT/TPR/S/273/Rev.1, 29 November 2012, Section IV, para . 44 and Central Bank of 
Iceland (2016), Economy of Iceland , Reykjavik,  p. 21.  
36 Eurostat Electricity price statistics, tables and graphs, Tables 2 and 3. View ed at: 
http://ec.europa.eu/eurostat/statistics -
explained/index.php/Electricity_price_statistics#Electricity_ prices_for_industrial_consumers  [March 2017].  WT/TPR/S/361 /Rev.1 • Iceland  
 
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  Chart 4.6 Primary energy use in Iceland – 2015  
 
Source:  Iceland National Energy Agency  
4.71.   Companies in the energy sector in Iceland are vertically integrated. Under the law, a single 
power company can function as generator, distributor and supplier. However, accounting 
separation is required between concess ion (transfer of electricity in a certain area) and competitive 
activities . 
4.72.   Companies owned by the State or municipalities dominate the electricity sector. 
Landsvirkjun, which is wholly state -owned, is the largest energy company in Iceland, providing 
appro ximately 75% of all the electricity produced in Iceland.37 Furthermore, Landsvirkjun is 
responsible for more than 96% of all hydro generation in Iceland, and its share in total geothermal 
electricity generation is around 11%.  
4.73.   Landsvirkjun has US Dollar deno minated long -term contracts with foreign -owned energy 
intensive companies (aluminium smelters); as such it sells 80% of the electricity it generates to 
these companies. The remaining 20% is bought by public utilities and the Icelandic Transmission 
System O perator (Landsnet).  
4.74.   Currently Landsvirkjun's core debt programme is run under its Euro Medium Term Note 
(EMTN) master agreements. They consist of two agreements, an EMTN programme, which is 
guaranteed by the State and another without a state guarantee.38 The Minister of Finance 
manages the ownership of Landsvirkjun and appoints all five board members and five alternate 
members. Lansdvirkjun is also the main owner of Landsnet, with a share of 65%.  
4.75.   Orkuveita Reykjavíkur (OR) is a public utility company, which is owned by the City of 
Reykjavík and adjacent municipalities. It is the largest local provider of electricity and heating to 
end-users. The main service area of the company is the larger Reykjavik Metropolitan Area, 
covering two -thirds of the Icelandic po pulation. HS Orka is the third main electricity -generating 
firm in Iceland. It was privatized in 2007. Its largest shareholder is the Canadian Alterra Power, 
which owns two -thirds of the company. The rest is owned by a group of Icelandic pension funds. 
There are several other small electricity firms and utilities in Iceland;  these are owned by the 
Icelandic State and/or municipalities.  
                                                
37 In 2016, Lansdvirkjun had operating revenues of over US$420 million, earning s before income and 
taxes of over US$183 million, and a net profit of nearly US$67 million.  
38 For details please see: http://www.landsvirkjun.com/Finance/Funding/ . WT/TPR/S/361 /Rev.1  • Iceland  
 
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  4.2.1   Regulation  
4.76.   The energy sector in Iceland is governed by Act No. 57/1998 on Survey and Utilization of 
Ground Resources, Act No. 65/2003 on Electricity, Act No . 13/2001 on Prospecting, Exploration 
and Production of Hydrocarbons and accompanying regulations and amendments39, and Act 
No. 109/2011 on the Taxation of Hydrocarbon Extraction. All the above Acts are administered by 
the National Energy Authority (Orkustofun).  
4.77.   The National Energy Authority (NEA) is a government agency under the Ministry of 
Industries and Innovation. The NEA 's main responsibilities include advising the Government on 
energy issues and related topics, licens ing and monitoring the development and exploitation of 
energy and mineral resources, regulating the operation of the electrical transmission and 
distribution system, and promoting energy research. Furthermore, administrative decisions made 
by the NEA with respect to the above -mentioned Acts can be appealed to the Appeals Committee 
for Environmental and Resource Matters as per Act No. 130/2011. Since the establishment of the 
committee in 2012 , appeals have averaged 120 annually, while in 2016 there were 175 appeals. 
Complainants have recourse to the courts after the non -judicial appeals process has been 
exhausted.  
4.78.   Under the provisions of these laws, investment and/or ownership of energy exploitation 
rights and the production and distribution of energy are li mited to EEA and EFTA residents. Act 
No. 57/1998 stipulates that resources within the ground belong to the owner of the land. However, 
a licence from the National Energy Authority is required to survey or prospect on the land40; 
additionally a compensation agreement with the landowner is required. Recent changes to Act 
No. 57/1998 on Survey and Utilization of Ground Resources  and Act No. 65/2003 on Electricity 
stipulate that:  
 The State or municipalities can no longer sell the ownership of resources; however , 
utilization rights can be leased to a developer for up to 65 years with a possibility of 
extension. Royalties for the utilization are determined by the Prime Minister.  
 Producers of electricity compete in an open market in Iceland. Therefore CHP power 
plants are obliged to keep separate accounts for heat and power production to prevent 
cross subsidization of electricity.  
4.79.   The energy market in Iceland is open, with foreign companies operating in the sector. As 
part of its accession process to the EU, which w as suspended in September 2013, Iceland 
implemented the first and second electricity directives of the EU. The generation and distribution 
segments of the market are open to competition from companies in the EEA. The Electricity Act 
allows third -party acce ss for transmission and distribution networks. Under the provisions of the 
Electricity Act, only Landsnet (IceGrid), a private company may provide electricity transmission 
services in the country and it also has the exclusive right to construct new transmi ssion 
infrastructure. Landsnet operates under a concession arrangement and is subject to regulation by 
the National Energy Authority (NEA). The NEA determines the revenue framework on which 
Landsnet's tariff is based. The law stipulates that a single power  company can function as 
generator, distributor and supplier. However, accounting separation is required between 
concession (transfer of electricity in a certain area) and competitive activities. While consumers 
must use the distributor holding the concess ion for their respective area, the distributor need not 
be the same company as the supplier, thus consumers are able to choose their supplier.  
4.80.   Power companies determine the price of electricity that they sell, while transmission and 
distribution fees are s et by the NEA.41 The NEA sets an upper limit on Landsnet's income, and 
Landsnet's profits are also bound by an upper limit under the Act. These measures indirectly 
control the tariff that Landsnet may charge. Iceland also operates a policy of equalization o f 
energy prices. Under this policy, homes that are heated by oil and electricity (where no other 
means of heating are available) are subsidized by the State. The annual subsidy amount is 
                                                
39 Regulation No . 884/2011 and Regulation No . 39/2009 . 
40 As of August 2008, the National Energy Authority may grant licences on behalf of the Minister of 
Industry,  Energy and Tourism.  
41 Electricity prices in Iceland have declined in real terms since 2007 and are significantly lower than 
those in other EU countries.  WT/TPR/S/361 /Rev.1 • Iceland  
 
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  approved by the Parliament in the Budget each year; in 2015 it was ov er ISK 1.2 billion. With a 
view to promoting a more efficient market for electricity trading , Landsnet has been working on 
establishing an electronic market for electricity trading (ISBAS) . However, it is unclear when it 
would be operational.  
4.81.   At the time o f the last review, the authorities were in the process of preparing a 
comprehensive energy strategy for 2020 that was to be released in 2012. The salient features of 
the strategy were: replacing fossil fuels with renewable energy; following an environmenta lly 
protective and precautionary approach in hydroelectric and geothermal energy production; 
support ing diversified industry with an emphasis on ecologically beneficial high -tech industry; 
sustainable utilization of all energy sources; and encouraging bett er energy utilization. The 
strategy was not concluded in 2012 as planned. The authorities stated that they are currently in 
the process of preparing a new comprehensive energy strategy, which they aim to publish in 2018.  
4.3  Services  
4.3.1   Financial sector  
4.3.1.1   Banking  
4.82.   Iceland was one of the countrie s' worst affected by the 2008 financial crisis: the financial 
system was on the verge of collapse; equity prices fell by over 90%; money market rates rose to 
18%; and the Icelandic króna  depreciated by around 40% in real terms . As a result of lower asset 
prices, debt to collateral ratios increased and, along with higher inflation and a currency 
depreciation , resulted in  a spike in  non-performing loans. The Government intervened through 
several emergency measures, including: liq uidation of the three largest commercial banks and the 
establishment of three new commercial banks, which took over their domestic operations; the 
introduction of capital controls; and putting in place an international financial aid package.42 
4.3.1.1.1   Structure and  performance  
4.83.   Since the cris is, the banking system has stabili zed and recovered. Currently the banking 
sector in Iceland is comprised of four commercial banks and four savings banks (compared with 
nine in 2012). Two of the commercial banks are wholly state -owned, while a third has a minority 
government stake. The activities of the banks are focused mainly on serving the domestic 
economy.  
4.84.   The assets of the financial system rose from ISK 7,715 billion in 2010, to nearly 
ISK 10,034  billion in 2016, while over t he same period the assets of the commercial banks rose 
from ISK  2,627 billion to ISK 3,199 billion. The restructuring of the banks has also resulted in the 
ratio of non -performing loans43 to total loans declining from a peak of 20% in 2010 to 2 .1% in 
2016 ( Chart 4.7).44 
                                                
42 WTO document WT/TPR/S/273/Rev.1 . 
43 NPLs are defined as loans in default for over 90 days . 
44 Data is only for domestic systemically important banks.  WT/TPR/S/361 /Rev.1  • Iceland  
 
