WT/TPR/S/164/Rev.1 Trade Policy Review 
Page 20 
 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
(1) INTRODUCTION  
1. Iceland pursues a liberal trade policy except with respect to certain agricultural products.  No 
major changes have been made to Iceland's impo rt regime since its previous Review in 2000 
notwithstanding the entry into force of a new cust oms law on 1 January 2006.  Iceland's average MFN 
applied tariff is 5.9%.  A high percentage of ta riff lines (70%) benefit from duty free treatment.  The 
average MFN applied tariff rate for agricultural pro ducts is 18.3% (WTO definition) compared with 
2.5% for other goods.  Most non- ad valorem  tariffs apply to agricultural products.  All agricultural 
tariffs lines as well as some 94% of manufactured lines are bound but the average bound rate is much 
higher than applied rates, which reduces the predictability otherwise injected by Iceland's 
comprehensive tariff bindings. 
2. In practice, most of Iceland's trade and inv estment relations take place under preferential 
rules.  Iceland offers preferential tariffs on imports from 37 WTO Members under various free-trade 
agreements.  Regional liberalization has advanced the most within the framework of the European 
Economic Area (EEA);  nevertheless, the average ta riff on products from EEA partners is still 3.2%, 
reflecting the exclusion of several agricultural pr oducts from duty-free treatment.  Iceland's growing 
number of preferential agreements has increased the complexity of its trade regime, although this may 
be lessened somewhat by Iceland's application of the Pan-European Cumulation System for rules of 
origin. 
3. Other than tariffs, charges affecting imports include a value-added tax, excise taxes, and some 
other specific charges.  As with other small econom ies, the burden of these charges is in many cases 
significantly heavier than that of the tariffs them selves, and falls mostly on imports as Iceland relies 
on imported products to meet most of its domestic needs. 
4. Iceland has not used contingency measures since the WTO's establishment.  Iceland notified 
the State Alcohol and Tobacco Monopoly (ATVR) as its only state trading enterprise.  The ATVR has 
monopoly rights for the retail distribution of alc oholic beverages, and the importation and wholesale 
of tobacco and tobacco products. 
5. Iceland notified the WTO of its measures to implement the TBT Agreement in 2000.  It 
notified only one technical regulation under the TBT Agreement during the period under review.  In contrast, during the same period it made 41 notif ications to the EFTA Surveillance Authority 
concerning draft technical regulations.  Iceland's EEA  membership requires it to apply EU legislation 
on technical regulations, standards, testing, and certification. 
6. Imports of a number of agricultural products are prohibited for sanitary and phytosanitary 
reasons, unless an exemption is granted by the Minister of Agriculture.  Iceland has a wide derogation from EEA sanitary legislation and is only require d to transpose EU sanitary measures relating to 
fishery products.  Iceland has notified emergency import bans on certain foods from a number of 
countries because of avian influenza.  It has yet to notify to WTO Members, however, at least one key 
SPS-related regulation. 
7. Export restrictions or licensing are applied to protect human and animal health or for other 
non-commercial reasons.  Among the other limited num ber of measures specific to exports is the 
requirement for producers of lamb meat to export a percentage of their productio n, in order to regulate 
the domestic supply.  In addition,  export goods made from agricultural raw materials benefit from a 
refund equal to the difference between the cost of raw materials in the international and domestic 
markets.  The law authorizes the establishment of free zones but only one company has been Iceland WT/TPR/S/164/Rev.1 
 Page 21 
 
 
authorized to operate in a limited manner under this regime.  Iceland has notified that WTO that it did 
not provide subsidies for agricultural products con tingent upon exportation during the period 2000-02 
(no more recent information has been notified). 
8. Excluding agriculture, state aid is low and is generally of a horizontal nature, targeted mainly 
at research and development, promotion of sma ll and medium-sized enterprises, training, and job 
creation. 
9. In 2001, Iceland acceded to the WTO Government  Procurement Agreement.  The same year, 
it adopted new laws on public procurement and on public projects procedures.  Limitations on the 
coverage of Iceland GPA commitments relate to , among others, various services sectors, certain 
services or utilities contracts, and the procurement of animal products.  Up to early 2006, Iceland had 
not provided the statistical information mentioned in Article XIX:5 of the Government Procurement 
Agreement, however the authorities are in the process of establishing a system for the collection of statistics. 
10. Iceland's national competition regime runs in parallel with EEA competition rules, and 
significant amendments were made to Icela nd's legislative framework in 2000 and 2005, 
implementing structural changes, EEA legislati on, and strengthening the powers of the competition 
authority.  Iceland's programme of privatization has been under way over the last fifteen years;  during the period under review, the programme has covered major government assets in telecommunications.  Efforts have also been made to make the tax syst em simpler and reduce tax rates, notably by reducing 
the corporate income tax from 30% to 18% and abolis hing the net wealth tax of 0.6% on net capital. 
11. Iceland's intellectual property legislation was last reviewed in the Council for TRIPS in 2000.  
Since then, Iceland has adopted new laws on desi gn protection, collective marks, and employees' 
inventions, while the Patents Trademark, Design and the Copyright Acts have been amended. 
(2) MEASURES DIRECTLY AFFECTING IMPORTS  
(i) Procedures and documentation 
12. A new Customs Law came into force on 1 Ja nuary 2006 (Act No. 88/2005).  The most 
significant amendments made by this bill include:  new provisions regarding the operations of 
customs brokers, which are subject to authorization by the Minister of Finance; amendments to provisions on storage of undeclared goods; simplified procedures for complaints; and amendments to 
penal provisions and rules procedures. 
13. The Minister of Finance is the head of customs affairs.  Iceland has 26 districts, which serve 
as both customs districts and administrative districts of  magistrates.  Directors of customs are:  the 
Director of Customs in Reykjavík (for the admi nistrative district of Reykjavík), and district 
magistrates in other administrative districts.  The Directorate of Customs in Reykjavik also has a harmonizing role. 
14. According to the authorities, customs clearance  for all importation aspects is computerized;  
electronic data interchange (EDI) covers 98% of the declarations of import and export firms.  
Customs clearance using EDI takes a matter of minutes, or a few hours if processed manually.  Importers must apply for a licence to use the EDI system or use the services of customs brokers, who 
also need to be licensed.  When imported goods are cleared through customs using EDI, the importer does not need to submit the required documents to customs, but must have these to hand when the 
customs declaration is submitted electronically and for a certain period of time thereafter. WT/TPR/S/164/Rev.1 Trade Policy Review 
Page 22 
 
 
                                                     15. The new Customs Act sets out the documentati on requirements for importers of goods;  in 
this respect there are no significant changes to the previous Customs Act (Act No. 55/1987).  
Documents required by customs, as set out in the Customs Act, include: an import declaration;  an 
invoice;  a bill of lading or relevant transport document;  a bill covering freight charges; a certificate 
of origin when preferential customs treatment is  requested unless a declaration of origin has been 
entered on the invoice; other documents relevant to  the customs treatment of the imports, e.g. an 
import licence when required, a confirmation authori zation for special customs treatment, or other 
certificates required in special circumstances.  Cu stoms authorities may request accounting data if 
needed for customs surveillance.1 
16. In addition to the Customs Law, other statutes may impose requirements on importers in 
general, in particular to register.  For example, importers of animal fodder,  fertilizer, and seeds must 
be registered at the Agricultural Authority of Icel and (Table III.5) and imports of medicinal products 
must be licenced by the Ministry of Health and Social Security. There was no full list available 
concerning the registration of importers. 
17. The new Customs Law has defined more clearl y the respective responsibilities of the police 
and customs authorities.  Customs enforcement officials are authorized to inspect and investigate all goods transported to the country (Article 156).  They may request the goods to be moved to the premises of the Directorate of Customs, or to another specific place where customs control is carried out, and to be produced there for inspection.  Cu stoms inspections appear to be conducted randomly 
or based on a risk analysis. 
18. Goods may be cleared directly through customs or stored in a tax-free zone or supervised 
warehouses until their release is authorized.  This re quires respective bills of lading to be signed and 
stamped by customs officials.  Bonded wareho uses operate in Akureyri, Hafnarfjördur, and 
Reykjavik.2  The amendments introduced by the new Cu stoms Act with respect to provisions on 
storage of undeclared goods include:  obligatory no tification of transfer of goods between places of 
storage; more concise rules on those responsible for storing undeclared goods;  as well as rules on the 
payment of import charges on goods are missing from a place of storage and in cases where excess 
stores are detected in a place of storage. 
19. Complaints must be submitted in writing to the relevant Director of Customs and supported 
by the necessary documents.3 The ruling of the Director of Cust oms can be appealed to the State 
Customs Board for a final decision. Under the previo us Customs Act some rulings had to be appealed 
to the Minister of Finance. 
20. A breach of the Customs Law can result in conf iscation of goods, fines or imprisonment of up 
to six years.4 
21. Iceland has notified the WTO that it does not have any laws or regulations relating to 
preshipment inspection.5 
 
1 Customs Law (Act No. 88/2005), Articles 28, 29. 
2 Dun & Bradstreet (2004). 
3 Act No. 88/2005 Chapter XIV. 
4 Act No. 88/2005 Chapter XXII. 
5 WTO document G/PSI/N/1/Add.4, 9 October 1996. Iceland WT/TPR/S/164/Rev.1 
 Page 23 
 
 
                                                     (ii) Customs valuation 
22. Iceland's rules and regulations with respect to customs valuation have not changed greatly 
since its last Review;  they are contained in Ch apter V of Iceland's Customs Act No. 88/2005 and in 
Regulation No. 374/1995.  There have been no signi ficant changes in this area as a result of the new 
law with the exception of simplified procedur es on exchange rates for customs procedures. 
23. The Minister of Finance is ultimately resp onsible for issuing rules regarding: the 
determination of customs value, taking into account Implementation of Article VII of the GATT 
1994;  instances where there is doubt over the truthful ness of invoices;  and exchange rates used to 
convert the customs value of goods into Icelandic kronur.6  These rates of exchange must be based on 
an official adjustment rate of exchange register ed by the Central Bank on the 28th of each month. 
24. Iceland applies tariffs to the c.i.f. value of  imports, based on the transaction value of the 
goods.  Minimum prices or reference prices are not u sed for customs valuation.  Average prices for 
tariff headings and the exporting country are so metimes used as guidance to uncover valuation 
discrepancies.  If goods are unloaded at a customs port th at is farther away than the first port at which 
they could have been unloaded then the additional transportation costs may be subtracted.  Additional 
transportation costs related to poor conditions for un loading, or related to a vessel's unloading at more 
than one port, may also be subtracted. 
25. When the price specified on an invoice is not the transaction value, the importer must submit 
together with the import declaration a special decl aration of customs value for the determination of 
the customs value.  If the truthfulness of the decl ared transaction value is in doubt the Director of 
Customs asks the importer to provide further explan ations or data, before resorting to the other 
sequential methods of determining customs value set out in the Agreement on Implementation of 
Article VII of the GATT 1994 and mirrored in Regulation No. 374/1995.7 
26. With respect to imported used vehicles, a special rule applies if it is not possible to use any of 
the other methods listed in Regulation No. 374/1995.  This provides for a comparison of the transaction value stated on the import declaration to  values of vehicles of the same model in the 
country where the vehicle was purchased.  Depreci ation allowances are calculated according to the 
age of the vehicle. 
27. Assistance may be sought from customs authorities in the country of export.  Where the 
determination of customs value of imported goods is delayed, customs may release the goods, against 
security for border charges.  Upon written re quest, an importer has the right to a written 
communication from the Director of Customs explaining how the customs value of the imported goods was determined. 
28. Iceland has 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;  the provisions of the Decision on the Treatment of Interest Charges in the Customs 
Value of Imported Goods has not been implemented and nor have the provision s of paragraph 2 of the 
Decision on the Valuation of Carrier Media Bear ing Software for Data Processing Equipment.8 
 
6 Articles 10 and 13 respectively of Iceland's Customs Act No. 55/1987 (amended). 
7 Articles 10 to 15 of Iceland's Regulation No. 374/1995 (amended). 
8 WTO document G/VAL/N/2/ISL/1, 16 April 1999. WT/TPR/S/164/Rev.1 Trade Policy Review 
Page 24 
 
 
                                                     (iii) Rules of origin 
29. Iceland does not maintain non-preferential rules of origin.  The Minister of Finance has 
authority under Law No. 87/1995 to issue such rules, but will probably not exercise this authority 
until the Technical Committee on Rules of Origin completes its work on the harmonization of non-
preferential rules of origin.9 
30. Both bilaterally with the EU and in the context of its participation in the EEA, Iceland applies 
the Pan-European Cumulation System rules of prefer ential origin, which was created in 1997.  In this 
context, its rules of origin are substantively the same as those of other participants in the system (the EU and EFTA countries, Bulgaria, Romania a nd, for industrial products only, Turkey) , i.e. imports 
into Iceland from participating countries are eligible to receive preferential status if they are "wholly 
obtained" or if non-originating products are "su fficiently processed".  Diagonal cumulation under the 
system allows products to be manufactured by mo re than one participating country to meet the 
"sufficient processing" criteria.  The criteria for "sufficient processing" are outlined in Annex II of 
Protocol 4 of the EEA Agreement
10, and vary across products.  The pan-European cumulation of 
origin system is gradually being extended to the EU 's Mediterranean partners (Turkey to include coal, 
steel and agricultural products as well as Algeria, Eg ypt, Israel, Jordan, Lebanon, Morocco, Syria, 
Tunisia and the Palestinian Authority of the W est Bank and Gaza Strip), and the Faroe Islands.11 
31. The rules of origin under the free-trade agreements between EFTA and other third countries 
are closely modelled on the EEA rules of origin.  Or iginating status is conferred on wholly obtained 
products, or semi-manufactured or manufactured products that satisfy product-specific processing 
rules, based on minimum levels of value added.  To lerance rules exist, but they do not cover textiles 
and clothing. 
32. The rules of origin for trade between Icela nd and GSP countries are outlined in Regulation 
119/2002.  Products must be "wholly obtained" in individual GSP countries or sufficiently processed 
according to the rules on working or processing in Annex II to Protocol 4 of the EEA Agreement. 
33. Exporters, importers or other persons may request an advance assessment of origin from the 
Icelandic authorities.  If the enquirer disagrees with an assessment by a director of customs, this may be appealed to the State Customs Board.
12 
(iv) Tariffs 
(a) Applied MFN tariff 
34. Iceland grants at least MFN treatment to all tr ading partners.  Icela nd adopted the Harmonized 
Commodity Description and Coding System on 1 January 1988 through Law No. 96/1987, which 
amended Customs Law No. 55/1987.  The Customs Law (Act No. 88/2005) contains the tariff. 
35. The MFN tariff includes 8,167 lines at the eight-digit HS level (HS2002) in 2005, of which 
95.3% are ad valorem  duties (Table III.1).  Some 70% of all tariff lines are duty free.  The average 
 
9 WTO document G/RO/N/5, 1 November 1995. 
10 The latest update to this Protocol was through Decision No. 38/2003 (OJ No. L 137, 5.6.2003, p. 46 
and EEA Supplement No. 29, p. 29). 
11 The decision to extend the pan-European cumulation of origin system to the EU's Mediterranean 
partners was taken at the Euro-med Trade Ministerial M eeting (Palermo, 7 July 2003), and to the Faroe Islands 
at the Faroe Islands/Denmark Jo int Committee (28 November 2003). 
12 WTO document G/RO/W/26, 25 March 1998. Iceland WT/TPR/S/164/Rev.1 
 Page 25 
 
 
rate of dutiable lines is 19.7%.  Non- ad valorem  duties (specific and compound rates) apply to 382 
items, representing 4.7% of total tariff lines.  Tari ff rate quotas are treated in Chapter IV(section 2). 
Table III.1 
Structure of tariff schedule in Iceland, 2005 
(Per cent) 
 2005 
Total number of tariff lines 8,167 
Non- ad valorem  tariffs (% of all tariff lines) 4.7 
Non- ad valorem  with no AVEs (% of all tariff lines) 2.0 
Tariff quotas (% of all tariff lines) 1.0 
Duty-free tariff lines (% of all tariff lines) 70.1 
Dutiable lines average tariff rate (%) 19.7 
Domestic tariff "peaks" (% of all tariff lines)a7.8 
International tariff "peaks" (% of all tariff lines)b7.9 
Bound tariff lines (% of all tariff lines)c94.9 
 
a Domestic tariff peaks are defined as those exceed ing three times the overall average applied rate. 
b International tariff peaks are defined as those exceeding 15%. 
c Based on concession Schedule in HS96 classi fication, therefore there may be a differe nce between the number of lines included  
 in the calculation. 
 