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  Table 4.11 Credit system assets , 2008 -16 
ISK billion  
 2008  2010  2012  2014  2016  
Banking system  4,632  3,878  3,809  3,758  3,737  
    Central Bank of Iceland  1,187  1,328  1,075  957 901 
    Commercial banks  3,417  2,627  2,850  2,939  3,199  
    Savings banks  768 137 57 56 21 
Other credit institutions  1,388  1,265  1,234  1,216  1,718  
    Housing finance fund  733 836 876 824 787 
Pension funds  1,665  1,989  2,439  2,935  3,515  
Insurance companies  122 138 155 169 177 
Mutual funds, investment and institutional 
funds  212 284 410 488 670 
State loan funds  125 161 192 226 216 
Total assets  8,144  7,715  8,239  8,791  10,034  
Source:  Central Bank of Iceland.  
Chart 4.7 Non-performing loans , 2009 -16  
 
Source:  Financial Supervisory Authority, Central Bank of Iceland.  
4.85.   Furthermore, during the period under review, Icelandic banks have been profitable, with 
return on assets being 1.8% and return on equity 9% in 2016. In 2016 , incom e from equity 
securities and upward loan value adjustments contracted significantly from 2015 and operating 
expenses rose. On the other hand, net interest income rose markedly.  Additionally, the banks ' 
capital position is robust, with capital adequacy rati os of 28%; including 27% in Tier 1 capital. 
Both ratios are well in excess of the statutory minimum (Chart 4.8).  WT/TPR/S/361 /Rev.1 • Iceland  
 
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  Chart 4.8 Commercial banks' capital adequacy ratios , 2009 -16 
 
Source:  Central bank of Iceland.  
4.86.   With regard to the banking sector, a lingering issue had been the resolution of the estates of 
the failed bank s. In June 2015, the authorities announced a plan to unwind both the estates of the 
failed banks and the remaining offshore ISK holdings, comprisi ng mainly bank deposits, treasury 
securities and equity interests, which involved a combination of incentives so as to motivate the 
boards responsible for winding up the insolvent banks to reach voluntary agreements with the 
claimholders to allocate outsta nding assets in a way that ensured financial stability. These 
included:  
 Measures to neutrali ze the threat from distributing króna -denominated assets45, such as 
making an offsetting "stability contribution" to the Icelandic treasury;  
 extending the maturity o f foreign -currency denominated domestic assets; and  
 refinancing or otherwise ensuring the repayment of foreign -exchange denominated loans 
granted by the authorities to the new banks following the crisis.  
4.87.   The "composition" agreements were signed in late 201 5; these discounted further bank 
claims in default since 2008 –09 as a quid pro quo for lifting capital controls on the estates. The 
estates assigned most of their ISK assets to the State (17% of GDP), distributed recoveries to the 
Central Bank of Iceland (CBI) as a claimant (about 4%), term ed out their domestic foreign 
currency deposits for seven years (4%), and drew from their external assets so as to refinance 
certain CBI and Government claims on the banks (2.5% of GDP). They agreed to these actions so 
they could immediately distribute liquid foreign assets worth around 35% of GDP to their mainly 
foreign claimants, with more to follow over time.  
4.88.   With respect to the offshore ISK holders, the CBI held a euro auction in June 2016. All 
accepted bids were offer ed to investors at the  same price. The auction exchange rate was based 
on a sliding scale according to the size of the total bid, with a best rate of  ISK 190:€1, implying a 
euro premium of roughly  27% over the onshore market rate.  Participation was volunta ry. 
                                                
45 Threats stem from pressure on balance of payments and financial instability due to disorderly capital 
outflows.  WT/TPR/S/361 /Rev.1  • Iceland  
 
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  Settlement took place on 29  June 2016. Since then , a further two auctions have taken place 
(Section 1.1).  
4.89.   Direct state assistance to the financial sector amounted to around 34% of GDP . Both the 
CBI and the banks had to be recapitalized.  To cover this, the Government gave the  CBI a bond 
equivalent to 17% of GDP in 2009. In 2009 to 2012, it  provided the banks a separate  bond 
equivalent to 15%  of GDP. According to the IMF , recoveries are estimated at 43% of GDP . These 
consist of: bank equity and subordinat ed debt taken in 2009 as consideration for recapitalizations, 
the estimated value of which was 15% of GDP at end -2015; dividends and coupons on those 
claims, cumulating to around 3% of GDP in 2010 -15; the stability contributions from the failed 
bank estate s in the context of the compositions, valued on an accruals basis at 17% of GDP; and 
profits and interest payments to the CBI by the asset management subsidiary it established in 
2009 to hold its seized collateral, cumulating to an expected 8% of GDP over 2010-16. Thus the 
State is estimated to have made a net gain in excess of 9% of GDP . 
4.3.1.1.2   Regulation  
4.90.   During the period under review, significant regulatory changes have included the 
establishment of the Financial Stability Council (FSC) and the Systemic Risk Co mmittee (SRC) in 
2014 as the official fora for collaboration on financial stability.46 The FSC is a three member 
Council (Minister of Finance (chair), CBI Governor, and Director General (DG) of the Financial 
Supervisory Authority ), which is responsible for formulating public policy on financial stability; 
assessing economic imbalances, financial system risks, undesirable incentives and other 
circumstances liable to jeopardize financial stability; defining actions, other than implementing the 
CBI's monetary p olicy management tools, which are considered necessary to influence the financial 
system with the objective of reinforcing and safeguarding financial stability; and confirming 
definitions of systemically important regulated entities, infrastructure and mar kets of such nature 
that their activities can impact financial stability. The FSC draws from recommendations and 
assessments from the SRC and other available data and submits recommendations to the relevant 
authorities.  
4.91.   The SRC is a five voting member Comm ittee (CBI Governor (chair); DG of the Financial 
Supervisory Authority  (Deputy Chair); CBI Deputy Governor; Deputy DG of the Financial 
Supervisory Authority ; an outside expert in financial markets appointed by the Finance Minister; 
and the Permanent Secret ary of the Finance Ministry  in a non-voting capacity). The SRC evaluates 
the current situation and outlook for the financial system, systemic risk, and financial stability. The 
SRC is mandated to take account of the FSC's official policy and intermediate o bjectives on 
financial stability. Its assessments are based on analysis carried out by the CBI and the Financial 
Supervisory Authority 's joint risk assessment groups. Assessments and recommendations are 
submitted to the FSC.  
4.92.   Additionally, new liquidity rul es issued by the Central Bank of Iceland took effect in 
December 2013 , based on the liquidity coverage ratio (LCR) issued by the Basel Committee, and 
set minimum liquidity under stress scenarios.47 Banks must fulfil requirements for both 
foreign -denominated  and overall liquidity. Furthermore, a net stable funding ratio (NSFR) on 
foreign currency funding was put in place in December 2014. This was based on the Basel 
Committee's rules on NSFRs. The funding ratio is intended to ensure a minimum level of stable 
one-year funding in foreign currencies and therefore restrict the degree to which the commercial 
banks can rely on unstable short -term funding to finance long -term foreign -denominated lending. 
The rules on funding ratios reduce maturity mismatches and limi t the extent to which the banks 
can depend on unstable short -term funding to finance long -term assets that could prove difficult to 
sell. 
4.93.   In early 2016, the Financial Stability Council (FSC) recommended that the Icelandic 
Financial Supervisory Authority  (FME) impose three capital buffers48: a 2% capital buffer on 
systemically important financial institutions as of 1 April 2016; a systemic risk buffer amounting to 
3% of risk -weighted domestic assets on systemically important deposit -taking institutions as of 
1 April 2016; and a 1% countercyclical capital buffer on all financial institutions, effective 12 
                                                
46 Act No . 66/2014 on the Financial Stability Council.  
47 Rules on Liquidity Ratio No. 1055/2013 . 
48 In March 2016, the FME put these buffers in place in accordance with the FSC's recommendations.  WT/TPR/S/361 /Rev.1 • Iceland  
 
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  months after the date of the FME's decision. In addition, a capital conservation buffer was put in 
place at the beginning of 2016; it will rise in increments to 2.5% by the beginning of 2017. In 
October of 2016 , the Financial Stability Council recommended that the Systemic Risk Buffer be 
increased by 1.25%, effective 12 months after the date of the FME's decision. Capital buffers may 
only include Tier 1 capital . When fully implemented, in November 2018, the combined capital 
buffers imposed on the three largest banks will be 8.75%.  
4.94.   From 1 April 2017 , the Icelandic Financial Supervisory Authority (FME) can set ceiling s on 
loan-to-value (LTV) and debt -service -to-income (DSTI) ratios of consumer mortgage credit. Before 
the FME can do this , the Financial Stability Council is required  to give its opinion on the matter. 
The FME has yet to use this authorization.49 There is a bill under discussion in the Icelandic 
Parlia ment that will, if passed, grant the Central Bank of Iceland authorization to limit the lending 
of financial undertakings to unhedged parties. Before the CBI can do this , the Financial Stability 
Council is required  to give its opinion on the matter.50 
4.95.   Curre ntly there is one stock exchange in Iceland, which is operated by Nasdaq Iceland hf., a 
part of the Nasdaq Group. Trading at the Nasdaq Iceland is governed by the Issuer Rules, the 
Member Rules and the Warrant Rulebook. The market is supervised by the Fina ncial Supervisory 
Authority of Iceland. As of end of April 2017, there were 17 companies listed on the exchange with 
a market capitali zation of €8.7 billion, compared with €2.2 billion in 2013. The OMX18 index has 
risen from 1,144 points in July 2014 to 1,822 points in April 2017.  
4.96.   To operate in Iceland, Insurance companies need an operating licence from the Financial 
Supervisory Authorit y of Iceland. Restriction on investment in the sector depends on the insurance 
company's risk profile. Currently there are 12 insurance companies operating in Iceland. Four 
companies operate in the non -life insurance segment , five operate in the life insur ance segment, 
there are two reinsurance companies , and there is the  Iceland Natural Catastrophe Insurance, 
which operates under special legislation (Act No. 100/2016 on Insurance Activity and Act 
No. 55/1992 on Iceland Catastrophe Insurance). At the end of  2015, the assets of all insurance 
companies stood at approximately ISK 165 billion compared with over ISK 140 billion in 2011. The 
solvency ratio of the three largest companies was within the range of 125% and 156%. Both 
segments of the insurance market c ontinue to be profitable, with non -insurance companies 
registering a profit of over ISK 4 billion in 2015, a decline from around ISK 8 billion in 2012, while 
over the same period the profits of life insurance companies grew from about ISK 1.2 billion to 
over 1.7 billion.  
4.3.2   Telecommunications  
4.97.   The review period has seen the share of the information and communications sector in GDP 
steadily increasing to 5.1% in 2016 compared with 3.6% in 2010. This is in contrast to the 
previous review period where the share of  the sector declined. Total income rose from 
ISK 43.4 billion in 2010 to nearly ISK 55 billion in 2015 ; during the same period, investment in the 
sector rose from around ISK  5.3 billion to ISK 8.6 billion. The fixed -line segment has been the 
major recipien t of the investment due to fibre optic roll -out replacing copper. With regard to 
income generated, the largest amount is derived from the mobile networks followed by data 
transfer and internet services. During the review period , total telecommunication sub scriptions 
continued to rise, resulting in the telecommunications penetration rate rising from 163% in 2010 
to over 176% in 2016. The growth has come about almost entirely due to increased mobile 
subscriptions.  
4.3.2.1   Fixed -line telephony  
4.98.   During the period under review, the fixed -line segment has continued to decline as it did 
during the previous review period. Total subscribers declined from nearly 142,500 in 2010 to 
around 136,000 in 2016, while total traffic declined from about 620 million minutes to about 
330 million minutes. Fixed -line services accounted for around 25% of total revenue in the 
telecommunications industry in 2016, a fall from over 30% in 2010. Currently there are three main 
                                                