Note Estimates based on Iceland's submis sion to the WTO Integrated Data Base.  Ad valorem equivalents (AVEs) were estimated by 
 the Secretariat using import unit values for 2004 and 2003 wher e no data for 2004 were available.  For 185 tariff lines, AVEs 
 were estimated as the ad valorem  part of the compound duty.  For nine tariff lines , no AVEs could be estimated;  these nine lines 
 were not taken into account for the calculation of averages. 
 
Source:  WTO Secretariat calculations, based on data provided by the authorities of Iceland. 
36. The average MFN duty rate is 5.9% (includi ng out of quota rates only) Table III.2.  A 
distinctive feature of Iceland's tr ade regime is that tariff protect ion for agricultural products (WTO 
classification) remains significantly higher than fo r non-agricultural products (18.3% and 2.5% 
respectively).13  All tariff rates above 100% correspond to the AVEs of compound duties, they all 
apply to agricultural products.  Amongst the product groups with the highest averages are animals and 
products thereof and dairy products.  For non-agricultural products, the highest duty rate is 20%, applied to medicated sweets. 
37. More than 90% of tariff lines have MFN duty rates below 15%;  excluding duty-free rates, 
most rates are in the 5% to 10% range (Chart III.1).  Slightly over 5% of lines are subject to rates 
above 25%;  0.7% of lines (56 products) have ap plied rates greater than 100%, of which 0.3% 
(24 products) are over 200% (all 56 lines correspond to agricultural products).  Duty-free rates 
account for close to 60% of lines in the manufacturi ng sector but only 12% in the agriculture sector. 
38. Tariff escalation is unusual in that average MF N applied tariff protection is high (10.7%) at 
the first stage of processing, very low for semi-p rocessed products (0.8%) and high again for fully 
processed products (7.5%) (Table III.2). 
(b) Bound tariff 
39. All agricultural tariff lines and some 95% of manufactured lines are bound (using Iceland's 
schedule based in the HS96 classification).  The fi nal average bound rate is 31.5%.  For lines with 
                                                      
13 Based on the WTO classification of agricultural products. WT/TPR/S/164/Rev.1 Trade Policy Review 
Page 26 
 
 
strictly comparable HS codes between HS96 and HS2002, ad valorem  applied rates appear to be 
higher than the corresponding ad valorem  final bound rates for seven items.14 
(5.1%)
(0.2%)(70.1%)
(0.1%)(4.9%)(12.8%)
(4.1%)(2.6%)
01,0002,0003,0004,0005,0006,0007,000
Empty lines Duty free >0-5 >5-10 >10-15 >15-20 >20-25 >250102030405060708090100Chart III.1
Frequency distribution of MFN tariff rates, 2005
Number of tariff linesaPer cent
Cumulative per cent
Number of lines (% of total)
The total number of lines is 8,167; 9 lines are empty (no AVEs could be estimated).
WTO Secretariat calculations, based on data  provided by the authorities of Iceland.a
Source :
 
Table III.2 
Summary analysis of Iceland's MFN tariff, 2005 
 MFN  
Description No. of lines Average 
(%) Range 
(%) Coefficient 
of 
variation 
(CV) Final bound 
averagea 
(%) 
Total 8,167 5.9 0 - 547.7 3.6 31.5 
HS 01-24 2,071 15-8 0 - 547.7 2.5 102.4 
HS 25-97 6,096 2.5 0 - 20 1.8 10.3 
By WTO category      
WTO Agriculture 1,755 18.3 0 - 547.7 2.3 120.5 
 - Animals and products thereof 196 48.3 0 - 306.3 1.2 408.7 
 - Dairy products 33 66.8 30 - 304.3 0.9 471.7 
 - Coffee and tea, cocoa, sugar, etc. 347 11.0 0 - 216.3 1.8 69.2 
 - Cut flowers, plants 65 13.1 0 - 30 1.1 90.5 
 - Fruit and vegetables 237 39.2 0 - 547.7 2.2 111.9 
 - Grains 31 19.5 0 - 55 1.4 87.5 
Table III.2 (cont'd) 
                                                      
14 The HS codes concerned are (applied, bound rates between parentheses):  2106.09031 (20, 10), 
3404.9001 (5, 0), 8518.2109 (7.5, 0), 8518.2209 (7.5, 0);  8518.2900 (7.5, 0);  8540.4000 (7.5, 0);  8540.5000 
(7.5, 0). Iceland WT/TPR/S/164/Rev.1 
 Page 27 
 
 
 MFN  
Description No. of lines Average 
(%) Range 
(%) Coefficient 
of 
variation 
(CV) Final bound 
averagea 
(%) 
 - Oil seeds, fats and oils and their products 116 6.0 0 - 68.0 2.9 104.6 
 - Beverages and spirits 512 7.6 0 - 88.6 1.4 8.2 
 - Tobacco 24 2.5 0 - 10 1.8 16.9 
 - Other agricultural products, n.e.s. 194 6.3 0 - 55 2.5 41.6 
WTO Non-agriculture (incl. petroleum) 6,412 2.5 0 - 20 1.8 10.1 
 - WTO Non-agriculture (excl. petroleum) 6,394 2.5 0 - 20 1.8 10.1 
  - Fish and fishery products 423 1.5 0 - 10 2.4 8.7 
  - Mineral products, precious stones and precious 
    metals 397 2.1 0 - 10 1.8 12.8 
  - Metals 715 1.0 0 - 15 2.8 7.0 
  - Chemicals and photographic supplies 1,157 1.3 0 - 20 2.2 5.8 
  - Leather, rubber, footwear and travel goods 247 6.4 0 - 15 0.9 13.6 
  - Wood, pulp, paper and furniture 427 2.6 0 - 15 1.5 12.1 
  - Textile and clothing 1,188 4.4 0 - 15 1.4 10.4 
  - Transport equipment 258 1.2 0 - 15 2.5 10.2 
  - Non-electrical machinery 671 0.7 0 - 10 3.1 5.6 
  - Electrical machinery 313 2.4 0 - 10 1.5 15.7 
  - Non-agriculture articles, n.e.s. 598 4.6 0 - 15 1.0 20.5 
 - Petroleum 18 0.3 0 - 5 4.2 8.7 
By ISIC sectorb     
Agriculture and fisheries 436 22.0 0 - 547.7 3.0 85.0 
Mining 116 0.0 0 - 0 .. 1.7 
Manufacturing 7,614 5.1 0 - 306.3 3.0 28.9 
By HS section      
  01  Live animals & products 553 15.5 0 - 304.3 2.3 157.0 
  02  Vegetable products 407 27.6 0 - 547.7 2.4 94.3 
  03  Fats & oils 102 0.7 0 - 68.0 9.9 95.2 
  04  Prepared food, etc. 1,009 12.6 0 - 306.3 2.1 70.1 
  05  Minerals 179 0.0 0 - 5 13.4 2.6 
  06  Chemical & products 988 1.2 0 - 20 2.6 7.6 
  07  Plastics & rubber 368 2.4 0 - 15 1.5 5.9 
  08  Hides & skins 128 5.4 0 - 15 0.7 11.6 
  09  Wood & articles 206 1.8 0 - 10 1.7 11.2 
  10  Pulp, paper, etc. 187 2.1 0 - 15 1.8 10.1 
  11  Textile & articles  1,173 4.2 0 - 15 1.5 9.9 
  12  Footwear, headgear 82 12.7 0 - 15 0.3 22.3 
  13  Articles of stone 189 3.4 0 - 10 1.2 20.2 
  14  Precious stones, etc. 61 3.0 0 - 10 1.6 9.6 
  15  Base metals & products 698 1.2 0 - 15 2.6 7.3 
  16  Machinery 1,110 2.1 0 - 10 1.8 10.0 
  17  Transport equipment 269 1.2 0 - 15 2.6 10.4 
  18  Precision equipment 252 0.1 0 - 10 9.1 17.2 
  19  Arms and ammunition 27 6.1 0 - 15 0.6 29.5 
  20  Miscellaneous manufacturing 172 8.7 0 - 15 0.3 26.6 
  21  Works of art, etc. 7 1.4 0 - 10 2.6 3.9 
Table III.2 (cont'd) WT/TPR/S/164/Rev.1 Trade Policy Review 
Page 28 
 
 
 MFN  
Description No. of lines Average 
(%) Range 
(%) Coefficient 
of 
variation 
(CV) Final bound 
averagea 
(%) 
By stage of processing      
First stage of processing 974 10.7 0 - 547.7 4.3 46.7 
Semi-processed products 2,387 0.8 0 - 55 6.4 7.0 
Fully-processed products 4,806 7.5 0 - 306.3 2.4 41.5 
 
.. Not available. 
 
a Bound rates are provided in HS96 classification and applied rates in HS2002;  therefore there may be a difference between the  
 number of lines included in the calcula tion.  Either the estimated AVE or the ad valorem  part of the mixed duties, whichever was 
 the highest, was considered fo r the calculation of averages. 
b ISIC (Rev.2) classification, excluding electricity (1 line). 
 
Source:  WTO Secretariat estimates, based on data provided by the authorities of Iceland. 
(c) Tariff preferences 
40. Iceland grants tariff preferences to participan ts in the EEA.  The overall simple average 
preferential tariff is 3.2% (2005).15  The average rate for agricult ural products is 14.9% compared 
with 0.1% for other products.  Tariff rates ranged from duty free up to 547.7%.  Some 94% of total 
tariff lines are duty free;  99.5% of tariffs on manufactured products are duty free.  In addition to the EEA Agreement, Iceland has several FTAs under whic h it offers preferential tariffs (Table II.2). 
(v) Other charges affecting imports 
41. Other charges affecting imports include a value-added tax (VAT), excise taxes, and some 
other specific charges.  Internal taxes are applie d equally to domestic products and imports.  The 
burden of internal charges on imports is in many cases significantly heavier than that of the tariffs.  Thus, official data for 2004  show that tariff collections amounted to ISK 3.1 billion), or around 1.3% 
of the total value of merchandise imports.  In c ontrast, VAT collected on imported goods amounted to 
ISK 60 billion in 2004 (63% of total VAT revenue), while excise duties collected on imports in the same year amounted to nearly ISK 10.7 billion.  Thus, VAT and excise duties collected on imports 
amounted to around almost 30% of the value of merchandise imports. 
42. The VAT is Iceland's main source of govern ment revenue.  In 2004, revenue from VAT 
receipts on goods and services amounted to ISK 96 billion, equivalent to around one quarter of total 
tax revenue (direct and indirect taxes).16 
43. VAT rules are set out in the Value Added Tax Act No. 50/1988;  the main responsibility for 
administering VAT lies with the VAT office of the Inland Revenue.17  VAT is levied at all stages of 
production and trade on domestically produced and imported goods and servi ces.  Taxable persons 
selling goods and services are required to register  for VAT, including non-residents without a fixed 
place of business who must appoint a local repres entative.  The threshold for compulsory VAT 
registration is an annual turnover of ISK 220,000 (ex-VAT).18  The VAT is payable along with 
                                                      
15 When possible, AVEs were estimated by the WTO Secretariat using 2004 and 2003 unit values.  The 
average also includes the MFN zero rate. 
16 Ministry of Finance (2005), p. 20. 
17 Director of Internal Revenue online information.  Available at:  www.rsk.is. 
18 This figure will be raised to ISK 500,000 according to a bill of law submitted to Parliament in 
March 2006. Iceland WT/TPR/S/164/Rev.1 
 Page 29 
 
 
customs duties when goods are imported:  it is calcula ted on the c.i.f. price plus the tariff and other 
imposts levied at customs. Those on the VAT-regist er are granted a credit period for taxable imported 
goods.  Under the new Customs Act19 this credit period is two months under the old law it was one 
month (two months for certain products used for industrial production). 
44. VAT rates have not changed since Iceland's last review.  The standard VAT rate is 24.5%;  a 
reduced rate of 14 % applies to certain goods and ser vices and some exemptions are also provided for.  
As noted in the 2005 Budget Proposal, the VAT will be reviewed in 2007.20 
45. In 2003, revenue from excise and other indirect taxes, other than the VAT, amounted to 
around 18% of total tax reve nue (on an accrual basis).21  Excise taxes are levied on imported and 
domestically produced or packaged goods as sp ecified in the Icelandic Excise Tax Act 
(Act No. 97/1987).  According to the authorities,  excise taxes are applied equally to domestic 
production (if there is any) and imports regardle ss of their origin.  The Customs and Taxation 
authorities are not authorized to exempt any categories of local taxable goods from excise duty. 
Table III.3 
VAT rates different from 24.5%, end 2005 
VAT at 14% 
(Article 14) The rental of hotel and guestrooms and ot her guest services;  radio licence charge s;  sales of magazines, newspapers 
and countryside and district newspapers;  sales of books;  sales of hot water, electricity, and oil for space heating and 
swimming pool water;  sales of foods tuffs and other goods for human consumption;  admission tolls to land 
transportation projects. 
Exemptions from VAT 
(Article 2) The services of hospitals, birth clinics, sanatoriums and other comparable institutions, medical and dental services, and other actual health services;  social services, such as the operation of day-care centres, nurseries, after-school 
care centres, juvenile detention facilities and other simi lar services;  the operation of schools and educational 
institutions, driver instruction, pilot instruction, and dance instruction;  the operation of collections, such as libraries, 
art museums and natural history museums and similar cultu ral activity.  Admission charges to concerts, Icelandic 
motion pictures,  ballet and stage performances and theatres, provide d such gatherings are in  no manner associated 
with other gatherings or restaurant operations;  athletic activity, the hire of athletic facilities, admission charges to 
swimming pools, ski lifts, athletic events, athletic exhib itions, and health facilities; pa ssenger transportation.  The 
transportation of vehicles by ferry that is directly connected to passenger transportation. 
Postal services for which a public entity has a monopol y pursuant to the Postal Act No. 33/1986;  acceptance and 
distribution of other addressed letter mailings, including postcards, newspapers and magazines as well as general 
distribution mailings and open letters.  The rental of real property and parking spaces. 
The rental of hotel and guestrooms and camping spaces is taxable as well as other overnight guest services for a 
period of less than one month.  The same applies to sales of  restaurant facilities and gather ings when the rental is for 
a period of less than one month;  insura nce activity; the services of banks, savings banks and other credit institutions 
as well as securities trading;  lotteries and betting pools. 
The activities of authors and musical composers in their creation of intellectual property and comparable artistic 
activity;  the services of travel agencies ;  funeral services and all services of ministers of the church;  charity activity 
(as defined);  the original sale of commemorative coins issued by  the Central Bank of Iceland.  These exemptions 
cover only the sales or delivery of labour and services listed therein, not the va lue-added tax (input tax) of purchases 
to the exempted activity. 
Exemptions from VAT 
(Article 36) The import of certain goods, mostly listed in Article 6 of the Customs Law (88/2005) including gifts up to a certain 
value, temporary imports, and scientific  equipment given to Icelandic resear ch institutes;  Regulation 165/2001 the 
Nordic Investment Bank can receive ref unds on all VAT paid on goods and services necessary for the functioning of 
its offices in Iceland. This is based on an internationa l agreement between the Nordic countries on the running of the 
Bank. 
 