49 Chapter VII of Act No . 118/2016 on consumer mortgage credit . Viewed at:  
http://www .althingi.is/lagas/nuna/2016118.html . 
50 Article 3 of the Bill of Law on Foreign Currency Loans . Viewed at : 
http://www.althingi.is/altext/146/s/0300.html . WT/TPR/S/361 /Rev.1  • Iceland  
 
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  service providers in the fixed -line segment: Siminn, Vodafone, and 365. Although it has been 
losing market share, Siminn continues to dominate, with over 56% market share followed by 
Vodafone, which has a 30% share of the market. Both providers are classified as having 
"significant market power" in certain service markets and hence may be subject to various 
obligations, imposed by the Post and Telecom Administration (PTA) with respect to access to 
infrastructure, interconnection, and carrier selection and pre -selection .  
4.3.2.2   Mobile telephony  
4.99.   The mobile communications market has con tinued to grow steadily. Total subscriptions rose 
from 375,430 in 2010 to over 451,000 in 2016. Over the same period, traffic has also increased 
from around 750 million minutes to around 827  million minutes. Growth was driven by increased 
subscriptions and  usage by the younger segment of the population. The mobile sector is the 
largest revenue generator in the telecommunications sector, accounting for nearly 30% of total 
revenue in electronic communications in 2015. Currently there are four main companies o perating 
in the mobile communications sector (Nova, Siminn, Vodafone, and 365). Siminn has continued to 
lose market share and is no longer the main supplier . Nova has the largest market share with 
nearly 35% of the market followed by Siminn (32.6%) and Vod afone (27.8 %). 
4.3.2.3   Internet  
4.100.   As is the global trend, the internet sector has been the fastest growing subsector within 
the electronic communications industry. Total subscriptions rose from around 110,000 in 2010 to 
nearly 128,000 in 2016. Furthermore, in 2015, the internet sector accounted for nearly 18% of 
total revenue in the electronic communications sector compared with 16.4% in 2010. At present, 
four companies operate in the market, with Siminn controlling nearly 48% of the market in 2016; 
its market share has fallen from over 52% in 2010. Vodafone, the other major internet service 
provider, controlled nearly 28% of the market in 2016.  
4.3.2.4   Regulations  
4.101.   During the period under review , there have been no significant changes to the legislation 
governing the telecom munications sector in Iceland except  for Act No. 62 of 25 June 2012 
amending the Electronic Communications Act and the Act on the Post and Telecom Administration, 
which addresses cyber security. The legal framework for electronic communications and postal 
services is influenced by Directives of the European Union. Having signed the Agreement on the 
European Economic Area , Iceland made a commitment to adopt all of the Directives of the 
European Union  in the fields of electronic communications and postal serv ices. The main laws 
governing the sector continue to be the Act on the Post and Telecom Administration  No. 69/2003 
and Electronic Communications Act No.  81/2003. The Acts implement the major provisions of the 
EU Communications Directive package of 2002. Th e Acts are administered by the Postal and 
Telecom Administration (PTA) which is part of the Ministry of the Interior. The PTA is also the 
regulator for the sector.  
4.102.   The PTA's responsibilities include inter alia : implementing the Electronic Communications 
Act and supervising electronic communications as provided for in the Act; encouraging competition 
in postal and electronic communications services and preventing unfair business practices; 
participating in developing the market for electronic communications  and information technology; 
safeguarding public interest; advising the authorities and ministries and ensuring that Iceland 
fulfils its international obligations as well as making recommendations, if necessary, for 
amendments to acts and regulations; and participating in cooperation resulting from international 
obligations.  
4.103.   The Electronic Communications Act provides for a general authorization  for natural persons 
and legal entities established within the EEA and within WTO Member states  to start operations , 
implying that they do not need a licence, unless specific frequencies are involved. Registration with 
the PTA is required for all operators. An individual licence is required for all frequencies except 
open spectrum. In most cases the procedure is simple  and frequencies are assigned by the PTA 
within six weeks of receipt of application.  WT/TPR/S/361 /Rev.1 • Iceland  
 
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  4.104.   The Act also addresses transparency and non -discrimination; rules on number portability, 
and on carrier selection and pre -selection; and provisions relating to competition  within the sector. 
Furthermore, under Chapter VII of the Act, the PTA is expected to "ensure access and 
interconnection and interoperability of services in a satisfactory and efficient manner" (Article 25) 
and may , inter alia , impose obligations with resp ect to open and non -discriminatory access and 
price control. The Act also ensures that all users are entitled to universal service at the same tariff 
rate throughout the country. To ensure this obligation is met, the PTA may place obligations on 
electronic  communications providers and set minimum quality requirements. The PTA also 
operates the equalization fund, which subsidises universal service operations that are unprofitable 
or loss making.   
4.105.   Violations of the provisions of the Electronic Communications  Act or the Act on the Post 
and Telecom Administration must be rectified within a month of their notification by the PTA. If 
operators fail to remedy the violations, the PTA has the authority to impose daily fines, or to 
cancel the right to use numbers or the general authorization to operate. Serious or repeated 
violations may result in imprisonment. Rulings by the PTA may be referred to the Rulings 
Committee for Electronic Communications and Postal Affairs, and to the courts.  
4.3.3   Transport  
4.3.3.1   Air transport  
4.106.   The a ir transport sector in Iceland comprises passenger and cargo airlines, airports, and 
associated services. The sector has continued to grow during the review period, with the sector's 
contribution to GDP rising from 6.6% in 2010 to approximately 15%  in 2016; however, the 
authorities stated that the contribution to GDP is hard to estimate due to an annual growth of 
30-40% over the past few years .  
4.107.   Since 2011, total passenger traffic has grown significantly and was over 7.6 million 
(including transit/transfer passengers) in 2016 compared with 3.3 million in 2011, of which 
6.8 million were international passengers (Chart 4.10). The growth was due almost entirely to the 
increase in international passenger traffic, while domestic passenger traffic fluctuated sligh tly 
during the review period. Growth of international traffic is due to Iceland attracting more tourists 
as well as Icelandic airlines becoming a more financially viable option for transatlantic passengers 
and the promotion of Iceland as a transatlantic hu b. The total number of passengers through 
Keflavik airport in 2017 is estimated to be in the region  of 9 million.  
4.108.   After declining during the previous review period, total mail and cargo also increased 
during the current review period from about 40 thousan d tonnes in 2011 to over 52 thousand 
tonnes in 2016. The increase is due to strong growth in online shopping (mainly from China) , as 
well as an increase in the export of fresh fish.  
4.109.   There are 24 foreign passenger transport operators in Iceland which operat e scheduled air 
services. Currently, there are four international and nine domestic airports operating scheduled 
flights in Iceland. In 2016 , Reykjavik airport accounted for nearly 50% of domestic traffic, while 
nearly all international air traffic was thr ough Keflavik airport. All airports in Iceland are 
state-owned. Since its establishment in 2010, Isavia, a government -owned company with the 
Ministry of Finance as a sole shareholder, has been responsible for all operations, development, 
assets, and obliga tions of all airports, based on an annual service agreement with the Ministry of 
Transport. Furthermore, Isavia manages air traffic in the Icelandic air traffic control area. It is also 
the owner and operator of Fríhöfnin ehf (The Duty -free store), Tern Sy stems ehf, Domavia ehf and 
Suluk ApS. Ground handling at Keflavik airport is provided by four independent service providers : 
Ace Handling, Airport Associates, IGS Ground Services and SouthAir. Airline operators are also 
allowed to undertake ground handling  services themselves; this is the most common method at 
the domestic airports.    
4.110.   With regards to procedures and fees, Iceland accords national treatment to both domestic 
and international airline companies. Scheduled air services to certain domestic destin ations that WT/TPR/S/361 /Rev.1  • Iceland  
 
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  are not economically viable, but fall within given criteria of public service obligation, are subsidized 
by the Government. Such contracts are awarded to airlines via an open tender.51  
4.111.   Act No. 60/1998 as amended on Aviation is the main legislat ion governing the air transport 
sector. The Act is administered by the Icelandic Transport Authority, which is under the Ministry of 
the Interior.52 The authorities stated that the Aviation Act follows European legislation, thus 
making Iceland compliant wit h European rules on licensing, access to aircrafts  and ground 
handling, competition, slot allocation, airport charges, and aviation safety and security. 
Furthermore, under the provisions of the Act, EEA operators are allowed to engage in cabotage, 
while no n-EEA operators are only allowed to engage in cabotage if specified in a bilateral 
agreement.53 
4.112.   The Icelandic Transport Authority was established in accordance with Act No . 119/2012 on 
the Icelandic Transport Authority (ICETRA), Administrative Institution f or Transport Affairs. Under 
the provisions of the ICETRA Act, all tasks that were the responsibility of the Icelandic Civil 
Aviation Administration have been taken over by ICETRA. As such , ICETRA is responsible for inter 
alia: overseeing general aviation; overseeing commercial aviation of Icelandic parties, procedural 
rules of air operators, flight crew members, as well as the financial status of air operators; 
ensuring the issu ance of air operator licen ces in accordance with Council Regulation 
No. 1008/200 8 and Commission Regulation No.  965/2012 on air transport flights with subsequent 
amendments; issuing air operator certificates which attest that the air operator is in control of 
flight safety aspects in its operations. Furthermore, all licen ces for fligh t operations are subject to 
ICETRA's approval and control. ICETRA is also responsible for overseeing flights of foreign carriers 
to and from Iceland and issues permits to fly through Icelandic airspace. Assessments of air 
operators' management of flight op erations are also carried out by ICETRA.  
4.113.   As per EU regulations, Iceland operates under a "Single European Sky". In addition, 
Iceland has bilateral aviation agreements with Armenia ; Azerbaijan ; Bahrain ; Barbados ; Brazil ; 
Canada ; Chile; China ; Columbia ; Croatia; Denmark ; Dominican Republic ; Egypt ; Finland ; 
Germany ; Ghana ; Hong Kong, China ; India; Indonesia ; Jamaica ; Jordan ; Kuwait ; Laos; Lebanon ; 
Luxembourg ; Macau, China ; Malaysia ; Mongolia ; Netherlands ; Norway ; Oman ; Paraguay ; Qatar ; 
Russian Federation ; Rwan da; Saudi Arabia ; Singapore ; South Africa ; Spain ; Sweden ; Syria; 
Thailand ; Turkey ; Turkmenistan ; United Kingdom ; Viet Nam ; and Zambia. Iceland is also party to 
the EU -USA Open Skies Agreement, which is the only open skies agreement that Iceland has in 
place other than the "Single European Sky".54 
4.114.   Under the provisions of Act No. 34/1991 on Foreign Investment in Companies, foreign 
ownership in Icelandic companies involved in airline operations may not exceed 49%. This 
limitation does not apply to nationals of the EEA, who are treated as Icelandic nationals. 
Additionally, no entity may be granted an operating licen ce unless it is effectively controlled by 
EEA nationals. There are no limitations on foreign participation in auxiliary services.  
4.3.3.2   Maritime transport  
4.115.   As an island nation with a high dependence on international trade, maritime transport is 
very important for Iceland. Nearly all of Iceland's merchandise trade is conducted by sea. There 
are around 1,200 open boats, 1,100 decked vessels, a petroleum tanker,  a container ship and a 
chemical tanker registered in Iceland.  
4.116.   At the time of the last review, there were approximately 60 harbours in Iceland, of these 
15 had appreciable cargo activities, with four of these ports having the capability to handle ships 
of up to 40,000 DWT. The rest were essentially fishing ports but were able to accommodate larger 
merchant vessels for fish -based products. Faxafloahafnir Associated Icelandic Ports was the largest 
                                                
51 In 2011 subsidies amounted to ISK 263 , in 2012 ISK 338 million, in 2013 ISK 262 million, in 2014 
ISK 258 million, in 2015 ISK 313 million, and in 2016 ISK 306 million.  
52 Prior to 2013, the Act was administered by the Icelandic Civil Aviation Administration.  
53 As per the provisions of their bi lateral agreements, operators from Greenland, Paraguay, and Chile 
are allowed to engage in cabotage.  
54 For a full list of aviation agreement s see: https://www.utanrikisraduneyti.is/media/utn -pdf-
skjol/Yfirlit -yfir-loftferdasamninga -Islands -i-arslok -desember.pdf . WT/TPR/S/361 /Rev.1 • Iceland  
 
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  port in the country, accounting for nearly 50% of total cargo  in Iceland. Harbours and coastal 
protection structures are owned and operated by the municipalities where they are located.  
4.117.   In 2013, the Icelandic Maritime Administration Act of 1996 was repealed and the Iceland 
Maritime Authority (IMA) dissolved. Curren tly, the sector is governed by two agencies, the ICETRA 
and the Icelandic Road and Coastal Administration (IRCA). The ICETRA has regulatory and 
oversight responsibilities, while infrastructure project procurement and operational tasks are the 
responsibilit y of the IRCA.  
4.118.   ICETRA 's responsibilities include inter alia : port state control of foreign merchant vessels in 
Icelandic ports; seamen's certification and crew issues; implementation of the International 
Convention on Standards of Training, Certification and Watchkeeping for Seafarers (STCW); 
issuing professional diving and pilots' certificates; and maritime traffic services and security. 
Preparing new maritime legislation, publishing marine -safety training materials and training are 
also the responsibilit y of ICETRA. Iceland's maritime legislation is fully aligned with EU regulations 
on freedom to provide services, transfer of cargo and passenger ships between registers, action to 
safeguard free access to cargoes in ocean trades, and maritime cabotage. Wit h respect to 
cabotage , Iceland is the only WTO Member that has scheduled a binding commitment on cabotage.  
4.119.   With respect to harbour administration, the IRCA is responsible for coastal protection and 
harbour projects, research, and planning for the developme nt of coastal protections and harbours. 
The State is responsible for conducting basic research pertaining to harbour projects as well as 
provision of financial support for new harbour projects. The Director General of IRCA is a member 
of the National Trans port Plan Committee, which is responsible for developing proposals for a 
4-year and a 12 -year transport policy plan for the Minister. Furthermore, most harbour funds are 
owned by municipalities but most harbour development projects are eligible for state g rants and in 
the transport plan there is a list of approved harbour development projects that have been 
approved for state grants.   
4.120.   The port state control system implemented in 2011 continues to be in use. It follows the 
EU Directive on port state control.  Under this system, termed the New Inspection Regime (NIR), 
inspections are targeted according to a Ship Risk Profile so that "risky" ships are inspected 
frequently, while "good" ships are inspected less frequently. A ship's risk profile is determined 
according to, inter alia,  age, flag, type, and company.  
4.121.   Iceland has ratified and incorporated into its laws and regulations most of the conventions 
and instruments adopted by the International Maritime Organisation (IMO), such as: the 
International Convention  for the Safety of Life at Sea (SOLAS); International Convention on 
Standards of Training, Certification and Watchkeeping for Seafarers (STCW); International 
Convention on Standards of Training, Certification and Watchkeeping for Fishing Vessel Personnel 
(STCW -F); International Convention on Load Lines; International Convention for the Prevention of 
Pollution from Ships (MARPOL); Convention on the International Regulations for Preventing 
Collisions at Sea (COLREG);  International Convention on Maritime Sear ch and Rescue (SAR); and 
Convention for the Suppression of Unlawful Acts against the Safety of Maritime Navigation (SUA).  
4.3.4   Tourism  
4.122.   Since 2010, the tourism sector 's importance in Iceland's economy has increased 
significantly. Tourisms' contribution to GDP ne arly doubled from 5.6% in 2010 to around 10% in 
2016. Between 2010 and 2015, the number of visitors to Iceland has grown at an average annual 
rate of around 22%, to reach nearly 1.3 million visitors in 2015.  
4.123.   The tourism sector has overtaken fisheries and a luminium as the largest export sector 
responsible for nearly 40% of Iceland's export receipts of good s and services in 2016. Employment 
in the sector also rose during the review period from 15,700 in 2010 to 24,200 in 2016.  
4.124.   Total spending on tourism -relate d activities has also increased steadily from 2009 to 2015: 
from ISK 93 billion to ISK 222 billion, about half of which is from air passenger transportation and 
accommodation (Chart 4.9) . WT/TPR/S/361 /Rev.1  • Iceland  
 
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  Chart 4.9 Total touri sm spending in Iceland,  2009 -15 
ISK million  
 
Source:  Iceland statistics . 
4.125.   The tourism industry tends to be cyclical and income elastic. As such , the recent growth 
can be attributed in part to the ongoing economic recovery in key  source markets (Europe and 
North America) after the global economic crisis of 2008; as well as Iceland becoming a more 
affordable destination due to the exchange rate depreciation. As a result, the average spend per 
person rose from ISK 140,300 in 2010 to  ISK 161,600 in 2015. Additionally, better and more 
frequent flight connections and improved and more specifically targeted marketing campaigns 
have also had a positive impact. Another positive impact of the marketing campaigns has been the 
increased share  of visitors in winter months. Although tourism remains very cyclical, and the 
number of summer visitors is much greater than the number who come in winter, both have 
increased significantly, as indicated by the number of arrivals to Keflavik airport (alth ough this also 
reflects the growing number of transit passengers) ( Chart 4.10). In 2011, nearly half the tourists 
came in the summer months, while around 20% came in the winter season; in 2015 , the share of 
visitors in winter had risen to nearly 30%, while the share of those coming in the summer had 
fallen to around 40%.  
WT/TPR/S/361 /Rev.1 • Iceland  
 