Source: The Value Added Tax Act No. 50/1988 (as amended by Act No. 64/2002). 
                                                      
19 Act No. 88/2005, Articles 121 and 122. 
20 Ministry of Finance (2005) p. 3. 
21 Other indirect taxes include:  general excise taxes; excise tax on motor vehicles;  general excise tax 
on petrol;  special excise tax on petrol;  other turnover taxes;  motor vehicle tax;  diesel weight tax; and 
miscellaneous charges (Ministry of Finance 2005 p. 20). WT/TPR/S/164/Rev.1 Trade Policy Review 
Page 30 
 
 
46. Excise duty is levied only on the final product intended for domestic use.  Hence, materials 
used in the production of other goods (whether importe d or domestically produced), materials used in 
exports and exported goods themselves are not taxa ble.  Goods exempted from customs duties as 
listed in the Customs Act (Act No. 88/2005) are also exempt from excise tax.22  These include 
imported gifts of a limited value and temporary imports. 
47. The excise tax can be either specific or ad valorem .  Specific commodity taxes on a range of 
agricultural products range between ISK 8 and IS K 60 per kg.;  commodity taxes on beverages are 
ISK 8 per litre.  Ad valorem  charges are calculated on the customs- duty-added c.i.f. price of imported 
goods, and on the factory price for goods produced in Iceland.  Ad valorem  rates are 15% for 
chemicals, wood, textiles, metal products, machinery, furniture, and spare parts for automobiles23;  
20% for some metal products, machinery, and electrical equipment and appliances24;  and 25% for 
electric appliances and machinery (mainly teleco mmunications and radio broadcasting equipment, 
television receivers, and some other electrical appliances). 
48. A special weight-distance tax for diesel fue lled cars was abolishe d on 1 July 2005 and was 
replaced by an excise tax on diesel fuel (Act No. 87/2004).  Diesel fuel for certain uses is tax exempt 
(including marine use, space heating, industrial use, for earthmoving equipment, agricultural tractors, 
and special-purpose vehicles). 
49. Details on excise taxes and other charges, othe r than the VAT, are outlined in Table III.4. 
Table III.4 
Other taxes and charges on production and consumption (including imports), 2005 
Tax HS heading Rate (% or ISK/kg. or/unit) 
Excise tax on alcoholic beverages 2106, 2203-09 ISK 52.80, 58.70,  or 70.78 per litre 
Excise tax on motor vehicles  87 5, 10, 13, 30, and 45% 
Waste charge: 
charge on containers 
charge on oil products etc. 
charge on tyres 
charge on batteries etc.  
0401, 2009, 2201, 2202, 4811, 4819 2207, 2710, 2900, 3811, 3819 
4011, 8412, 8701-16 
8506, 8507, 8543, 8548  
Range 0.33 – 10 ISK/kg. Range 0.20 – 14.50 ISK/kg. 
Range 20 – 18,000 ISK 
Range 2.50 – 279.50 ISK/kg. 
charge on quicksilver solvent products charge on compounds with other 
nitrogen functions 
charge on colour laces, paints, 
pigments, artists colours, mastics,  printing ink 
charge on photographic chemical 
products charge on halogenated derivatives of 
hydrocarbons, some organic solvers 2805, 3006 
2929 
 
3205, 3208, 3210-15 
  
3707 
 2903, 3814, 3824 900 ISK/kg. 
1.50 ISK/kg. 
 
20 ISK/kg. 
  
Range 51 – 408 ISK/kg. 
 
Range 2.50 – 130 ISK/kg. 
Derricks, cranes, bulldozers, and other 
moving machinery, motor vehicles, 
vessels, optical fibre 8426, 8427, 8429, 8430, chapter 87, 
chapter 89, 9001101 ISK 19 – 1,672 
Intellectual property rights charge  
(equipment for audio and video 
recording) 8503-26 (See Table III.15) 
Transportation equalization tax (petroleum products) 2710 (petroleum products) ISK 12, 0.2 or 0.65 per litre 
Deposit charge on disposable containers 
(waters, juices, alcoholic beverages) 2202-2209 ISK 6.43 
Table III.4 (cont'd) 
                                                      
22 Regulation 436/1998. 
23 HS headings 39, 40, 44, 45, 56, 57, 58, 59, 67, 68, 69, 70, 73, 74, 76, 83, 84, 85, 87, 90 and 94. 
24 HS headings 73, 84 and 85. Iceland WT/TPR/S/164/Rev.1 
 Page 31 
 
 
Tax HS heading Rate (% or ISK/kg. or/unit) 
Excise tax on petrol/diesel oil 2710 ISK 42, 23 or 44.2 (petrol) 
ISK 41 (diesel oil) 
Surveillance fee on electrical materials 
subject to surveillance (plastics, electric 
blankets, articles of iron and steel, 
electrical machinery, motors, optical 
fibres, time switches with motors, lamps and lighting fittings) 3036, 4677,4677, 5450, 5526, 5603, 5849, 
5851, 5865, 5868-75, 5878-81, 5883-85, 
5892-5905, a number of headings under 
HS chapters 59, 60, 61, 62, 63, 64, 65, 66, 
67, 84, 85, and 90; headings 7326, 7419, 7616, 9107 and  9405 .. 
 
.. Not available. 
 
Source: Information provided by the authorities of Iceland. 
(vi) Import restrictions, including licensing 
50. Iceland applies few unconditional import prohibition s;  these are generally for environmental, 
health or safety reasons or to follow United Natio ns Security Council resolutions.  Thus, Iceland 
prohibits imports of rough diamonds from Liberia under Act No. 5/1969 implementing 
United Nations Security Council resolutions.  Iceland also bans the importation of certain substances 
that deplete the ozone layer, including:  halons;  hydrobromflurocarbons (HBFCs);  methyl bromide;  
methyl chloroform;  chloroflurocarbons (CFCs), including aerosols containing CFC;  and carbon tetrachloride.  Imports of ozone-depleting substa nces from countries not signatory to the Montreal 
Protocol are also banned. 
51. The import of a number of other products is r estricted, conditional upon the obtention of a 
permit, licence, or other conditions .  These products include live animals, feeds and fertilizers, plants 
and plant products, used machines for agricultural works, and health-related goods.  Iceland maintains 
import licensing requirements for reasons including e nvironmental protection, health, safety, and to 
ensure technical requirements are met.  Imports subject to licensing or other requirements were 
notified to the WTO in Oc tober 2004 (Table III.5).25 
Table III.5 
Goods subject to licensing or other import requirements, 2006 
Product Legislation Type of restriction and conditions 
Live animals; animal 
products, soil and 
other items of general 
concerna;  freshwater 
fish and other 
freshwater animals Act No. 54/1990 on the importation of 
animals;  Reg. No. 444/1982 on fur 
farming and the importation of fur-bearing animals;  Reg. No. 431/2003 on the 
importation of pets and canine semen;  Act 
No. 25/1993 on animal diseases and prevention thereof;  Act No. 66/1998 on 
veterinary services;  Reg. No. 509/2004 on 
measures to prevent the introduction of animal diseases and contaminated 
products in Iceland;  Act No. 76/1970 on 
salmon and trout fishing;  Act No. 54/1990 on the importation of live animals Conditional prohibition on imports;  exemptions to this ban may 
be granted by the Minister of Agriculture on the basis of a recommendation from the Chief Veterinary Officer, in which case import licences are required an d granted by the Minister of 
Agriculture;  licences are va lid for one shipment only  
Animal fodder fertilizers and seeds Act No. 22/1994 on control of feeds, fertilizers and seeds Import licence/notice to be obtained from The Agricultural Authority of Iceland in advance of arrival of goods;  a veterinary 
certificate is required for feeds containing products of animal 
origin;  inspection fees are charged 
Plants, plant products, 
soil, and compost for 
mushroom growing Act No. 51/1981 on protection against 
plant diseases and pests Import licence to be obtained from the Agricultural Research Institute in advance of arrival of goods;  licences are valid for 
one shipment only;  inspection fees are charged 
Table III.5 (cont'd) 
                                                      
25 WTO document G/LIC/N/3/ISL/3, 28 October 2004. WT/TPR/S/164/Rev.1 Trade Policy Review 
Page 32 
 
 
Product Legislation Type of restriction and conditions 
Narcotic drugs, 
psychotropic substances and related 
chemicalsbAct No. 65/1974 on controlled substances;  
Reg. No. 233/2001 on narcotic substances, psychotropic substances and other 
controlled substances (as amended);  based 
on requirements of international conventions Import licences are issued by the Ministry of Health and Social Security only to persons/firms licensed by the Ministry to 
handle, store or sell controlled s ubstances;  imports are subject to 
quantitative restrictions and licences allocated on first-come first-served basis;  import licences are valid for 120 days from date of issue;  the Icelandic Medicines Control Agency validates 
documents required for customs handling 
HCFCs and manufactured 
products that may contain ozone-
depleting substances Reg. No. 586/2002 on substances that deplete the ozone layer Import licensing takes the form of  administrative approval for 
imports of non-prohibited substances;  the Environment and 
Food Agency of Iceland considers applications for licences and licences are granted by the Mini stry of Environment;  imports 
are subject to quantitative restrictions;  quotas to import virgin HCFC are allocated on a yearly basis, with quotas for importers based upon past performance of imports;  fees are charged on 
importation 
Radioactive goodscIcelandic Radiation Protection Act no. 
44/2002; Reg. No. 809/2003 relating to the 
use of unshielded radioactive sources; 
Reg. No. 811/2003 relating to the use of shielded radioactive source Conditional prohibition on imports;  imports may be allowed 
with the permission of the I celandic Radiation Protection 
Institute 
Weapons (semi-automatic weapons and other firearms as well as ammunition) Weapons Act No. 16/1998;  Firearms and Ammunition Reg. No. 787/1998 (as amended) Permits for importation of semi -automatic weapons, and other 
firearms as well as ammunition are issued by the Commissioner of the Icelandic Police, which as a rule are valid for six months (extendable);  immediately prior to actual importation the vendor 
must present customs clearing papers to the competent police officer along with a copy of the import permit;  conditional ban on the importation of automatic firearms and all things 
manufactured for offensive purposes 
Radio and non-radio 
communication 
equipment connected 
to public telecommunication 
networks Act No. 81/2003 on Telecommunications;   
Reg. No. 589/1994 on CE marking Goods may be imported without  prior application for an 
individual licence;  at importati on the appropriate customs forms 
must be completed and invoices presented to verify equipment has the required CE marking 
Machines for public 
worksdAct No. 46/1980 on Working Conditions 
and Occupational Hea lth and Safety;  
Reg. No. 388/1989 on Registration and Inspection of Mobile and Other Construction Machinery;  
Reg. No. 761/2001 on Machinery and 
Technical Equipment Prior to import, importers must apply to the Administration of Occupational Safety and Health for registration of each mobile 
and construction machinery which he/she intends to import, and 
present this application at customs.  Following import, registered machines are inspected by the Administration to ensure they 
meet requirements;  registration and inspection fees are charged 
Hazardous and 
health-related goodseAct No. 52/1988 on toxic and hazardous 
chemical substances (amended) and its 
numerous implementing regulations, Act No. 7/1998 on hygiene and 
environmental control and Act No. 
134/1995 on product safety Conditional prohibition on imports.  Imports may be permitted 
under certain conditions and require administrative approval or licensing from the Ministry for the Environment, and approval by the Environmental and Food Agency;  in some cases, 
approval or licensing is required prior to each import, in other 
cases unlimited administrative approval is given;  there may also be requirements on labelling, marketing, sale and use 
Table III.5 (cont'd) Iceland WT/TPR/S/164/Rev.1 
 Page 33 
 
 
Product Legislation Type of restriction and conditions 
Ships, boats and 
floating structures Act No. 47/2003 on control of ships Importers must apply to the Icelandic Maritime Administration 
for permission to import;  after a survey of drawings and other 
documents and an inspection on bo ard, permission to import is 
granted or not;  associated fees include a survey fee and a stamp 
fee of 0.4 % of the price of the import;  registration fees are also 
charged;  only Icelandic citizens or companies with a legal 
residence in Iceland may register  vessels of 6 meters in length 
and over 
 
a Includes; certain meat and meat products, wool, eggs, milk, ha y, blood serum and other biologi cal products from the animal 
 kingdom, used riding gear, used agricu ltural machinery and used fishing gear. 
b Designation of products subject to licensing is at administra tive discretion.  The drugs covered are substances listed in 
 Addendum I to Reg. No. 233/2001. 
c Coverage does not include radio luminous watches, pocket compa sses, meters and other equipment of that nature containing a 
 slight quantity of radioactive material. 
d The procedure concerns the categories of machinery listed in Annex to Reg. No. 388/1989.  These include:  tower cranes; mobil e 
 cranes bigger than 18 MT;  overhead cranes;  cranes smaller th an 18MT;  excavators heavier than  4,000 kg.;  wheel loaders;  
 bulldozers;  motor grades;  industrial tr actors;  forklift trucks;  compactors;  asphalt pavers;  drilling rigs;  grinding and  screening 
 installations;  mobile work platforms. 
e These regulations relate, among others to:  asbestos;  chrome in  cement;  toys containing lead;  chemicals that contain mercu ry,  
 arsenic and organic tin compounds;  PCBs;  PCTs;  cadmium ;  batteries and accumulators containing certain dangerous 
 substances;  insecticides;  herbicides;  rodenticides;  nick el in certain products;  and short-chain chlorinated paraffins. 
 
Source: WTO document G/LIC/N/3/IS L/3, 28 October 2004.  
(vii) Contingency measures 
52. There have been no significant changes to the legal framework for safeguards, anti-dumping 
and countervailing measures since Iceland's last Trade Policy Review.  Iceland does not use safeguard 
measures, nor does it have any safeguard legislation.   Iceland did not retain the right to use the 
transitional safeguard mechanism under the Agreement on Textiles and Clothing26, but it did reserve 
the right to make use of the special safeguards prov isions under the Agreement on Agriculture.  To 
date it has not availed itself of this right.27 
53. Iceland has never applied anti-dumping or c ountervailing measures.  According to the 
authorities two complaints, relating to dumping, have been lodged over the review period, but no investigations have been initiated.   Under the EEA Agreement (A rticle 26), anti-dumping and 
countervailing measures may not be used against imports from other EEA States. 
54. Iceland's anti-dumping and countervailing legisl ation is contained in Chapter XVIII of 
Customs Law No. 88/2005 (Articles 133-139).  Ther e are no substantial changes to the previous 
Customs Law (No. 55/1987 as amended by Law No. 66/1994).  Regulation No. 351/1994 on the 
preparation and application of the imposition and the collection of  anti-dumping and countervailing 
duties remains in force.  The 1994 amendment to the Customs Law extended the coverage of anti-
dumping and countervailing duties to include trade in  services, on the same conditions as applicable 
to trade in goods. 
55. In 1995, Iceland notified its anti-dumping and c ountervailing legislation to the WTO, stating 
that this legislation was under re view in light of the relevant provisions of the WTO Agreements.28  In 
                                                      
26 WTO document G/TMB/N/201, 2 December 1996. 
27 As notified to the WTO Secretariat in WT O documents G/AG/N/ISL/3; G/AG/N/ISL/7;  
G/AG/N/ISL/13;  G/AG /N/ISL/18; G/AG/N/ISL/21;  G/AG/N/ISL/23. 
28 WTO document G/ADP/N/1/ISL/1, 23 May 1995. WT/TPR/S/164/Rev.1 Trade Policy Review 
Page 34 
 
 
                                                     1995 and 1996, questions were posed by Australia;  Canada;  Hong Kong, China;  Korea;  and the 
United States regarding the notification, and Iceland provided responses.29 
56. Complaints regarding anti-dumpi ng and subsidy practices on im ports are examined by an 
Advisory Committee appointed by the Minister of Finance for a period of four years, and consisting 
of seven experts.  Complaints regarding dumped or  subsidized imports, with the requisite evidence, 
must be addressed to the Ministry of Finance;  within five days of the complaint being lodged, the 
Committee must meet.  It is charged with undert aking a preliminary examination to determine 
whether an investigation is justified.  In vestigations launched are announced in the Lögbirtingabladid  
(the Legal Bulletin), which provides information on the product under investigation, the country of 
export or of origin, a summary of information recei ved, and the timeframe w ithin which views may be 
submitted in writing.  During the investigation, part ies may be given the opportunity to meet before 
the Committee.  Investigations should no rmally be concluded within a year. 
57. As noted in Iceland's previous Trade Polic y Review, anti-dumping and countervailing duties 
may be imposed on products assembled or produced in Iceland containing imported materials.30  For 
this, the products must be assembled or produced by a party related or associated to a foreign 
manufacturer on which anti-dumping or countervailing duties will be imposed;  the assembly or 
production must have started or substantially increased after the opening of the anti-dumping 
investigation;  and the value of parts or materials used in the a ssembly or production and originating 
in the country of exportation of the product subject to the anti-dumping or countervailing duty must exceed the value of all other parts or materials used by at least 50%.  The applicable duty is 
proportional to the import content of the product. 
58. Provisional anti-dumping and countervailing measures may be put in place, upon decision by 
the Minister of Finance, for a maximum period of 12 months.  Final duties may be in place for an 
additional five years from the day of their entry into  force, and may be imposed retroactively.  There 
is also provision for a review of the measures if an interested party can show that expiry of the duty 
would lead to injury, which may result in them being maintained. 
59. Anti-dumping duties may not exceed the margin of dumping, and countervailing duties may 
not exceed the subsidies granted directly or indi rectly for the manufacturing, processing, exportation 
or transportation of the goods.  No product may be subject to both anti-dumping and countervailing 
duties for the purpose of dealing with the same situ ation.  Icelandic anti-dumping legislation allows 
the retroactive application of an additional duty in  the case of duty absorption by the exporter.  If an 
interested party shows that the expiry of the measure would lead again to injury, measures may be maintained beyond the five-year period following a determination by the Advisory Committee.  
Requests for reviews of decisions to impose an ti-dumping or countervailing duties and to accept 
undertakings are addressed to the Ministry of Finance. 
60. Within the DDA Negotiating Group on Rules, Icel and has made two submissions on fisheries 
subsidies in conjunction with other Members.  One submission looks at specific problems arising out of fisheries sector subsidies and issues and shortcomings relating to the application of WTO 
 
29 The questions concerning Iceland's legislation are in WTO documents G/ADP/W/167-
G/SCM/W/167 submitted by Korea;  G/ADP/W/189-G/SCM/W/196 submitted by Hong Kong, China;  
G/ADP/W/213-G/SCM/W/223 submitted by the United States;  G/ADP/W/222-G/SCM/W/232 submitted by 
Australia;  G/ADP/W/230-G/SCM/W/240 submitted by Canada;  and G/ADP/W/249-G/SCM/W/259 submitted 
by the United States.  Answers are in WTO doc uments G/ADP/W/312-G/SCM/W/320 to Korea;  
G/ADP/W/311-G/SCM/W/319 to Hong Kong, China;  G/ADP/W/313-G/SCM/W/321 to the United States;  G/ADP/W/309-G/SCM/W/317 to Australia;  and G/ADP/W/310-G/SCM/W/318 to Canada. 
30 Article 39 of Regulation 351/1994 (amended). Iceland WT/TPR/S/164/Rev.1 
 Page 35 
 
 
                                                     disciplines in this area.31  The other describes different approaches to classification of fisheries 
programmes recently proposed by other organizations.32 
(viii) Standards and technical regulations 
61. In July 2000, Iceland notified the Committee on Technical Barriers to Trade33 that it had 
implemented the technical regulations and conf ormity assessment part of the TBT Agreement 
(Article 15.2) by Law No. 57/2000 concerning the ex change of information on technical regulations 
regarding products and information society services.34  The standards part of the TBT Agreement is 
implemented by Regulation 534/1995.35  As noted in Iceland's notification, technical regulations are 
published in the Icelandic Law and Ministerial Gazette  (Stjórnartídindi ).36  Notices of draft and 
adopted standards are published in the Standards Bulletin  (Stadlatídindi ).  Iceland generally allows 
90 days for written comments on technical regulations and at least 60 days on standards. 
62. Iceland's enquiry point under the TBT Agreem ent is the Consumer Agency for technical 
regulations.  Its enquiry point for standards is Icela ndic Standards.  The External Trade Department in 
the Ministry for Foreign Affairs has also been notified as an enquiry point. 
63. Icelandic Standards (IST) is an independent association.37  Its role, by law, is to publish 
Icelandic standards and to represent Iceland in in ternational and regional standards bodies.  Three 
sectoral committees operate under its auspices:  B STR in the building sector, FUT for information 
technology and RST in the electrotechnical sector.  IST is a full member of the European Committee 
for Standardization (CEN) and the European Committee for Electrotechnical Standardization 
(CENELEC);  an NSO (National Standards Organi zation) in the European Telecommunications 
Standards Institute (ETSI);  a full member of the International Organization for Standardization (ISO) 
and an associate member of  the International Electrotechnical Commission (IEC).  Icelandic 
Standards has accepted the TBT Agreement Code of  Good Practice for the Preparation, Adoption and 
Application of Standards.38 
64. The Consumer Agency was created in 2005 (Act. No. 62/2005).39  It took over all of the 
activities of the Icelandic Metrology, Accreditation and Electrical Safety Authority 
(Löggildingarstofan ) as well as two departments of the former Competition and Fair Trade Authority 
(CFTA) in the area of unfair trade practices (such as unfair contract terms and misleading 
advertisements) as well as market transp arency issues.  The Consumer Agency  is an independent 
government agency, whose role is to ensure prot ection of consumer rights, market surveillance, 
 
31 WTO document TN/RL/W/3, 24 April 2002, submission from Australia, Chile, Ecuador, Iceland, 
New Zealand, Peru, Philippines and the United States on "The Doha Mandate to Address Fisheries Subsidies:  
Issues". 
32 WTO document TN/RL/W/58, 10 February 2003, submission from Argentina, Chile, Iceland, 
New Zealand, Norway and Peru on  "Subsidies in the Fisheries Sector:  Possible Categorizations". 
33 WTO document G/TBT/2/Add.55/Suppl.1, 11 July 2000. 
34 Regulation 733/2000 implements law 57/2000.  Information society services are defined as "fee 
based and provided (a) from a distance, i.e. without th e parties being present at the same place and the same 
time, (b) electronically, i.e. the service is sent and received with the help of electronic equipment that is intended 
for processing and storing data and is entirely sent, tr ansported and received through wire, wireless, fibre optic 
cable or through electromagnet cable, (c) on request of the receiver, i.e. the service is  provided in such a way 
that data is sent at the request of the receiver." 
35 Published in the Law and Ministerial Gazette , B series, 1995. 
36 The Iceland Law and Ministerial Gazette,  online information.  Available at:  http://stjornartidindi.is. 
37 Icelandic Standards online information.  Available at:  http://www.stadlar.is. 
38 WTO document G/TBT/CS/2/Rev.11, 4 March 2005. 
39 The Consumer Agency online information.  Available at:  http://neytendastofa.is. WT/TPR/S/164/Rev.1 Trade Policy Review 
Page 36 
 
 
                                                     consumer safety (general and electrical safety) as well as safe and correct measurements (legal and 
industrial metrology).  Icelandic legislation in these areas is largely based on joint rules applying 
throughout the European Economic Area. 
65. As at early 2006, The Consumer Agency was or ganized into four different departments:  
Safety Department (electrical and general product safety);  Consumer  Rights Department (which deals 
with the work taken over from the CFTA);  Metrological Department as well as Accreditation Services.  It represents Iceland internationally in  its area of competence and is involved in the 
harmonization of requirements between EEA member states. 
66. The Consumer Agency also houses the Consumer Spokesperson, an independent post 
established by Act No. 62/2005.  The Consumer Spokesperson may take up any issue relating to 
consumer interests but has no enforcement powers. 
67. Since its last Review, Iceland has made tw o notifications under Article 10.7 of the TBT 
Agreement (on international agreements).  One c oncerns a mutual recognition agreement relating to 
conformity assessment between Canada and the EFTA participants in the EEA40, which entered into 
force in 1 January 2001.  The products covered include telecommunications terminal equipment, 
recreational craft, and medical devices.  The other concerns an Agreement on Mutual Acceptance of 
Test Reports and Calibration Certificates between the signatories to the Eu ropean Co-operation for 
Accreditation Multilateral Agreement and the Ins tituto Nacional de Metrologia, Normalização e 
Qualidade Industrial of Brazil.  This entered into force on 30 January, 2001.  These two new 
agreements add to the mutual recognition agreement with Australia notified to the WTO and 
mentioned in Iceland's previous Review.  A MR A between EEA-EFTA States and the U.S. entered 
into force on 1 March 2006 which includes sector al annexes on telecommunications equipment, 
electromagnetic compatibility and recreational craft. 
68. Also since its last Review, Iceland has circul ated one notification under Article 2.9 of the 
TBT Agreement, concerning the amendment of  Regulation 398/1995 on Fertilizers and Soil 
Improvers.41  The authorities noted that, with respect to non-EEA and non-EFTA technical 
regulations, individual ministries preparing technical  regulations are responsible for notifying these to 
the Consumer Agency, which in turn is responsib le for forwarding such regulations to the WTO.42  
The authorities also indicated that Iceland does not have a system in place for notifying EEA technical 
regulations to WTO Members but that they are considering how to address this.  The majority of Iceland's standards and technical regulations follow EU norms. 
69. EEA membership requires Iceland to apply th e EU's legislation on technical regulations, 
standards, testing, and certification.  EEA tec hnical regulations are found in Annex II to the EEA 
agreement.  Under the EEA Agreement, all signatori es must notify draft technical regulations prior to 
their adoption through a procedure known as the DTR procedure.  Under the DTR procedure, Iceland 
has made 41 notifications to the EFTA Su rveillance Authority since the beginning of 2000 
(see Table AIII.1).  A "standstill" period of three m onths is provided for before technical regulations 
may be adopted, giving the opportunity for other EEA signatories, the EFTA Surveillance Authority 
and the European Commission to ensure that they do  not create new barriers to trade or conflict with 
secondary EEA legislation in force. 
 