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  Chart 4.10 Passenger numbers through Keflavik airport , 2003 -16 
050,000100,000150,000200,000250,000300,000350,000Total passengers through Keflavik airport per month (non-Icelandic)
Source:  Iceland statistic s. 
4.3.4.1   Regulation  
4.126.   The main legislation governing the tourism sector is the Tourism Administration Act 
(Act No. 73/2005). The Act is administered by the Icelandic Tourist Board.  
4.127.   The objective of the Act is to promote the development of tourism as an economic se ctor 
and an important facet of Icelandic economic and societal activity. The guiding principles are 
economic efficiency, Icelandic culture, environmental protection, professionalism, and the 
safeguarding of consumer interests.  
4.128.   The Icelandic Tourist Board is an independent authority under the Ministry of Industries 
and Innovation. Under the provisions of the Act, the Icelandic Tourist Board is responsible for : 
(i) issuance of licen ces, registration of operations, and monitoring in order to ensure that 
requirements for operations are met; (ii) development, quality control, and organizational issues 
related to tourism; that is, the implementation of a defined tourism strategy, the co -ordination of 
environmental and educational affairs, the dissemination of inf ormation, regional and local 
development, and international collaboration; and (iii) marketing and promotion of tourism 
services.  
4.129.   Furthermore, Act No. 41/2015 on Regional Incentives, which applies to the whole of 
Iceland outside the capital area, is also applicable to the tourism sector. Incentives under the Act 
include the authorization to : fix an income tax rate ceiling of only 15% for 10 years ; depreciate 
real estate, equipment and moveable assets fully ; reduce the rate of property tax and the general 
social security charge by 50% ; grant exemption from customs and excise duties for construction 
materials, machinery and equipment, and other capital goods ; and the State and municipalities are 
allowed to lease a site for projects  at reduced rates. Additiona lly, under Commission Regulation 
(EC) No . 651/2014, on General Block Exemptions, state aid is permissible for certain categories ; 
these include: incentives as training  aid of up to a maximum of €2 million; incentives as aid to 
SMEs, which includes up to 10% of investment cost in medium -sized enterprises or 20% of 
investment cost in small enterprises, up to a ceiling of €7.5 million; and incentives as aid to 
environmenta l protection investment projects with a ceiling of €15 million.  According to the WT/TPR/S/361 /Rev.1  • Iceland  
 
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  authorities, the Regulation falls under the Agreement on the European Economic Area and is 
currently being incorporated into Icelandic legislation.  
4.3.4.2   Strategy  
4.130.   Under the Governme nt's growth plan (Iceland 2020), the tourism sector was specifically 
identified as a main growth sector.55 In this regard, parliament approved the Tourism Strategy 
2011-2020, in 2011. Salient aims of the strategy are:   
 to increase the profitability of the sector, through inter alia  off-season product 
development and marketing;  
 to engage in systematic development of tourist destinations, effective product 
development, and promotion and advertising work so as to create the opportunity to 
lengthen the tourist  season, reduce seasonal fluctuations, and contribute to better 
distribution of tourists throughout the country56; 
 to enhance quality, professionalism, safety, and environment -awareness in the tourism 
sector57; and  
 to define and maintain Iceland's uniqueness  as a tourist destination, in part through 
effective analysis and research.  
 
 
                                                
55 Prime Minister's Office (2011), Iceland 2020 – governmental policy statement for the economy and 
community , p. 18.  
56 In this regard , the Tourism Road Map 2015 -2020 was launched in 2015, the Tourist Site Protection 
Fund was established in 2011, the Route Development Fund was established in 2016 in order to open new 
flight-hubs into the country , and a special marketing ca mpaign was initiated – "Inspired by Iceland" , which  is a 
public -private collaboration with the aim of lengthening the stay of tourists , reducing seasonal fluctuations and 
increasing profitability.  
57 Initiatives in this respect include: annual measurements of tourist carrying capacity in popular tourist 
places provided by the University of Iceland and Icelandic Tourism Research Centre ; "Vakinn", the quality and 
environmental system for Icelandic Tourism , was established by the Icelandic Tourist Board ; the Centre for 
Qualifications in the Tourist Sector was established in 2016 ; a webpage Safetravel.is was launched in 2016 ; 
and a safety application (app ) "112 Iceland" was also launched.  WT/TPR/S/361 /Rev.1 • Iceland  
 
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  5  APPENDIX TABLES  
Table A1. 1 Merchandise imports by product group, 2010 -16 
  2010  2011  2012  2013  2014  2015  2016  
Total imports (US$ million)    3,914.3     4,845.8    4,771.9    5,019.2    5,371.9    5,285.8    5,703.2  
(% of total)  
Total primary products         41.3         41.4         39.4         43.3         40.6         37.0         31.5  
  Agriculture         12.2         11.6         11.3         11.6         11.6         12.6         11.4  
    Food        11.0         10.5         10.3         10.5         10.7         11.3         10.4  
0361 - Crustaceans, frozen           1.5           1.2           0.9           0.7           1.1           1.8           0.8  
0989 - Food preparations,  
n.e.s.           0.8           0.7           0.7           0.8           0.8           0.7           0.7  
0819 - Food wastes and 
prepared animal feeds, 
n.e.s.           0.3           0.3           0.3           0.4           0.5           0.6           0.7  
    Agricultural raw material           1.3           1.1           1.0           1.1           1.0           1.2           1.0  
  Mining         29.0         29.8         28.1         31.6         28.9         24.4         20.1  
    Ores and other minerals         14.0         12.8         11.4         10.7           9.9         10.4           8.0  
2852 - Alumina (aluminium 
oxide), other than artificial 
corundum         13.2         11.9         10.6         10.0           9.2           9.8           7.5  
    Non-ferrous metals           1.9           2.6           1.6           1.8           1.9           1.5           1.5  
6842 - Aluminium and 
aluminium alloys, worked           1.1           1.8           1.3           1.5           1.4           1.1           1.0  
    Fuels        13.1         14.4         15.0         19.0         17.2         12.5         10.6  
334 Petroleum oils, other 
than crude         11.8         13.4         13.9         17.9         16.4         11.7         10.0  
Manufactures         58.6         58.4         60.4         56.6         59.3         62.8         68.4  
  Iron and steel           1.4           1.3           1.3           1.1           1.1           1.1           1.3  
  Chemicals         10.1           9.3           8.9           9.0           9.1           9.0           9.3  
5429 - Medicaments, n.e.s.           2.7           2.3           2.3           2.3           2.3           2.0           2.6  
5986 - Organic chemic al 
products, n.e.s.           0.6           0.5           0.4           0.5           0.7           0.9           1.1  
  Other semi -manufactures           7.3           6.9           6.9           6.8           6.7           6.8           7.4  
6911 - Structures 
(excluding prefabricated 
buildings of group 811) and 
parts of structures (e.g. 
bridges and bridge sections, 
lock-gates, towers, lattice 
masts, roofs, roofing 
frameworks, doors and 
windows and their frames 
and thresholds for doors, 
shutters)           0.3           0.3           0.3           0.3           0.3           0.5           0.7  
Machinery and transport 
equipment         27.2         29.6         32.4         28.7         31.1         35.0         38.5  
Power generating machines           1.3           0.6           0.6           0.8           0.6           0.7           0.8  
Other non -electrical 
machinery           4.9           4.7           5.3           5.2           5.2           5.9           6.9  
Agricultural machinery and 
tractors           0.2           0.3           0.4           0.5           0.5           0.6           0.6  
Office machines & 
telecommunication equipment           4.3           4.4           4.2           4.9           5.1           5.3           5.5  
7643 - Transmissi on 
apparatus for radio -
telephony, radio -
telegraphy, radio -
broadcasting or television, 
whether or not 
incorporating reception 
apparatus or sound -
recording or reproducing 
apparatus           0.5           0.6           0.7           0.8           1.0           1.1           1.0  
7522 - Digital automatic 
data-processing machines, 
containing in the same 
housing at least a central 
processing unit and an          0.9           0.9           0.9           1.0           1.0           0.8           0.9  WT/TPR/S/361 /Rev.1  • Iceland  
 
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    2010  2011  2012  2013  2014  2015  2016  
input and output unit, 
whether or not combined  
    Other electrical machines         10.9         11.7         10.7         10.6           9.7           8.9           8.4  
7788 - Electrical machinery 
and equipment, n.e.s.           8.0           8.4           7.7           7.4           7.1           6.0           5.3  
    Automotive products           2.8           3.6           5.1           4.6           5.9           7.8         10.5  
7812 - Motor vehicles for 
the transport of persons, 
n.e.s.           1.7           2.5           3.7           3.1           4.0           5.5           7.1  
7821 - Motor vehicles for 
the transport of goods           0.2           0.2           0.3           0.4           0.7           0.9           1.3  
7831 - Motor vehicles for 
the transport of ten or more 
persons, including the driver           0.2           0.2           0.3           0.3           0.3           0.4           0.8  
7843 - Other parts and 
accessories of the motor 
vehicles of groups 722, 781, 
782 and 783           0.4           0.4           0.5           0.4           0.5           0.6           0.6  
    Other transport equipment           3.0           4.6           6.6           2.7           4.7           6.3           6.4  
7924 - Aeroplanes and other 
aircraft, mec hanically -
propelled (other than 
helicopters), of an unladen 
weight exceeding 15,000 kg           0.8           1.4           3.0           0.7           0.8           2.9           3.5  
7929 - Parts, n.e.s. (not 
including tyres, engines and 
electrical part s), of the 
goods of group 792           1.0           0.6           1.0           0.6           0.4           0.5           0.9  
7932 - Ships, boats and 
other vessels (other than 
pleasure craft, tugs, pusher 
craft, special -purpose 
vessels and vessels for 
breaking up)           0.6           1.8           1.7           0.6           2.4           2.0           0.8  
  Textiles           1.1           1.0           1.0           1.0           1.0           1.0           1.0  
  Clothing           2.9           2.6           2.5           2.5           2.5           2.3           2.6  
  Other consumer goods           8.5           7.7           7.4           7.5           7.7           7.6           8.3  
8931 - Articles for the 
conveyance or packing of 
goods, of plastics; stoppers, 
lids, caps and other 
closures, of plastics           0.7           0.7           0.7           0.7           0.6           0.5           0.6  
Other           0.2           0.2           0.3           0.2           0.2           0.2           0.1  
Source:  UNSD, Comtrade database (SITC Rev.3).  WT/TPR/S/361 /Rev.1 • Iceland  
 
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  Table A1. 2 Merchandise exports by destination, 2010 -16 
 2010  2011  2012  2013  2014  2015  2016  
Total exports (US$ million)   4,603.1  5,348.8  5,063.4  4,997.7  5,051.3  4,722.0  4,449.7  
(% of total)  
Americas  5.7  5.0  6.2  6.6  8.2  8.7  9.9  
  United States  4.6  3.7  4.5  4.7  4.9  5.7  7.8  
  Other America  1.1  1.3  1.6  1.9  3.2  3.0  2.1  
          Canada  0.4  0.4  0.6  0.8  0.8  1.2  1.0  
          Greenland  0.3  0.3  0.4  0.4  1.8  0.7  0.5  
Europe  84.8  84.6  81.4  81.5  79.0  80.4  80.4  
  EU-28 77.6  78.4  73.3  74.4  71.6  73.5  73.2  
          Netherlands  34.0  32.4  30.0  30.0  29.2  26.1  25.5  
          United Kingdom  10.1  9.0  9.8  9.5  11.2  11.6  11.3  
          Spain  4.7  3.9  3.5  3.9  7.5  11.5  10.4  
          Germany  14.0  15.0  12.9  12.1  6.0  7.4  6.9  
          France  3.1  3.9  4.4  4.6  5.0  5.7  6.7  
          Denmark  2.7  2.3  2.6  2.9  2.0  2.4  2.4  
          Belgium  1.7  1.5  1.6  1.7  2.2  2.3  2.3  
          Portugal  1.2  1.7  1.5  1.2  1.5  1.5  1.9  
          Poland  1.1  1.2  1.4  1.3  0.7  0.5  1.2  
          Italy 1.6  2.5  2.1  2.2  1.7  1.3  1.1  
          Hungary  0.0  0.0  0.0  0.9  1.5  1.0  1.0  
          Lithuania  1.5  1.9  1.7  1.7  1.1  0.4  0.6  
          Sweden  0.5  0.6  0.5  0.4  0.4  0.5  0.6  
  EFTA 6.1  5.1  6.8  5.8  6.1  5.8  5.6  
          Norway  4.2  4.4  5.1  4.7  4.5  4.7  4.3  
          Switzerland  1.8  0.7  1.7  1.1  1.6  1.1  1.3  
  Other Euro pe 1.2  1.1  1.3  1.4  1.3  1.1  1.6  
          Faroe Islands  0.6  0.6  1.1  1.0  0.9  0.7  1.1  
Commonwealth of Independent 
States (CIS)  2.5  3.5  4.5  4.7  5.4  2.6  1.5  
Africa  2.0  2.1  2.8  2.1  3.0  2.7  1.5  
          Nigeria  1.8  2.0  2.6  2.0  2.5  2.2  1.1  
Middle East  0.2  0.1  0.4  0.5  0.2  0.1  0.1  
Asia 4.7  4.7  4.8  4.5  4.3  5.4  6.6  
  China  0.6  0.9  1.2  1.1  0.8  1.5  2.1  
  Japan  2.5  2.5  2.0  1.9  1.8  2.0  2.2  
  Other Asia  1.6  1.3  1.5  1.5  1.6  1.9  2.3  
            Chinese Taipei  0.4  0.3  0.3  0.2  0.2  0.3  0.5  
Source:  UNSD, Comtrade database . WT/TPR/S/361 /Rev.1  • Iceland  
 
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  Table A1. 3 Merchandise imports by origin, 2010 -16 
  2010  2011  2012  2013  2014  2015  2016  
Total imports (US$ million)  3,914.3  4,845.8  4,771.9  5,019.2  5,371.9  5,285.4  5,703.2  
(% of total)  
Americas  22.8  22.1  21.4  20.7  19.4  20.5  16.5  
  United States  7.9  10.9  10.2  9.6  10.1  7.9  10.0  
  Other America  14.8  11.2  11.2  11.0  9.3  12.6  6.5  
          Bermuda  0.0  0.0  0.0  0.0  0.0  0.0  1.8  
          Brazil  8.7  5.8  6.7  7.3  5.5  6.1  1.7  
          Canada  1.7  1.2  1.1  1.1  1.2  1.9  1.2  
Europe  63.4  64.7  63.6  65.1  65.9  64.7  64.0  
  EU-28 52.0  46.0  44.8  47.3  48.2  50.6  52.5  
          Germany  7.5  7.9  9.2  8.0  7.6  8.6  10.0  
          Netherlands  8.5  7.4  6.0  5.0  6.6  5.9  7.5  
          Denmark  7.1  6.2  5.7  8.3  7.6  7.1  6.1  
          United Kingdom  5.1  5.2  4.6  6.0  6.0  5.0  6.0  
          Sweden  5.2  3.9  3.8  4.0  3.6  3.8  3.9  
          Italy 3.0  3.2  3.0  3.3  3.1  2.9  3.1  
          France  1.8  1.8  2.1  2.5  2.5  4.5  2.8  
          Poland  1.2  2.0  1.2  1.6  1.6  1.9  2.1  
          Spain  1.1  1.0  1.2  1.3  1.5  1.3  1.5  
          Belgium  1.4  1.3  1.3  1.2  1.4  1.3  1.3  
          Ireland  0.8  0.5  1.5  0.7  1.0  2.2  1.3  
          Czech Republic  0.6  0.6  0.8  1.0  1.0  1.1  1.2  
  EFTA 10.4  17.9  17.7  16.8  16.0  12.0  10.1  
          Norway  9.1  15.9  16.6  15.1  14.6  10.1  9.0  
          Switzerland  1.4  2.0  1.1  1.7  1.4  1.8  1.1  
  Other Europe  1.0  0.8  1.0  1.0  1.6  2.2  1.4  
Commonwealth of Independent States 
(CIS)  0.6  0.9  0.8  0.7  0.5  0.4  0.3  
Africa  0.5  0.6  0.9  0.5  0.5  0.8  0.9  
Middle East  0.2  0.4  0.4  0.2  0.9  0.2  1.1  
Asia 12.5  11.3  12.9  12.8  12.8  13.5  17.3  
  China  6.0  6.3  7.2  7.8  7.4  7.8  7.4  
  Japan  2.3  1.6  1.5  1.4  1.4  1.7  2.0  
  Other Asia  4.1  3.4  4.3  3.6  4.0  3.9  8.0  
          Australia  0.6  0.1  0.1  0.1  0.1  0.3  2.1  
          Korea, Republic of  0.5  0.6  0.7  0.9  1.1  1.1  1.3  
          India 1.0  0.9  0.7  0.7  0.6  0.6  1.0  
Source:  UNSD, Comtrade database . WT/TPR/S/361 /Rev.1 • Iceland  
 
- 109 - 
 
  Table A1. 4 Inflows of foreign direct investment, 2010 -16 
  2010  2011  2012  2013  2014  2015  2016  
Total inflow s  (ISK million)  29,966.1  128,418.0  128,225.9  48,482.7  52,208.2  93,468.4   ..  
By sector:         
Agriculture, forestry and fishing  673.0  -2.0 72.8 3,332.9  4,338.4  169.2   ..  
Manufacturing, mining and 
quarrying and other industry  34,250.8  62,116.0  28,750.2  6,265.7  -11,159.1  -5,043.3   ..  
Construction  -785.8  4,843.0  551.7  -517.8  81.3 212.6   ..  
Wholesale and retail trade, 
transportation and storage, 
accommodation and food service 
activities  1,701.9  1,546.0  3,213.6  50,810.1  75,358.1  -
292,715.1   ..  
Information and communication  14.9 2,686.0  674.0  3,200.7  1,007.9  5,118.5   ..  
Financial and insurance activities  -6,357.3  57,475.0  75,034.3  -33,752.1  -27,681.7  379,922.6   ..  
Real estate activities  0.0 0.0 11,508.8  10,502.2  3,795.3  3,133.3   ..  
Professi onal, scientific, technical, 
administration and support 
service activities  468.8  -247.0  4,137.2  3,068.3  5,807.0  2,137.3   ..  
Other  0.0 0.0 4,283.4  5,572.8  660.9  533.3   ..  
By origin:         
Netherlands  -23,833.5  -4,055.0  -6,609.2  8,952.7  19,265.8  67,972 .1  ..  
United Kingdom  89.7 2,593.0  10,731.2  426.3  10,639.2  33,678.2   ..  
Malta  0.0 0.0 1,589.2  -28,900.4  6,440.9  9,757.1   ..  
Germany  19.7 77.0 2,587.5  -1,537.4  -883.5  9,404.4   ..  
Norway  1,748.3  -1,176.0  -1,388.5  3,424.6  818.3  4,845.2   ..  
Ireland  136.6 6.0 2,318.2  2,474.7  7,177.6  4,316.4   ..  
United States  -1,231.0  8,292.0  -136.2  -581.7  10,541.6  3,191.4   ..  
Denmark  325.7  2,639.0  3,652.6  28,406.3  4,756.0  1,363.8   ..  
Italy 641.8  195.0  -293.1  -600.1  1,432.1  1,189.8   ..  
Australia  0.0 0.0 0.0 -7,231.6 -3,212.7  1,020.1   ..  
Switzerland  579.1  29,157.0  20,658.9  274.4  -38,951.0  769.4   ..  
Cyprus  0.0 0.0 2,927.1  1,643.2  -362.8  -47.9  ..  
Sweden  18,113.8  -6,963.0  -2,985.4  2,964.1  3,969.9  -240.5   ..  
Luxembourg  32,629.1  92,875.0  70,336.3  45,299.9  7,058.5 -63,164.2   ..  
Not allocated  746.8  4,778.0  24,837.2  -6,532.4  23,518.1  19,413.0   ..  
.. Not available  
Source:  Statistics Iceland online information.  WT/TPR/S/361 /Rev.1  • Iceland  
 