40 WTO documents G/TBT/10.7/N/31, 28 May 2005;  G/TBT/10.7/N/39, 12 December 2002.  Prior to 
the last review, EEA/EFTA States notified a mutual recognition agreement with Australia to the WTO. 
41 WTO document G/TBT/Notif.00/71, 15 February 2000. 
42 Act No. 57/2000 and Regulation 733/2000. Iceland WT/TPR/S/164/Rev.1 
 Page 37 
 
 
                                                     70. Conformity assessment services can be obtained from Icelandic conformity assessment bodies 
or foreign/EEA bodies.  The Icelandic Accredit ation Service evaluates the competence of and 
designates these bodies but respective ministri es notify them to the EU Commission. 
71. A bill on accreditation services was being put forward in November 2005 for adoption in 
early 2006.  Under the proposed legislation, r esponsibility for providing accreditations would be 
separated from the Consumer Agency and an inde pendent Accreditation Depa rtment would operate 
within the Icelandic Patent Office.  According to th e authorities, the main purpose is to ensure that the 
Accreditation Department is fully independent of public and private bodies that use or may use its 
services. 
72. When a European standard h as been approved by the members of CEN, CENELEC or ETSI, 
it is formally adopted by IST and any conflicting st andards are withdrawn, usually within six months 
of approval of the European standard.  According to  the authorities, 99.75% of Icelandic standards are 
European standards, valid in all EEA countries.  The authorities have reported that, of the few 
standards that are purely Icelandic, most are in areas of high importance to Iceland where European 
standards are lacking.  Some 32.3% of Icelandic sta ndards are equivalent to international standards.  
In certain sectors, such as the electrotech nical sector, the percentage is up to 60%. 
73. All draft European standards are submitted to a public enquiry in Iceland.  This is done by 
means of an announcement on the website of IST, w ith a notification by email to those who have 
expressed a wish to be notified of new drafts.  Anyone can send in a comment on a draft European 
standard.  The time limit for submitting comments on the drafts is usually five to six months.  A 
formal vote on final drafts also takes place by th e same means, but with a time limit of two months. 
(ix) Sanitary and phytosanitary measures 
74. Iceland has traditionally applied strict border c ontrols with a view to maintaining high animal 
and plant health standards.  The Chief Veterinary O fficer at the Ministry of Agriculture is Iceland's 
enquiry point under the SPS Agreement and the Mini stry of Agriculture is Iceland's national 
notification authority.43  Iceland is a member of the FAO/WHO Codex Alimentarius, the World 
Organisation for Animal Health, and the International Plant Protection Convention. 
75. Since its last Review, Iceland has notified em ergency bans on imports of live poultry and 
birds, fertile eggs, and raw poultry and bird products that can carry  avian influenza from a number of 
countries.44  Iceland's notification in Decem ber 1999, on meat and meat products45, was discussed in 
the Committee on Sanitary and Phytosanitary Measures in March 2000.46  The representative of 
Argentina requested further clarification on the notif ication and the possibility, under the regulation of 
exporting meat without heat treatment to Iceland.  The representative of Iceland responded that this was the case, provided the necessary certificates a nd documents were submitted.  The representative 
of Canada expressed the view that  Iceland's regulation was unclear. 
76. The authorities indicated that the Ministry of Agriculture is responsible for SPS measures as 
provided for in Act No. 25/1993 on Animal Diseases and their Prevention (as amended), Act No. 66/1998 (as amended) on Vete rinarians Health Services for Animals and Regulation 509/2004 on 
 
43 WTO documents G/SPSENQ/17, 20 October 2004 and G/SPS/NAA/8, 20 December 2004. 
44 See WTO documents:  G/SPS/N/ISL/2; G/ SPS/N/ISL/2/Add.1; G/ SPS/N/ISL/2/Add.2;  
G/SPS/N/ISL/3;  G/SPS/N/ISL/4/Rev. 1; G/SPS/N/ISL/5;  G/SPS/N/ISL/ 5/Add.1;  G/SPS/N/ISL/6;  
G/SPS/N/ISL/7. 
45 WTO document G/SPS/N/IS L/1, 16 December 1999. 
46 WTO document G/SPS/R/18, 18 April 2000. WT/TPR/S/164/Rev.1 Trade Policy Review 
Page 38 
 
 
                                                     measures to prevent the introduction of animal di seases and contaminated products in Iceland.  As 
outlined in the  Foodstuffs Act (Act No. 92/1995), responsibility for the quality and safety of food is 
with the Minister of Environment who is advised by the Environmental and Food Agency.  The 
Agency was created in 2003 combining the functions  of the State Health and Safety Authority 
(Hollustuvernd Rikisins ), and the State Nature Protection Authority ( Natturuvernd  Rikisins ) as well as 
the Chief of Hunting and the Committees on Reind eer and Animal Protection (Act No. 90/2002). 
77. There are, however, two exceptions to the above.  The Minister of Agriculture, advised by the 
Chief Veterinary Officer, is responsible for matters  concerning the supervisory tasks of veterinarians 
which include:  the import and export of livest ock products;  communicable livestock diseases;  the 
handling, inspection and classification of slaughterh ouse products;  and health inspection of farmed 
freshwater fish.  The Minister of Fisheries holds responsibility for handling, transport, storage, and 
processing of marine products for export and for farmed  marine species;  the Minister is advised by 
the Directorate of Fisheries.  The Food Stuffs Committee ( Matvaelarad ) made up of representatives 
from all three advisory bodies has the role of coordinating the different rules and regulations concerning the quality and safety of food. 
78. According to the authorities, Iceland bases its  analysis process on the SPS Agreement, and 
other internationally recognized standards, guidelines, and recommendations.  Importers of 
feedingstuffs have to be registered with the Feed , Seed and Fertilizer Authority according to the EU 
legislation.  Iceland accepts certificates signed by the competent authority of the country of origin. 
79. Iceland has a wide derogation from EEA sanitary legislation and is only required to transpose 
EU sanitary measures relating to fishery products.47  According to the authorities, in practice many of 
Iceland's SPS regulations have been harmonized with  those in the EU, and Iceland's derogation is 
currently under review. 
80. The EFTA Surveillance Authority is empowered to  carry out inspections in the EFTA states 
in order to control the application of food and veterinary legislation incorporated into the EEA Agreement. In the case of Iceland, the EFTA author ity carries out inspections in the areas of fish 
production, disease and border control, hygiene cont rol systems, and animal nutrition.  During the 
review period, seven such inspections have been carried out in Iceland.
48  The EFTA Surveillance 
Authority is also involved in the running of the Rapid Alert System for Food and Feed (RASFF), a notification system for risks to human health resulting from food or feed. 
81. Under Regulation 509/2004, in principle the import of specified agricultural products are 
banned (Table III.6).  However, the Minister of Agriculture with the recommendation of the Chief 
Veterinary Officer may permit the importation of these products provided it is proven that they will 
not carry any contaminant capable of causing animal or human diseases and that the conditions applicable to the importation have been met.  The recommendation must be grounded on a risk evaluation based on OIE and CODEX standards as well as the provisions laid out in the WTO SPS 
Agreement.  This Regulation has not been notified to WTO Members. 
82. According to Regulation 509/2004 the conditions to obtain a permit for the importation of the 
specified agricultural products include:  (a) for boiled, pasteurized and processed products, official 
 
47 As a result of its commitments under the EEA, I celand is obliged to transpose EU phytosanitary 
legislation (Annex I, Chapter III of the EEA Agreement) as well as legislation on feedingstuffs (Annex I, 
Chapter II of the EEA Agreement) and foodstuffs (Annex II, Chapter XII).  Iceland's derogation relates to 
Veterinary Issues (Annex I, Chapter I of the EEA Agreement). 
48 For detailed information on the outcomes of these inspections see EFTA Surveillance Authority 
online information.  Available at:  http://www.eftasurv.int/information/reportsdocuments/vetcontrolmatters/. Iceland WT/TPR/S/164/Rev.1 
 Page 39 
 
 
certification of origin and health and official cer tification that those processes have taken place in 
certified processing plants, and (b) for raw and unpasteu rized products, official certification of origin 
and health;  that products have been stored at a temperature of at least -18°C for one month prior to 
customs clearance;  that products were slaughtered in certified slaughterhouses and processed in 
certified processing plants;  and that the products are free from salmonella bacteria. 
83. Regulation 509/2004 also requi res that processing plants and slaughterhouses must be 
certified for sale/export purposes either by the Eur opean Union, member states of the European 
Economic Area or the United States. 
84. Animal and plant products that have been gi ven growth promoting agents and hormones are 
banned in Iceland (Act No. 99/1993 on the producti on, pricing and sale of agricultural products, as 
changed by Act No. 87/1995).  This applies equally  to imports and domestically produced products.  
Regulation 509/2004 requires certification that sour ce animals of the products have not been given 
growth-promoting substances during their breeding period. 
Table III.6 
Products subject to conditional im port ban under Regulation 509/2004 
A. Raw meat, processed or unprocessed, as well as offal and animal by-products 
B. Animal feeding-stuffs having as constituents: 
(1)  Fallen stock, including stillborn or unbor n animals (animal foetuses);  (2) animals slaughtered to prevent the spread of a nimal 
diseases;  (3) animal by-products, including blood from animals whose meat on inspection has proven to be unfit for human 
consumption because of contagious diseases;  (4) parts of an animal slaughtered in a normal manner that are not examined during  
meat inspection.  However, this does not apply to hides, blood and similar products;  (5) meat, domestic poultry, fish, wild ga me 
and foods made from animal products that have  been spoiled;  (6) animals, fresh meat  and domestic poultry, fish, wild game, mea t 
and dairy products that generall y would not meet the requirements of veterinary  authorities for importation;  (7)  animal produ cts 
and animal by-products that contain traces of contaminants which are dangerous for animal and human health;  (8)  fish or fish 
by-products that have been deemed unsuitable for human cons umption because of contagious diseases;  (9) products from 
specified risk material, including the spinal cord, brain, head, and spleen of ruminants;   (10) products that have been contami nated 
after heat treatment 
C. Meat meal, bone meal, feed products processed from  products or by-products from mammals and fowl 
D. Wool, used bags or other packaging or wrapping materials, fl uff, feathers, down, straw mats, straw baskets, and unprocessed 
animal hair.  Exempted are sterilized raw skins, hides, hunting and fi shing trophies and dead mammals/birds intended to be 
stuffed, provided they are accompanied by a certificate attesting adequate disinfectio n accepted by the Chief Veterinary Office r 
E. Untreated eggs, eggshells and egg products 
F. Unpasteurized milk and diary products  processed from unpasteurized milk 
G. Hay, straw, manure, potting soil, peat, and compost mixed with manure 
H. Blood, serum, and other biological  products from the animal kingdom, including b acteria, viruses, and specimens of blood, blood  
serum, cells, tissues, and animal proteins 
I. Used riding gear and unsterilized riding outfits, soiled clothing a nd rags, as well as equipment that has been used for the sto rage 
and transport of animals and animal by-products 
J. Used agricultural machinery and tools, including horse-trailers and other equipmen t that has been us ed in agriculture 
K. Used fishing gear for angling, unless it has been disinfected 
 
Source: Regulation 509/2004, on  measures to prevent the introduction of anim al diseases and cont aminated products in 
 Iceland. 
85. The Genetically Modified Organisms Act No. 18/1996 regulates the contained use and 
deliberate release of genetically modified organisms (GMOs).  According to the Act, GMOs approved 
in the EU do not require approval in Iceland.  GM Os may, however, be prohibited in Iceland by the 
Minister of the Environment, even if they are approved in the EU, if they are deemed to be of danger to human health and the environment by the Environmental and Food Agency.  No restrictions, WT/TPR/S/164/Rev.1 Trade Policy Review 
Page 40 
 
 
                                                     however, have been put in place on GMOs.  A Sp ecialist Advisory Committee on GMOs was created 
by the Minister of the Environment in1997.  The role of the Committee is to advise the executive 
authorities on GMO issues and provide information to the public. 
86. According to Act No. 54/1990, and its numerous  implementing regulations, the import of live 
animals requires a permit from the Ministry of Agriculture and compliance with quarantine 
requirements.  Importers of animal fodder, fertil izer, and seeds need to be registered at the 
Agricultural Authority of Iceland. 
87. According to Regulation 189/1990 (stemmi ng from Act No. 51/1981 on disease prevention 
and vermin on plants) the import of plants and plan t products is subject to certificate requirements and 
may be restricted by the Minister of Agriculture to protect Icelandic flora against new diseases and 
pests.  The import of harmful organisms and plants (as listed in Appendices I and III of Regulation No. 189/1990), plant consignments rejected  for import into Denmark, Finland, Norway or 
Sweden for phytosanitary reasons, coniferous trees from countries outside the European continent, and most soil, compost, raw or cut tree bark and manure, is prohibited.  Plants and plant products from countries where the New Zeala nd flatworm (Artioposthia triangulate) is found must be free of 
soil unless there is an additional declaration on the phytosanitary certificate st ating that the plants 
come from a place of cultivation where the flatworm is not found.  Iceland has implemented the IPPC Guidelines for regulating wood packaging material in international trade as provided for in Regulation No. 343/2004 on Wood Packaging for exported products in accordance with Act No. 51/1981 on 
protection against plant diseases and pests. 
88. A new law on the aquaculture of exploitable mari ne stocks (Act No. 33/2002) was introduced 
during the review period.  According to Regulation 238/2003, imports of live fish for aquaculture are subject to an initial permit from the Minister of Fisheries and a confirmation from the Chief Veterinary Officer that the necessary official certif icates of health and origin have been provided. 
(3) MEASURES DIRECTLY AFFECTING EXPORTS  
(i) Procedures and charges 
89. Exporters must provide a cargo manifest (cont aining the same information as on the bill of 
loading or airway bill) to customs in order for goods to be cleared for export.49  Fishing vessels taking 
fish directly to ports abroad are required to provi de a report on their catch to the relevant customs 
office in Iceland.  The new Cust oms Law allows exporters selling sm all goods by mail order to send a 
simplified export report to the Customs Office after the export has taken place.50  According to the 
authorities there are no registration requirements applied to exporters. 
90. According to Act 66/2002, a fee of ISK 500 should be paid for every horse exported into a 
fund established with the purpose of protecting the speci es.  The authorities stressed that this fee is not 
collected by the Directorate of Customs. 
 
49 Customs Law No. 55/1987, Chapter 8 and Customs Law No. 88/2005, Chapter 19. 
50 Customs Law No. 88/2005, Chapter 19, article 141. Iceland WT/TPR/S/164/Rev.1 
 Page 41 
 
 
(ii) Export quotas, prohibitions, restrictions, and licensing 
91. Export restrictions, prohibitions, and licensing apply in a number of cases (Table III.7).  In 
addition, Iceland is a participant in the Australia Group.51 
Table III.7 
Export prohibitions and export licensing requirements, March 2006 
Product Legislation Nature of restriction 
Narcotics Narcotics Act No . 65/1974 Export prohibition 
Ozone-depleting 
substances Regulation No. 586/2002 on 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) 
Consumer goods that are a danger to health Act on Product Safety No. 134/1995 Export prohibition 
Wild animals and parts of 
wild animals, as well as 
eggs Act on Protection and 
Hunting of Wild Birds and 
Animals, No. 64/1994 Minister for the Environment shall in a regulation stipulate on the import 
and export of wild animals and their parts, as well as eggs 
Live horses Law on the Export of Horses 
No. 55/2002 Exports require a special certificate to be granted from an official 
veterinarian and from the Farmer's Association. 
Antiques and objects of 
historical value Law on Export of Cultural Goods, No. 105/2001 Exports require a special licence to be granted from the Museum's Committee 
Natural artefacts, micro-organisms and their DNA Law on the National Institute for National History, 
No. 60/1992 Exports require a special licence from the Icelandic Institute for Natural 
History 
Arms and related 
equipment Weapons Act No. 16/1998 Exports require a licence from the National Commissioner of the Police 
Exports of importance for warfare or necessary for 
the production of weapons 
(both substances and 
equipment) Regulation No. 070/1993 on 
Export Licences Exports require a licence from the Ministry of Foreign Affairs 
Plants and plant products Regulation No. 18 9/1990 Exports require a special health certificate from the Agricultural Research 
Institute 
 
Source:  Icelandic legislation.  
(iii) Duty and tax concessions 
92. Iceland does not provide income tax deductions  to businesses contingent on exports.  The 
VAT is zero-rated on exports of  goods and defined services. 
93. The Minister of Agriculture may authorize the duty on imported agricultural goods to be 
waived or refunded if such goods are being imported for processing and export, although the 
authorities indicate that this scheme is no longer in use.52  Iceland maintains no general drawback 
mechanism. 
94. Under Regulation 535/2003, on price equaliza tion for export goods made from agricultural 
raw materials, the Ministry of Agriculture can authorize the Customs Office to refund the exporter the 
difference between the cost of raw materials in th e international and domestic market.  The exporter 
must apply to the Ministry for such an authori zation.  The refunds for different categories of 
                                                      