- 110 - 
 
  Table A1. 5 FDI inward stock, 2010 -16 
 2010  2011  2012  2013  2014  2015  2016  
Total inward stock 
(ISK million)  1,355,736.3  1,552,991.0  1,337,204.8  851,255.5  1,001,094.7  1,017,413.0  .. 
By sector:         
Agriculture, forestry 
and fishing  822.0  856.0  1,476.6  4,723.1  8,928.6  8,736.6  .. 
Manufacturing, 
mining and 
quarrying  and other 
industry  777,836.6  875,293.0  986,533.9  165,541.2  219,302.0  207,269.8  .. 
Construction  6,653.4  8,556.0  7,304.5  1,013.5  158.6  534.2  .. 
Wholesale and retail 
trade, transportation 
and storage, 
accommodation and 
food service 
activities  37,207.0  38,191.0  28,039.2  361,325.3  376,718.6  23,552.3  .. 
Information and 
communication  1,160.2  5,206.0  1,409.1  7,920.2  14,063.3  20,542.5  .. 
Financial and 
insurance activities  534,102.1  625,168.0  271,050.0  258,282.2  304,010.9  672,868.4  .. 
Real estate activities  0.0  0.0  22,442.2  25,650.9  33,565.3  37,038.5  .. 
Professional, 
scientific, technical, 
administration and 
support service 
activities  -2,045.0  -279.0  9,572.1  10,142.0  23,231.4  26,354.7  .. 
Public 
administration, 
defence,  education, 
human health and 
social work activities  0.0  0.0  0.0  0.0  0.0  0.0  .. 
Other services  0.0  0.0  0.0  0.0  0.0  0.0  .. 
Unallocated  0.0  0.0  9,377.0  16,657.1  21,116.2  20,516.0  .. 
By origin:         
Luxembourg  1,097,359.7  1,229,631.0  918,666.9  868,604.2  935,719.4  809,164.9  .. 
Netherlands  129,740.0  136,440.0  126,199.8  98,112.9  130,727.4  193,568.8  .. 
Switzerland  21,055.0  48,695.0  72,117.0  69,383.9  52,205.3  75,477.5  .. 
United Kingdom  931.6  6,171.0  20,456.8  6,291.0  19,292.3  49,182.0  .. 
Denmark  24,632.0  29,045.0  54,134.6  40,035.6  53,319.5  47,709.9  .. 
Norway  26,356.4  25,643.0  27,908.3  27,822.4  27,905.6  30,726.0  .. 
Sweden  17,373.1  12,890.0  17,466.2  15,776.0  22,006.4  24,053.4  .. 
Ireland  294.5  7,544.0  8,007.7  9,594.3  20,420.2  18,152.6  .. 
Italy 7,956.8  1,956.0  8,879.4  8,377.1  8,990.4  10,157.9  .. 
Cyprus  0.0  0.0  403.6  1,914.7  7,547.0  7,331.3  .. 
Germany  670.8  570.0  2,597.2  10,973.6  -3,790.9  6,140.4  .. 
Malta  0.0  0.0  1,589.2  -23,397.5  -16,481.5  -3,956.0  .. 
Australia  0.0  0.0  0.0  -7,694.8  -11,009.6  -10,234.9  .. 
United States  24,696.3  44,951.0  49,743.7  -290,828.8  -330,202.9  -336,306.5  .. 
Not allocated  4,670.6  9,457.8  29,034.5  16,291.0  84,446.2  96,245.7  .. 
.. Not available  
Source:  Statistics Iceland online information.  WT/TPR/S/361 /Rev.1 • Iceland  
 
- 111 - 
 
  Table A1. 6 Outflows of foreign direct investment, 2010 -16 
 2010  2011  2012  2013  2014  2015  2016  
Total outflows  (ISK 
million)  -289,451.3  2,047.0  -400,970.8  56,234.8  -
30,011.3  -4,123.7  .. 
By sector:         
Agriculture, forestry and 
fishing  1,701.5  -10,281.0  1,879.2  -3,867.0  797.3  2,764.7  .. 
Manufacturing, mining and 
quarrying and other industry  -37,624.0  14,366.0  317,479.9  9,880.2  3,831.2  17,734.7  .. 
Constr uction  -244.4  -483.0  12.4 79.9 -462.0  7,183.1  .. 
Wholesale and retail trade, 
transportation and storage, 
accommodation and food 
service activities  -7,636.5  -24,711.0  -521,235.5  1,104.3  2,337.1  7,653.3  .. 
Information and 
communication  -2,850.0  2,907.0  -419.8 -1,050.5  326.1  50.1 .. 
Financial and insurance 
activities  -229,258.5  8,695.0  -196,619.7  41,857.7  -
31,025.4  -20,437.7  .. 
Real estate activities  -12,462.2  15,057.0  -340.0  8,389.9  -6,389.2  -6,058.5  .. 
Professional, scientific, 
technical, administration  and 
support service activities  4,506.0  -3,093.0  -441.0  -97.2 57.8 -13,186.3  .. 
Public administration, defence, 
education, human health and 
social work activities  0.0 0.0 0.0 -74.2 516.0  152.9  .. 
Other services  0.0 0.0 0.0 0.0 0.0 0.0 .. 
Other  -5,583.4  -411.0  -1,286.8  11.8 0.0 19.8 .. 
By destination:         
Cyprus  798.8  561.0  473.0  -563.5  -302.9  36,175.0  .. 
United Kingdom  -9,977.0  10,775.0  -270,295.1  -14,231.8  6,606.9  12,468.8  .. 
Spain  1,099.9  1,348.0  92.9 559.7  1,148.8  3,612.2  .. 
Germany  -10,526.6  1,875.0  -8,235.9  -307.0  -1,904.6  1,722.4  .. 
Denmark  -98,461.4  2,131.0  3,091.9  -2,967.8  1,364.4  1,547.2  .. 
France  -1,020.1  827.0  914.1  64.1 0.4 657.0  .. 
Canada  549.7  1,437.0  229.7  -1,534.6  63.4 158.5  .. 
Faroe Islands  2,152.5  -5,378.0  698.8  1,773.3  1,460.6 0.4 .. 
British Virgin Islands  0.8 1.0 -1,067.6  0.0 0.0 0.0 .. 
Bulgaria  -741.1  -2,728.0  4,127.5  0.0 0.0 0.0 .. 
United States  -42,278.2  1,399.0  28,300.4  81.0 -2,959.8  -381.5  .. 
Luxembourg  -91,052.0  13,305.0  -176,755.6  1,444.5  -
46,632.2  -1,258.0  .. 
Latvia -1,525.1  -4,417.0  -1,268.1  -5,188.7  -4,940.1  -2,995.0  .. 
Finland  1.9 -5,270.0  730.8  1,024.7  -247.3  -7,925.8  .. 
Sweden  -4,075.4  3,220.0  -531.5  5,047.3  -4,970.7  -11,755.2  .. 
Netherlands  -17,764.6  -20,209.0  2,045.3  65,368.0  12,792.9  -25,332.9  .. 
Norway -6,194.8  7,484.0  2,916.0  8,945.3  845.9  -41,484.5  .. 
Not allocated  -10,438.8  -4,314.0  13,562.5  -3,279.5  7,663.0  30,667.6  .. 
.. Not available  
Source  Statistics Iceland online information.  WT/TPR/S/361 /Rev.1  • Iceland  
 
- 112 - 
 
  Table A1. 7 FDI outward stock, 2010 -16 
 2010  2011  2012  2013  2014  2015  2016  
Total outward stock 
(US$ million)  1,319,186.5  1,413,710.0  1,587,172.1  1,098,088.6  1,067,844.9  989,627.3  .. 
By sector:         
Agriculture, forestry 
and fishing  15,998.7  5,677.0  22,785.0  19,179.1  18,415.9  16,438.1  .. 
Manufacturing, mining 
and quarrying and 
other industry  309,318.3  253,809.0  537,095.0  160,626.4  170,352.1  211,137.4  .. 
Construction  5,746.9  3,510.0  40,152.2  36,389.6  38,757.3  20,636.7  .. 
Wholesale and retail 
trade, transportatio n 
and storage, 
accommodation and 
food service activities  331,600.3  337,040.0  140,985.8  94,796.7  111,120.9  112,633.5  .. 
Information and 
communication  8,162.1  14,535.0  12,576.2  9,408.4  3,753.4  3,607.6  .. 
Financial and 
insurance activities  618,9 28.7  759,221.0  765,586.6  684,093.0  571,534.9  486,238.6  .. 
Real estate activities  17,671.0  28,289.0  13,789.6  33,701.7  45,825.5  27,911.6  .. 
Professional, scientific, 
technical, 
administration and 
support service 
activities  6,487.4  9,304.0  37,433.4  43,091.9  43,784.9  49,183.2  .. 
Public administration, 
defence, education, 
human health and 
social work activities  0.0  0.0  0.0  9,052.0  13,477.6  14,682.6  .. 
Other, unallocated  5,273.1  2,325.0  16,768.3  7,749.7  50,822.4  47,158.1  .. 
By destination:         
Netherlands  212,824.4  206,740.0  421,747.9  427,917.5  345,160.4  325,724.7  .. 
United Kingdom  370,468.6  459,934.0  270,589.7  215,112.2  225,611.0  212,016.1  .. 
Luxembourg  245,703.9  303,141.0  161,673.2  147,863.5  111,955.8  89,424.1  .. 
Cyprus  16,678.8  15,184.0  17,979.6  8,444.1  20,419.1  72,069.1  .. 
Sweden  47,585.4  60,977.0  81,434.7  77,795.1  79,067.9  48,171.2  .. 
British Virgin Islands  13,553.1  35.0  31,727.0  28,505.4  31,571.0  32,219.5  .. 
Norway  19,668.6  32,629.0  41,226.7  44,410.7  52,373.1  15,622.4  .. 
Finland  31,136.5  29,013.0  30,868.7  26,432.4  27,543.6  15,588.4  .. 
Germany  25,581.9  18,293.0  5,904.1  11,749.3  11,318.1  13,867.4  .. 
Canada  18,145.2  20,077.0  16,821.8  13,954.3  13,743.3  13,28 0.1  .. 
Spain  11,527.3  6,952.0  9,619.5  8,493.7  9,154.0  11,844.5  .. 
Faroe Islands  9,827.3  893.0  7,543.2  8,224.4  18,019.9  10,348.0  .. 
Denmark  61,335.5  60,636.0  51,473.4  -4,062.1  5,310.2  9,131.0  .. 
Latvia  13,917.7  14,816.0  18,866.3  19,267.2  14,277.5  6,989.1  .. 
United States  144,248.9  159,106.0  375,319.3  6,777.4  5,010.3  2,601.1  .. 
France  3,451.0  3,573.0  4,560.0  1,244.4  330.7  231.3  .. 
Bulgaria  284.4  -2,925.0  1,128.5  0.0  0.0  0.0  .. 
Not allocated  73,248.4  24,640.0   38,688.4  55,959.2  96,979.2  110,499.3  .. 
.. Not available  
Source:  Statistics Iceland online information.  
 WT/TPR/S/361 /Rev.1 • Iceland  
 
- 113 - 
 
  Table A2. 1 Selected Notifications to the WTO, 1 July 2012 -30 June 2017  
WTO 
Agreement  Description  Document symbol  Date 
Agreement on Agriculture  
Article 10 and 
18.2; ES:1, 
ES:2 Export subsidy commitments  G/AG/N/ISL/39  
G/AG/N/ISL/35  18/05/2017  
16/09/2014  
Article 18.2; 
DS:1 Domestic support  G/AG/N/ISL/40  
G/AG/N/ISL/33  22/05/2017  
10/09/2014  
Article 18.2; 
MA:2 Tariff qu otas G/AG/N/ISL/37  
G/AG/N/ISL/36  
G/AG/N/ISL/32  
G/AG/N/ISL/31  13/12/2016  
26/09/2014  
21/07/2014  
19/11/2012  
Article s 5.7 and 
18.2; MA:5  Special safeguard  G/AG/N/ISL/38  
G/AG/N/ISL/34  18/05/2017  
16/09/2014  
Agreement on the Implementation of Article VI of the GATT 1994 (Anti -Dumping)  
Article 16.4  – 
semi annual  Anti-dumping actions (taken within 
the preceding six months)  G/ADP/N/216/Add.1/Rev.1  25/07/2012  
GATT 1994 and/or GATS  
Article 
XXIV:7(a) of 
GATT 1994  Notification of regional trade 
agreements or changes :  Bosnia and 
Herzegovina and EFTA States; 
Montenegro and the EFTA States; the 
Arab Republic of Egypt and the EFTA 
States; EFTA States and Croatia; 
EFTA States and Jordan; EFTA States 
and Morocco  WT/REG360/N/1  
WT/REG323/N/1  
WT/REG232/N/1/Add.2  
WT/REG232/N/ 1/Add.3  
WT/REG232/N/1/Add.4  
WT/REG132/N/1/Add.5  
WT/REG133/N/1/Add.1  
WT/REG133/N/1/Add.2  
WT/REG133/N/1/Add.3  
WT/REG91/N/1/Add.2/Rev.1  
WT/REG91/N/1/Add.3/Rev.1  08/01/2015  
25/10/2012  
27/06/2013  
27/06/2013  
25/03/2015  
26/11/2013  
11/09/2013  
11/09/2013  
11/09/2013  
25/03/2013  
25/03/2013  
Article 
XXIV:7(a) of 
GATT 1994 and 
Article V:7(a) 
of GATS  Notification of regional trade 
agreements:  Chile and EFTA States; 
the Central American States and the 
EFTA States; Iceland and China; 
Hong Kong, China and the EFTA 
States; C olombia and the EFTA 
States; Mexico and EFTA States  WT/REG179/N/1/Add.4  
WT/REG357/N/1, S/C/N/774  
WT/REG355/N/1, S/C/N/771  
WT/REG322/N/1, S/C/N/654  
WT/REG299/N/2, S/C/N/600/Add.1  
WT/REG126/N/1/Add.2  
WT/REG126/N/1/Add.3  
WT/REG126/N/1/Add.4  
WT/REG126/N/1/Add. 5 
WT/REG126/N/1/Add.6  08/05/2017  
21/11/2014  
13/10/2014  
01/10/2012  
09/01/2015  
18/09/2013  
18/09/2013  
18/09/2013  
18/09/2013  
18/09/2013  
Article 
XXIV:7(c) of 
GATT 1994  Notification of regional trade 
agreements:  EFTA States and the 
Republic of Lebanon  WT/REG22 4/N/1/Add.1  25/04/2013  
GATT 1994 Art icle XVII and the Understanding on the Interpretation of Article XVII  
GATT 1994 Art. 
XVII:4(a) and 
Para. 1 of the 
Understanding 
on the 
Interpretation 
of Article XVII  New and full notification of state -
trading enterpris es G/STR/N/15/ISL  07/06/2017  
General Agreement on Trade in Services  
Services LDC 
Waiver  Preferential treatment to services and  
service suppliers of least developed 
countries  S/C/N/835  13/10/2015  
Agreement on Rule s of Origin  
Paragraph 4 of 
Annex II  Preferential rules of origin  G/RO/N/82  31/08/2012  
Agreement on Sanitary and Phytosanitary Measures  
Article 7 
Annex  B Sanitary and phytosanitary 
regulations  G/SPS/N/ISL/9  
G/SPS/N/ISL/8  15/11/2012  
15/11/2012  WT/TPR/S/361 /Rev.1  • Iceland  
 
- 114 - 
 
  WTO 
Agreement  Description  Document symbol  Date 
Agreement on Government Procurement  
Article XVI:4  Statistics reported under Article XVI:4 
of the revised GPA  GPA/142/Add.2  
GPA/137/Add.6  25/04/2017  
25/04/2017  
Article 
XXIV:5(b) and 
XXII:5  Notification of national implementing 
legislation  GPA/144  28/04/2017  
Appendix I  Thresholds in national currency  GPA/W/336/Add.11  
GPA/W/325/Add.9  
GPA/W/314/Add.9  21/11/2016  
22/07/2014  
10/09/2012  
Source:  WTO Secretariat.  WT/TPR/S/361 /Rev.1 • Iceland  
 
- 115 - 
 
  Table A2. 2 Iceland's free trade agreements, 2017  
Free trade agreement  Date of entry into 
force  Coverage  
EFTA – Bosnia and Herzegovina  1-Jan-15 Goods  
EFTA – Central America  
(Costa Rica and Panama)  19-Aug-14 Goods & Services  
EFTA – Gulf Cooperation Council  1-Jul-14 Goods & Services  
Iceland – China  1-Jul-14 Goods & Services  
EFTA – Hong Kong, China  1-Oct-12 Goods & Servi ces 
EFTA – Montenegro  1-Sep-12 Goods  
EFTA – Ukraine  1-Jun-12 Goods & Services  
EFTA – Colombia  1-Jul-11 Goods & Services  
EFTA – Peru 1-Jul-11 Goods  
EFTA – Albania  1-Nov-10 Goods  
EFTA – Serbia  1-Oct-10 Goods  
EFTA – Canada  1-Jul-09 Goods  
EFTA – SACU  1-May-08 Goods  
EFTA – Egypt  1-Aug-07 Goods  
EFTA – Lebanon  1-Jan-07 Goods  
Iceland – Faroe Islands  1-Nov-06 Goods & Services  
EFTA – Republic of Korea  1-Sep-06 Goods & Services  
EFTA – Tunisia  1-Jun-05 Goods  
EFTA – Chile 1-Dec-04 Goods & Services  
EFTA – Singapore  1-Jan-03 Goods & Services  
EFTA – Jordan  1-Sep-02 Goods  
EFTA – The former Yugoslav Republic of 
Macedonia  1-May-02 Goods  
EFTA – Mexico  1-Jul-01 Goods & Services  
EFTA – Morocco  1-Dec-99 Goods  
EFTA – Palestinian Authority  1-Jul-99 Goods  
Europea n Economic Area (EEA)  1-Jan-94 Goods & Services  
EFTA – Israel  1-Jan-93 Goods  
EFTA – Turkey  1-Apr-92 Goods  
Iceland – European Union ( EU)  1-Apr-73 Goods  
EFTA – Accession of Iceland  1-Mar-70 Goods  
Iceland – European Free Trade 
Association (EFTA)  3-May-60 
1-Jun-02 Goods  
Services  
Iceland – Greenland  1-Feb-85 Goods  
Source:  Compiled by the WTO Secretariat.  
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