51 The Australia Group aims to allow exporting or transhipping countries to minimize the risk of 
assisting chemical and biological weapon  proliferation.  The Australia Group online information.  Available at:  
www.australiagroup.net. 
52 Customs Law No. 1987/55, Article 6.3 (as amended by Act No. 134/2003), and Customs Law 
No. 88/2005, Article 7.3. WT/TPR/S/164/Rev.1 Trade Policy Review 
Page 42 
 
 
                                                     agricultural goods are set out in the regulation.  According to the authorities, in 2005 just over 
ISK 3 billion was refunded.  Producers of lamb meat  are obliged to export a certain percentage of 
their annual production (Chapter IV(2)). 
95. Under the Customs Law the establishment of free zones may be authorized.53  O n l y  o n e  
company has been authorized to operate in a limited manner under this regime. 
(iv) Export promotion, finance, insurance, and guarantees 
96. In its latest notification to the WTO, Icela nd indicated that for the years 2000-02, it did not 
provide subsidies in agriculture contingent upon exportation.54 
97. According to the authorities, in practice there is very little by way of government export 
finance available to Icelandic businesses, the only source being the New Business Venture Fund.   
New Business Venture Fund55, which runs an Export Credit Guaran tee Department.  According to the 
Act No. 60/1997, on the New Business Venture Fund the role of the Department is to, among other 
things:  insure loans granted by credit institutions to domestic manufacturers or service providers for 
export loans granted to foreign purchasers;  to  sell insurance guarantees for services provided by 
Icelandic parties abroad, and to underwrite project guarantees made by domestic parties in connection 
with certain projects;  and to insure investme nts by domestic investors abroad or equipment sent 
abroad against political risk.  The schem e is run on a cost-recovery basis. 
98. The operation of the Export Credit Guarantee Department was strengthened in 2002 by a 
contract it signed with the New Business Ventur e Fund, and its Product Development and Marketing 
Department, the Federation of Icelandic Industries,  and the Ministry of Industry.  Under this 
agreement, each of the signatory parties agreed to  deliver an annual ISK 2 million contribution to the 
cooperative venture, with a provision that if pr emiums are higher than operating expenses, then 
parties' contributions would be reduced.  The agreement was renewed for three years in 2005.  The value of this agreement is ISK 26.25 million (duri ng the three years) and is to cover the cost of 
running the department.
56 
99. The Trade Council of Iceland57 helps Icelandic companies to sell their products, services, and 
know-how in the international marketplace. The Council has a seven-member executive board appointed by the Minister for Foreign Affairs, co mprising business leaders from all sectors of the 
economy.  The Council employs a total of 20 staff and hires independent project managers overseas.  The Trade Council is organized into five main service areas:  information services, consultancy 
services, training, trade fairs and market development.   In 2005 the Invest in Iceland Agency became 
a part of the Trade Council.  The Overseas Business Services Office
58, a dependency of the Ministry of 
Foreign Affairs, in close cooperation with the Tr ade Council, assists Icela ndic exporters, generally 
charging a fee.  Assistance is mainly focused on pr oviding information on a target market.  The OBS 
maintains seven trade representatives,  in the United States, Denmark, Germany, France, Japan, China, 
and Russia. 
 
53 Customs Law No. 1987/55, Articles 90 to 96, and Customs Law No. 88/2005, Articles 105 to 108. 
54 WTO document G/AG/N/ISL/22, 29 April 2003. 
55 New Business Venture Fund online info rmation.  Available at:  www.nsa.is. 
56 The value of guarantees issued per year has been (i n ISK):  (i) for political risk, 44,949,894 in 2002, 
46,251,202 in 2003, 0 in 2004, and 57,512,000 in 2005;  for commercial risk, 44,949,894 in 2002, 
1,057,067,509 in 2003, 20,962,313 in 2004 and 60,154,703 in 2005. 
57 Trade Council of Iceland online inform ation.  Available at:  www.icetrade.is 
58 The Overseas Business Services Office online information.  Available at:  (www.obs.is) www.vur.is. Iceland WT/TPR/S/164/Rev.1 
 Page 43 
 
 
100. Law No. 3/2003 on Public Support to Scientific Research established the Innovation Centre 
(IMPRA), which is operationally linked to IceTech.59  This centre, inter alia , provides advice to 
SMEs on export planning.  IMPRA cooperates with other parties such as the New Business Venture 
Fund. 
101. An export market promotion programme called Iceland Naturally has been developed to 
promote Icelandic tourism and produc ts in the United States and Canada.60  The Icelandic 
Government pays 70% of the costs of the promotiona l activities the rest is paid by the participating 
Icelandic companies. 
(4) MEASURES AFFECTING PRODUCTION AND TRADE  
(i) Legal framework for businesses 
(a) Types of business 
102. The main types of business structure in Icela nd as well as fees and selected requirements are 
outlined in Table III.8.  According to the Icela ndic authorities, the most common and economically 
significant business structure is  the limited liability company.61  Information on Iceland's foreign 
direct investment regime can be found in Chapter II. 
103. According to the authorities, Icelandic company la w is in line with the relevant provisions of 
the EEA Agreement.62  An application to establish a company is generally handled in a day.63 
Table III.8 
Principal business structures, responsible agencies, and selected requirements, 2006 
Type of 
business Agency of registration Registration fee Selected rules and requirements Taxation 
Private limited 
companyaRegister of Limited Companiesb 
(hlutafélagaskrá) ISK 82,500 registration fee 
 
ISK 5,000 (for identity number 
from Director of Internal 
Revenue) 
 
ISK 4,980 (inc. VAT) for publication of notification of registration in Legal Gazette  Governed by Act No. 138/1994 respecting private limited 
companies 
 
A single party may establish a private limited 
company and be a shareholder 
 
Minimum share capital requirement of 
ISK 500,000;  liability is 
limited to share capital 
 
Limitations apply to payment of dividends;  granting of loans to shareholders is prohibited 
 Income tax 18% 
Table III.8 (cont'd) 
                                                      
59 Icetec online information.  Available at:  www.iti.is. 
60 Iceland Naturally online information.  Available at:  www.i celandnaturally.org. 
61 Invest in Iceland Agency (2004). 
62 Ministries of Industry and Commerce "Company Law General Rules for Business Formation in 
Iceland".  Available at:  http://eng.idnad arraduneyti.is/laws-and-regulations/nr/1189. 
63 Invest in Iceland Agency (2004). WT/TPR/S/164/Rev.1 Trade Policy Review 
Page 44 
 
 
Type of 
business Agency of registration Registration fee Selected rules and requirements Taxation 
Public limited 
companyaRegister of Limited Companies
b 
(hlutafélagaskrá) ISK 165,000 registration fee 
 
ISK 5,000 (for identity number 
from Director of Internal 
Revenue) 
 
ISK 4,980 (inc. VAT) for 
publication of notification of 
registration in Legal Gazette  Governed by Act No. 2/1995 respecting 
public limited companies 
 
Minimum of two founders, two shareholders, one manager and three persons on board of directors 
 
Minimum share capital requirement of 
ISK 4 million;  liability is 
limited to share capital 
 Income tax 18% 
Co-operative 
society Register of Co-
operative Societiesb 
(samvinnufélagaskr) ISK165,000 registration fee 
 
ISK 5,000 (for identity number 
from Director of Internal 
Revenue) Minimum 15 founders 
 
Liability of members 
limited to the payment of a 
membership fee and share 
of ownership of society's funds 
 Income tax 18% 
Partnership District 
Commissioner 
(sýslumanour) ISK 55,000 fee 
 
ISK 5,000 (for identity number 
from Director of Internal 
Revenue) 
 
ISK 1,868 (inc. VAT) for publication of notification of registration in Legal Gazette  
 Liability of members of partnerships is generally unlimited Income tax on the company 26% 
Individual 
firm District Commissioner 
(sýslumanour) ISK 44,000 registration fee 
 
ISK 5,000 (for identity number 
from Director of Internal 
Revenue) 
 
ISK 1,868 (inc. VAT) for 
publication of notification of 
registration in Legal Gazette  
 Individual's liability is 
unlimited Individual income tax total of 37.73% in 2005 
(24.75% (for income in 2004) plus municipal tax 
of 12.98%)
c
 
a Provisions on branches are similar for both types of company ex cept that disclosure requirements are stricter for the public 
 limited companies, and private limited companies have to  inform, upon establishment, whether there are one or more 
 shareholders. 
b Both the Register of Limited Companies and the Register of Cooperative Societies are operated by the Director of Internal 
 Revenue. 
c A phased 4% reduction of the personal income ta x is being implemented over the period 2005 to 2007. 
 
Source: Ministries of Industry and Commerce, Iceland. 
104. Operating licences are required for a number of industries and services and are issued on the 
basis of different acts and regulations, many of  which have been adopted to implement EU 
regulations.  Operating licences for polluting activities are based on the Public Health and Control Act 
(Act No. 7/1998 and Regulati on 785/1999) and various regulati ons, while operating licences for 
sanitary and health practices are based on Ac t No. 7/1998 and Regulation 941/2002.  Services 
requiring such licences include public baths, spor ts halls, schools, kindergartens, guesthouses, bars 
and night clubs, salons, social and health ins titutions, and both public institutions and private 
companies.  The Foodstuffs Act (93/1995) requires operating licences for the production and 
distribution of foodstuffs. Iceland WT/TPR/S/164/Rev.1 
 Page 45 
 
 
                                                     (b) Taxation 
105. According to Invest in Iceland Agency, over the last few years efforts have been made to 
make the Icelandic tax system simpler, to reduce tax rates, broaden the tax base and conclude more 
double taxation treaties with a view to increasing the competitiveness of Icelandic corporations and 
attract foreign investors.  Taxes on the main typ es of company structure are outlined in Table III.8. 
106. Significant changes to fiscal policy over the review period include the reduction of corporate 
income tax from 30% to 18%, which came into effect  on 1 January 2002.  In addition the net wealth 
tax of 0.6% on net capital (for both business and i ndividuals) was abolishe d on 31 December 2005. 
107. Corporations resident in Iceland are subject to  Icelandic corporate income tax (18%) on their 
worldwide profits.  Interest income is taxable and ca pital gains taxes are levied at the corporate rate, 
including on disposal of shares.  A deduction enjo yed by Icelandic corporations paying out dividends 
has been abolished.  Dividend payments by a resi dent limited company to another resident limited 
company are now subject to a 10% withholding tax, withheld at source.  Taxes withheld are credited 
against the assessed income tax. 
108. Corporations not resident in Iceland are taxed on their income from Icelandic sources at the 
corporate income tax rate (18%).  Withholding taxes on dividend payments and royalty payments to 
non-resident companies are levied at 15% and 18% respectively. 
109. Companies may be subject to an industrial fee of 0.08%, on all operating income;  it is 
assessed on all industrial activities carried out by individuals, corporations, and other taxable entities. 
(ii) Competition policy 
110. Iceland has a national competition regime and must also apply the EEA Agreement 
competition rules.  EEA and national competition le gislation run in parallel.  The EEA competition 
rules apply where restrictive practices may affect trade between EEA Contracting Parties, and national decisions should not jeopardise the prope r functioning of the EEA Agreement.  This, 
however, does not preclude Iceland from adopting stri cter national laws within its own territory.  
Iceland has also subscribed to competition provisions within the context of the EFTA Convention and 
in each of EFTA's free-trade agreements with third countries. 
111. Iceland has undertaken a number of pr o-competitive reforms in the banking, 
telecommunications, and energy sectors since the early 1990s.  As reported by the OECD, these 
reforms were largely stimulated by dissatisfacti on with economic performan ce and obligations under 
the EEA and the WTO.64 
112. Iceland's competition regime is under the authority of the Minister of Commerce.  There have 
been several changes to the regime over the revi ew period, chiefly in 2000 and 2005, following on 
from a comprehensive overhaul of the system in 1993 (Law 8/1993). 
113. In December 2000, amendments were made to the Competition Law with a view to bringing 
Iceland's national competition rules into greater conf ormity with those of the EU.  As noted by the 
OECD, the main changes included:  clarifying procedures on merger cases and extending the period 
for handling them;  new powers vested in the Competition and Fair Trade Authority (CFTA) to 
temporarily postpone a notified merger during an inves tigation;  bolstering of the CFTA's powers with 
 
64 OECD (2005a). WT/TPR/S/164/Rev.1 Trade Policy Review 
Page 46 
 
 
                                                     respect to public sector undertakings;  and furthe r clarification on the provision on fines, which 
allowed the CFTA to take into account the guilty undertaking's will, or lack thereof, to cooperate.65 
114. A new Competition Act came into force in 2005 (Act No. 44/2005) to strengthen the 
competition authority and its supervision responsib ilities.  The Act established a new Competition 
Authority (CA);  the CFTA and the Competition Council were dissolved.  The CA now focuses on 
competition cases;  unfair trade practices and market transparency are now the responsibility of the Consumer Agency (see Chapter III(viii)).  The CA Board, appointed by the Minister of Commerce, is responsible for supervising the Authority's activities and operations and major decisions are submitted to the Board for approval or rejection.  Under the new Competition Act the Minister of Commerce 
appoints only the Board of the CA, which in turn  appoints its Director-General.  Other changes 
brought about by the new Act were:  clearer permi ssion to the CA to evaluate whether cases submitted 
to it give adequate grounds for investigation;  a clearer focus on management and ownership links 
between undertakings;  clearer pe rmission to demand structural changes of a company or public 
entity;  and revocation of a provision that permitted the Competition Council to take measures against 
circumstances detrimental to competition.  In a ddition, the CA may now apply both Icelandic Law 
and Articles 53 and 54 of the EEA Agreement. 
115. The CA coordinates its work with sectoral supervisors.  There is a division of tasks between 
the CA and the Financial Services Authority;  a co operation agreement has been reached between the 
Competition Authority and the Post and Telecoms Administration, and one is envisaged with the 
authorities in the energy sector. 
116. Iceland prohibits anticompetitive agr eements and practices by undertakings66, where the 
aggregate market share of participants exceeds cert ain percentage thresholds.  It also prohibits 
associations of undertakings67 from deciding to impose restricti ons on competition or advocating 
restrictions prohibited under the Law.  Exemptions  to these prohibitions may be granted by the CA, 
however, no exemptions have been granted recently.  Iceland also prohibits the abuse of dominant 
market position.  As observed by the OECD, preven ting abuse of market dominance is a challenging 
task for Iceland given the size of the economy, which, for efficiency reasons, may lead to high 
concentrations in many markets.68 
117. The CA must be notified of mergers whereby the total turnover of the undertakings in 
question is ISK 1,000 million or more.  The CA must notify undertakings, within a set deadline, if it has reason to investigate the merger 's competitive effects.  The CA has the authority to set conditions 
for mergers, and, under certain conditions, may also  annul mergers after they have been concluded if 
it is deemed that they obstruct effective competition. 
118. Icelandic legislation provides certain exempti ons for agricultural producers, whereby dairy 
production centres may cooperate to bring down the cost s of production, storage, and distribution.  In 
addition, mergers are not subject to scrutiny of the CA as other sectors.  The CA participated in a joint 
 
65 OECD (2000). 
66 Undertakings are defined as "individuals, companies, public parties or other entities engaged in 
economic operations". 
67 A group of undertakings is defined as "undertakings connected by an ownership structure 
characterized by one undertaking owning a share in anothe r undertaking or undertakings large enough to confer 
on it the majority of voting rights" as well as "an undertaking where the parent company and subsidiary, or one 
or more subsidiaries, together have enough shares or  holdings to control the majority of voting rights". 
68 OECD (2005b), p. 7. Iceland WT/TPR/S/164/Rev.1 
 Page 47 
 
 
                                                     report with other Nordic competition authorities on Nordic food markets, which was issued in 2005.69  
In addition, the Prime Minister recently appoin ted a committee to look into high prices in the 
Icelandic food market.  According to the authorities, this committee is expected to provide a report in 
June 2006 in order that a bill of law may be presented to Parliament in the autumn. 
119. Between 2000 and 2 005, approximately 300 cases were handled annually by the former 
CFTA and former Competition Council;  around ha lf concerned competition matters, and the other 
half concerned unfair trade practices.  Of the 194 decisions taken by the Co mpetition Council, 105 led 
to interventions;  in other cases the claims were re jected or the case was overruled.  In addition, the 
Council addressed 15 decisions to public authorities, requesting them to  reveal restrictions on 
competition.  During the period, the Competition Appeals Committee took an average of 15 decisions 
annually.  Cartels, abuse of dominant position, a nd public restriction on competition have constituted 
the most important cases in recent years.  Fines have  been imposed and orders issued in relation to 
cartel cases. In some cases concerning abuse of do minant position fines have been imposed.  In other 
cases, orders have been issued to undertakings and public authorities. 
120. In October 2004, the Competition Council imposed  administrative fines of ISK 2.6 billion on 
four petroleum companies;  the case has now been ta ken to the district court.  The Council also took 
action against cartel agreements in professional serv ices, insurance, and distribution of fruits and 
vegetables.  The latter case resulted in a fine of  ISK 47 million.  The Competition Council issued an 
opinion (2/2001) on the competition-hindering provisions in laws and regulations on the import of vegetables, following which a decision was taken to reduce tariffs on some imported vegetables.
70 
121. The competition rules within the EEA are to  ensure equal competitive conditions within 
participating member states and as such EEA competition rules reflect the Community acquis in this area.  The cornerstones of the EEA competition regi me are: Article 53, which prohibits agreements 
and practices that may distort or restrict competition; Article 54, which prohibits the abuse of dominant market position;  and Article 57, which relates to control of large mergers and other 
concentrations of undertakings that may create or strengthen a dominant position and consequently 
impede effective competition. 
122. Authority for dealing with competition inves tigations is with the CA, the European 
Commission or the EFTA Surveillance Authority, depending on the case, but the "one stop shop" 
principle means that a case is never considered by both  the European Commission and the EFTA 
Surveillance Authority, although there is close cooperation between the two bodies.  Cooperation 
includes, inter alia , certain access rights to documents and the right to comment formally at various 
stages in the process as well as consultations on attributio n of jurisdiction.  The basic rule is that the 
European Commission has responsibility for cases falling under EU competition rules affecting trade between EU States;  the EFTA Surveillance Authority has responsibility for cases where there is only an effect on trade between participating EFTA states.  In cases affecting trade between the EU and 
one or more participating EFTA State responsibility is allocated according to the relative importance 
of the turnover of the undertakings concerned. 
123. The EFTA Convention and the FTA s negotiated between the EFTA  and third parties contain 
competition policy provisions.  Parties to these ag reements recognise that anticompetitive agreements 
and practices as well as abuse of dominant position ar e incompatible with the respective agreements.  
 
69 Report from the Nordic competition authorities (2005), "Nordic Food Markets:  A taste for 
competition"  (No. 1/2005) (ISBN:  87-7029-345-7).  Available at:  http://www.ks.dk/english/publications/2005/ 
foodmarket. 
70 Laubach and Wise (2005). WT/TPR/S/164/Rev.1 Trade Policy Review 
Page 48 
 
 
                                                     In most cases, consultations are provided for, wh ich may be followed by safeguard actions.  There 
have been no such cases involving Iceland or Icelandic companies since 2000. 
124. Cooperation on competition policy also exists be tween Nordic countries.  A joint report on 
the retail banking sector will be issued in late 2006 as  this is an area where there are oligopoly issues 
in all Nordic countries as well as  some entry difficulties.  An annual meeting is held between the 
Nordic competition authorities (Denmark, Finland, the Faroes, Greenland, Iceland, Norway, and 
Sweden) to discuss experiences matters of common in terest.  In addition, in 2000, the competition 
authorities of Iceland, Norway and Denmark signed an agreement on exchange of confidential 
competition-related information, to facilitate the identification of cartels and merger enquiries.  
Sweden signed the agreement in 2003.  Iceland is also a member of the International Competition 
Network. 
(iii) Incentives and other government assistance 
(a) Tax deductions and incentives 
125. While there has been a trend towards reduc ing taxation rates on bo th individuals and 
businesses, various tax incentives still exist in Iceland. 
126. Deductions for resident companies include: operating expenses, research and development 
costs (including market research costs and lawyer s and accountants fees relating to the establishment 
or expansion of an enterprise).  There are a number  of depreciation allowan ces for buildings and other 
structures, defined by tax regulations.  Capital gain s from the sale of shares may be deferred if others 
are purchased.  Operating losses may be carried forward for ten years, although carry backs are not 
permitted.  There are certain provisions for unilateral relief of foreign taxes paid.  Additional relief of 
various kinds may be provided through the terms of double taxation treaties. 
127. Iceland has concluded double taxation treaties with:  Belgium (2004); Canada (1998);  China 
(1998);  the Czech Republic (2001);  Denmark (1998);  Estonia (1996);  Faroe Islands (1998);  
Finland (1998);  France (1992);  Germany (1968);  Greenland (2003);  Ireland (2005), Latvia (1996);  Lithuania (2000);  Luxembourg (2002);  the Netherlands (1998);  Norway (1998);  Poland (2000);  
Portugal (2003);  Russia (2004);  the Slovak Republic (2004);  Spain (2003);  Sweden (1998);  
Switzerland (1990);  the United Kingdom (1992);  the United States (1976) and Viet Nam (2003).  In addition a joint treaty is in force between the Nordic countries.  In 2005, d ouble taxation treaties were 
completed with Greece, Croatia, Mexico, and the Ukraine;  these are being translated and finalized.  Treaties with Austria and Korea await signature;  tr eaties with Italy and Malta await ratification.  A 
treaty with Hungary will take effect at the beginning of 2007.  Negotiations on tax treaties are under way with India, Slovenia, and Romania.
71 
(b) Support programmes 
128. Since the previous Review of Iceland, ther e have been few changes to its main support 
programmes provided and notified to the WTO, al though levels of funding to certain programmes 
have changed (Table III.9). 
 
71 Ministry of Finance web release of February 16th 2006.  Available at:  http://eng.fjarmalaraduneyti. 
is/edia/wwr2006/wwr-160206.pdf. Iceland WT/TPR/S/164/Rev.1 
 Page 49 
 
 
Table III.9 
Support programmes (excluding agriculture), 2006 
Programme Administering 
Agency Objective Subsidy provided (data for most 
recent year)  
Research Fund RANNÍS Support scientific research in Iceland based on the policy direction laid 
out every three years by the Science and Technology Policy Council ISK 254.2 million 
new projects in 
2005, and 
ISK 229.1 million continuation of projects in 2005 
 
Equipment Fund RANNÍS Supports the purchase of expensive research equipment based on the 
policy direction laid out every thre e years by the Science and Technology 
Policy Council 
 ISK 166 million in 2004 
Graduate 
Training Fund RANNÍS Supports post-graduate studies in  science and technology based on the 
policy direction laid out every thre e years by the Science and Technology 
Policy Council 
 ISK 58 million in 2005 
Technology 
Development 
Fund RANNÍS Under the auspices of the Minist er of Industry and Commerce, the main 
objective is to strengthen development work and research in the field of 
technological development that aims  at innovation in the Icelandic 
economy.  The Technology Develo pment Fund finances innovation 
projects in accordance with the polic y of the Science and Technology 
Policy Council 
 ISK 340 million in 2005 
Specific Programme on Nanotechnology 
& Nanoscience 
& Post-genomic Biomedicine 
 RANNÍS The main objective is to strengthe n Icelandic research, to group available 
knowledge in the respective fields and to find new ways of application. Collaboration between companies, re search institutes and universities, 
nationally and internationally, is ai med at. The programme was initiated 
by the STPC and operates according to its policies ISK 90 million in 2005 
Fisheries Project Fund 
 Ministry of Fisheries Supports research innovation and monitoring in the area of fisheries ISK 140 million 
estimate 2005 
Research Fund to Increase the 
Value of Sea 
Produce 
 Ministry of Fisheries Supports applied research projects that  aim to increase the value of sea 
produce and the competitiveness of the fishing industry. Grants are given 
to all areas of fisheries and fish farming ISK 200 million in 2005 
Vocational Training Fund Directorate of Labour under the Ministry of 
Social Affairs 
 Maintain and develop vocati onal skills ISK 58.1 million in 
2004 
Employment 
Opportunities 
for Women in 
Rural Areas Directorate of Labour under 
Ministry of 
Social Affairs 
 Create new jobs among women, particularly where there is high female unemployment ISK 23.3 million in 2004 
Vocational Rehabilitation & Employment 
of Disabled 
Persons 
 Ministry of Social Affairs Rehabilitation of disabled persons through gross wage subsidies to 
rehabilitation centers ISK 227.3 million in 2004 
Job Creation Initiative IceTec, under the Ministry of Industry and 
Commerce Foster knowledge and competence of entrepreneurs and small and 
medium-sized enterprises in areas such as management, finance, product development, marketing, and innovation.  Through the IMPRA 
programme, the IceTech supports and provides grants to innovative projects 
 ISK 162 million in 2004 
Vocational Training in the Fishing Industry 
 Ministry of Fisheries Promotion of quality awareness and quality of working life ISK 12 million in 
2005 
Table III.9 (cont'd) WT/TPR/S/164/Rev.1 Trade Policy Review 
Page 50 
 
 
Programme Administering 
Agency Objective Subsidy provided (data for most 
recent year)  
Assistance to Development 
Projects 
Programme 
 Institute of Regional 
DevelopmentaAssisting regional development through small project grants covering up 
to 40% of their costs (mostly product development, marketing, training, 
and feasibility studies) ISK 54.3 million in 
2005 
Assistance to Local Economic 
Development 
Programme 
 Institute of Regional 
DevelopmentaAssisting local economic development companies in providing 
counselling for small businesses in their area through grants of up to 50% 
of specified running costs of counselling operations ISK 122.3 million in 
2005 
New Business Venture Fund (NBVF)
 NBVF is an independent state-owned 
agency 
overseen by the Minister of 
Commerce It is aimed at investing in innova tive and pioneering firms from which it 
can expect substantial added value, profitability, and a good return.  This 
is provided through equity contributions, loans, credit or guarantees.  It 
covers investment projects in Icela nd by Icelanders or foreigners, and 
investment made by Icelandic parties abroad.  It has four main areas of 
activity:  The Core fund represents the NBVFs equity as maintained and invested at any time and handles all general operation of the NBVF, its 
departments and funds.   The Pr oduct Development and Marketing 
Department contributes to product development and marketing projects 
and the Export Credit Guarantee Department guarantees loans, claims, 
services, investments and equipment related to exports and activities by 
Icelandic parties overseas and particip ation in larger domestic projects 
 Government funds 
provided to the NBVF since its 
establishment in 
1998 have amounted to around 
ISK 5.3 billion  
 
a The Institute of Regional Development stopped taking in new app lications for grants and loans at  the end of November because 
 of financial difficulties.  The Government's deci sion on the future of the Institute is awaited. 
 
Source:  WTO Secretariat document G/SCM/N/95/ISL, 14 August 2003; New Business Venture Fund Annual Report 2004 .
 Available at:  http://www.nsa.is;  and inform ation provided by the I celandic authorities. 
129. With the exception of agriculture and fisheries, state aid and support programmes are 
generally not sector specific, but are applied across sectors to address market failure, build 
comparative advantage, tackle diseconomies of scale or problems in the labour market.  Support is provided in areas such as research and developm ent, development of small and medium-sized 
enterprises, training, market promotion, and job creation.  State aid has been low, except for agriculture. 
130. In 2003, there was an overhaul of the governme nt focus on research and development with 
the overall objective of strengthening scientific research, scientific training, and technology development in Iceland in support of Icela ndic cultural development and to increase economic 
competitiveness. 
 New legislation adopted in this connecti on includes Law No. 2/2003 on the Science 
and Technology Policy Council;  Law No. 3/2003 on Public Support to Scientific Research, and 
Law No. 4/2003 on Public Support to Technology De velopment and Innovation in the Economy.  The 
STPC issues declarations for public policy on science and technology. 
131. The Icelandic Center for Research (RANNÍS), repor ting to the Ministry of  Education, Science 
and Culture, provides operational support to th e committees and funding bodies, to manage 
international connections, monitor the effects and im pact of policies, and to provide advice to the 
STPC.  The RANNÍS administers the Research Fund, the Technology Development Fund, the 
Instrument Fund, the Graduate Training Fund. Iceland WT/TPR/S/164/Rev.1 
 Page 51 
 
 
                                                     (iv) State trading, state-owned enterprises, and privatization 
(a) State trading 
132. The State Alcohol and Tobacco Monopoly (ATVR) is the only enterprise in Iceland 
considered to be a state-trading enterprise in  accordance with the provisions of GATT Article XVII.72 
133. The ATVR is governed by Act No. 63/1969 on th e Sale of Tobacco and Alcoholic Beverages 
as amended.  It is managed by a three-person Board of Directors appointed by the Minister of Finance 
and remains under the supervision of the Ministry  of Finance.  The ATVR imports, procures and 
distributes tobacco and tobacco products, manufactures s nuff, and sells ethyl alcohol.  It also operates 
retail outlets.  ATVR does not impor t or export alcoholic beverages or  sell them at wholesale level 
and it does not export tobacco products. 
134. As reported in Iceland's previous Review, since 1995 the ATVR's monopoly rights have been 
limited to the retail distribution of alcoholic beverages, and wholesale of tobacco and tobacco 
products. 
(b) State-owned enterprises and privatization 
135. Central administration of privatization is in the hands of the Government and a Ministerial 
Committee on Privatization composed of the Prime Minister, the Minister of Foreign Affairs, the Minister of Finance and the Minister of Industries and Commerce.  An Executive Committee on Privatization
73 which reports to the Ministerial Committe e, prepares and coordinates privatization 
projects. 
136. In February 1996, the Government agreed upon rules and procedures for the implementation 
of privatization.74  These rules apply to enterprises sold, or intended to be sold, entirely or partly, by 
the Treasury, as well as shares in enterprises.  Procedural requirements, inter alia,  include:  
coordination with respect to employees rights; the co nduct of a detailed review of potential effects of 
privatization and an assessment of its economic value;  public announcement of intended sale; and a decision by the Ministry on the selling procedure to be applied.  With respect to the sale of an enterprise, the rules stipulate that  the offer that secures the best payment and the highest cash price 
shall be accepted, although offers liable to reduce competition may be rejected.  Brokerage services must be tendered.  Before state-owned enterprises are sold, all the special rights accruing to them 
must be abolished.  The Ministry concerned may grant exceptions from these rules provided they are reported to the Government and thereafter to the public .  It must also provide information to the media 
and other parties on the state of privatization projects in their field. 
137. The Executive Committee on Privatization is involved,  either directly or in providing advice, 
at all stages of the procedures.  In addition, it is required to conduct surveys of state assets and submit 
proposals on government policy regarding their sale. 
138. An extensive programme of privatization of st ate enterprises has been under way over the last 
fifteen years.75  Previously, The Central Government's involvement in the business sector was 
extensive, and considered necessary given the sm all size of Iceland's economy.  It included 
 
72 WTO document G/STR/N/5/ISL, 1 October 1999. 
73 Also known as Task Force on Privatization. 
74 Prime Minister's Office Press Release No . 801 12 February 1996.  Available at:  
http://eng.forsaetisraduneyti.is/ministry/ privatisation/mr/801.  These rules re place the  rules of 12 October 1993. 
75 Central Bank of Iceland (2005a). WT/TPR/S/164/Rev.1 Trade Policy Review 
Page 52 
 
 
government ownership of factories producing fertili zer, cement, ferrosilicon, and pharmaceuticals as 
well as in shipping, airlines, energy production and distribution, financial services (responsible for 
more than 60% of domestic credit), broadcasting, telecommunications, and postal services.  Privatizations over the last 15 years started with the Government disposing of some of its smaller 
assets, and more recently has covered major govern ment assets in banking and telecommunications 
(Table III.10).  The part or full privatization or divesture of state assets in enterprises between 1992 and 2005 brought in a total of ISK 141.2 billion.
76  A comprehensive list of privatized enterprises is 
accessible on the website of the Prime Minister of Iceland. 
Table III.10 
Highlights of recent and pros pective privatization, 2006 
Year Company sold Share sold Proceeds 
€ million  
1998aIcelandic Alloys Ltd (Ferro-silicon plant) 26.5% 13 
 FBA Ltd. (Investment bank) 49% 58 
1999 FBA Ltd (Investment bank) Remaining 51% 126 
 Búnadarbanki (Commercial bank) 13% 29 
1999 Landsbanki (Commercial bank) 13% 43 
2001 Iceland Telecom 2.7% 11 
2002 Landsbanki (Commercial bank) 20% and 45.8% 200 
2003 Búnadarbanki (Commercial bank)  45.8% and remaining 9.1% 170 
 Landsbanki (Commercial bank) remaining 2.5% 8 
 IAV (contractors) remaining 40% 24 
2005bIceland Telecom 98.8% Approx. 921.5 
2005 Agricultural Loan Fund 100% 36.6 
 
a In addition in 1998 stock of 15% in both Landsbanki and Bunadarbanki was issued, raising €21 million and €14 million 
 respectively. 
b Updated information. 
 
Source:  Executive Committee on Privatization, cited in Central Bank of Iceland (2005a), The Economy of Iceland 2004. 
139. As reported by the Central Bank of Iceland, the major state-owned enterprises remaining are:  
the postal service, large stakes in the production and distribution of electricity; the Housing Finance 
Fund; the Student Loan Fund and a few smaller financial institutions. 
(v) Government procurement 
140. Iceland acceded to the WTO Government Procurement Agreement in 200177, and in the same 
year it adopted a new law on Public Procurement78, and a law on Public Projects Procedures.  
Subsequently, several implementing Regulations we re issued (Table III.11).  Up to early 2006, 
Iceland had not provided the statistical information mentioned in Article XI X:5 of the Government 
Procurement Agreement.  In the context of this Review, the authorities indicated that they were 
setting up a system to collect the required data.  The authorities indicated that the total value of 
government procurement in Icela nd in 2005 was around ISK 85 billion. 
                                                      
76 Prime Minister's Office online information.  Available at:  www.forsaetisraduneyti.is. 
77 GPA/43, 9 October 2000.  The Ag reement entered into force on 28  April, 2001 (WTO document 
GPA/48, 27 April 2001). 
78 The Public Procurement Act No. 94/2001. Iceland WT/TPR/S/164/Rev.1 
 Page 53 
 
 
Table III.11 
National legislation on government procurement, 2006 
Act No. 65/1993  On execution of tenders  
Act No. 84/2001  On public projects procedures  
Act No. 94/2001  On public procurement  
Regulation No. 705/2001  On procurement procedures of entities operating in the water, 
energy, transport, and telecommunications sectors (amended by 
Regulation No. 654/2003)  
Regulation No. 715/2001  On public projects procedures  
Regulation No. 239/2003  On the use of standard forms in the publication of contract notices  
Regulation No. 655/2003  On public procurement in the EEA  
Regulation No. 1012/2003  On threshold figures in the field of public procurement  
Parliamentary resolution  Membership to the WTO Govern ment Procurement Agreement  
 
Source: EFTA Surveillance Authority implementation status database;  and WTO documen t GPA/69, 7 October 2002. 
141. Public procurement in Iceland falls under the ju risdiction of the Minister of Finance.  The 
State Trading Center ( Rikiskaup ) is responsible for procurement of supplies and services in domestic 
and foreign markets for state ins titutions and corporations.  Other entities responsible for government 
procurement are:  Government Construction Contracts ( Framkvaemdasýslan );  Public Road 
Administration ( Vegagerd ríkisins) and the Icelandic Maritime Administration ( Siglingastofnun ). 
142. According to the authorities, Public Procurement Act No. 94/2001 is designed to ensure a fair 
and competitive environment for procurement of goods and services and brings Iceland into 
conformity with its EEA and WTO obligations.  Th e Act provides for equal treatment of bidders.  
Rights accrue to individuals and legal entities domiciled in any of the states of the EEA and 
individuals and legal entities who have such rights on  the basis of international treaties to which the 
Icelandic Government is a party. 
143. The Public Procurement Act applies to contracts made by public authorities79, for the 
purchase of supplies, services and works.  Certain types of service contracts listed in Annex 1B of the Public Procurement Act No. 94/2001 are exempted fr om the public-tender obligation.  The provisions 
of the Act relating to complaints (Chapter X III) and the validity of contracts and damages 
(Chapter XIV) apply to the contracts of institutio ns in charge of water supplies, power supplies, 
transport, and telecommunications. 
144. Procurement above certain thresholds by the I celandic Central Government must be put to 
tender.  Title 2 of the Act No. 94/2001 outlines the ru les, timeframes, and procedures for such tenders 
below the minimum thresholds for tendering in the EEA.  There are various minimum thresholds for obligatory tendering applied at national level, and Icel and has committed to others in the context of its 
participation in the EEA and GPA (Table III.12). 
145. Further conditions and limitations on the scope and coverage of Iceland's participation in the 
GPA are listed in the terms of Iceland's accession to the agreement.80  These include:  non-application 
of the Agreement to certain services sectors and sub sectors, types of services contracts, and types of 
utilities contracts;  non-application of certain benefits  of the Agreement to specific parties to the GPA 
until such time as access conditions  to these markets for Icelandic suppliers and service providers is 
improved;  non-application of the Agreement to pr ocurement of animal products made in furtherance 
of agricultural support programmes and human feeding programmes. 
                                                      
79 Public authorities include state and local authorities, their institutions, and other public entities as 
defined in Article 3 of the Act. 
80 WTO document GPA/43, 9 October 2000. WT/TPR/S/164/Rev.1 Trade Policy Review 
Page 54 
 
 
Table III.12 
Government procurement threshold values under nation al legislation and the EEA and GPA agreements, 2006 
Legislation  Supplies Services Works 
Iceland State procurement by central government agencies   ISK 5,410,000 ISK 10,819,000 ISK 10,819,000 
EEA Procurement by central government agencies ISK 13,422,320 ISK 17,430,000 ISK 435,750,000 
 Procurement by local government agencies ISK 17,430,000 ISK 17,430,000 ISK 435,750,000 
 Procurement by utilities 
- IT service and systems  
- Electricity, transportation, etc. 
Oil, gas, fuel, etc.  
ISK 47,481,612 
ISK 33,921,892 
ISK 31,654,408  
ISK 47,481,612 
ISK 31,654,408 
ISK 31,654,408  
ISK 396,680,100 
ISK 424,022,903 
ISK 396,680,100 
GPA Procurement by central government ag encies 130,000 SDR 130,000 SDR 5,000,000 SDR 
 Procurement by local government agen cies 200,000 SDR 200,000 SDR 5,000,000 SDR 
 Procurement by utilities 400,00 0 SDR 400,000 SD R 5,000,000 SDR 
 
a Certain services noted in Appendix 16 to the P ublic Procurement Act (No. 94/2001) are exempted. 
b Work concession agreements are exempted. 
 
Source: The authorities of Iceland. 
146. Tenders may be open, restricted or, in certain  circumstances, negotiated.  The authorities 
indicate that in the vast majority of cases open te ndering is used.  In the case of restricted and 
negotiated tenders, a pre-qualification process must be  applied to select parties invited to submit 
tenders, with a minimum of five participants in the case of the former and three in the latter.  Tender 
documents must include all information necessary for the bidder to make a tender.  Technical 
specifications must generally be in accordance with  EEA standards, or the Icelandic standards that 
comply with these (Article 24).  Tenders (whether  open or restricted) must be advertised in a 
conspicuous manner, and time limits are stipulat ed (Table III.13).  The State Trading Center 
advertises in Icelandic newspapers every Sunday. 
Table III.13 
Time periods for participating in government procurement tenders, 2006 
Agreement Time limit for submission of 
tenders in open procedures Time limit for restricted or negotiated procedures 
Public Procurement 
Act (applies to state 
procurement below 
EEA thresholds) 15 days (Article 36) Receipt of request to participate:  15 days 
Submission of tenders:  10 days (7  days for accelerated process) 
(Articles 37 and 38) 
GPA 40 days (may be reduced under 
certain circumstances) (Article XI) Receipt of request to participate:  25 days 
Submission of tenders:  40 days 
(may be reduced under certain circumstances) 
(Article XI) 
EEA 52 days (may be reduced under 
certain circumstances to 36 
days or a minimum of 22 days) 
(Article 64) Receipt of request to participate:  37 days Submission of tenders:  40 days 
(may be reduced to 26 days under certain circumstances) 
Shorter time periods apply for receipt of request to participate as well as for submission of tenders (may be reduced fo r urgent contracts:  to 15 days and 
10 days respectively) 
 
Source:  The Icelandic Public Procurement Act No. 94/2001;   and WTO Agreement on Government Procurement. 
147. As outlined in Article 50, the most advantage ous tenderer should be selected, defined as  the 
one with the lowest price (including taxes and tariffs) or that best fulfils the needs of the contracting 
party according to the criteria laid down in the tende r documents.  An evaluation model is used and is 
available to all suppliers.  Tenderers must be notified of the results of a tender or prequalification as soon as possible. Iceland WT/TPR/S/164/Rev.1 
 Page 55 
 
 
                                                     148. For all tenders advertised at the EEA level,  notices must be sent to the Publications 
Directorate of the European Communities for publication.  Contracting authorities to the EEA 
Agreement are also required as early as possible during each financial year to estimate total 
procurement of relevant services, supplies or work for the ensuing 12 months.  If contracting 
authorities are intending to publicly purchase in exc ess of threshold amounts they must indicate their 
intention at that time.  When a contract has been concluded as a result of tender in the EEA, notification must be made of the results.  Notifica tions of total procurement,  individual procurements, 
and contract are published in the Official Journal  of the European Union. 
149. Complaints are handled by an independent Tende r Complaints Committee, composed of three 
persons appointed by the Minister of Finance.81  Complaints must be sent, in writing, to the 
Committee within four weeks of the complainant ha ving learned of a possible violation of his/her 
legal rights, along with the requisite documen tation and information on the case.  Further 
documentation or information may be requested by the Committee.  The Committee must deliver its ruling no longer than one month after it receives th e documents required to evaluate the case.  The 
Committee may order a temporary suspension of contract procedures. 
150. Among the remedies available, the Committee may invalidate or alter a decision by the 
contracting authority for public procurement, provide d the contract has not already been concluded.  
If such a ruling is not complied with, the Committee may levy fines of up to ISK 500,000 per day.  
The Committee may instruct the contracting author ity to tender certain pr ocurement, advertise a 
tender again or alter a tender or an aspect of tender documents.  It may rule that the party against 
whom a complaint is directed shall pay the cost of lodging the complaint.  Launching a challenge 
procedure is free of charge.  If the Committee, howev er, finds the complaint is clearly unjustified or 
designed to delay implementation of public procur ement, it may require the complainant to pay the 
legal costs of the case.  Rulings and decisions of the Committee are subject to judicial review before 
the national district courts and the Supreme Court. 
151. As reported by the EFTA Surveillance Au thority, Iceland has implemented its EEA 
obligations in the area of government procurement.82 
152. Under the EEA Agreement, procurement above the given thresholds (see Table III.12) for all 
public bodies, including municipalities, their associations and bodies, enterprises or any public entity where the majority of the board is appointed by pu blic sector bodies, must be put up for tender in the 
EEA.  Exceptions to this requirement are made for bodies engaged in business or industry, provided 
they are not engaged in water supply, energy supply, transportation or telecommunications. 
153. According to the authorities, while tenders are usually submitted in Icelandic, they are 
submitted in English for large procurements, for example within the EEA.83 
154. Between January 2000 and end 2005, over 1,200 tenders had been issued at the European 
level.84 
155. Each of EFTA's agreements with third c ountries contains provisions on government 
procurement.  In many cases, these contain language to the effect that parties not already signatory to 
 
81 The Public Procurement Act,  No. 94/2001, Chapter XIII. 
82 EFTA Surveillance Authority online informa tion.  Available at:  www. eftasurv.int. 
83 WTO document GPA/69. 
84 Tenders Electronic Daily online information.  Available at:  http://ted.publications.eu.int. WT/TPR/S/164/Rev.1 Trade Policy Review 
Page 56 
 
 
                                                     the WTO Agreement on Government Procur ement shall endeavour to accede to it.85  In the meantime, 
some agreements specify that the respective par ties will elaborate rules on and liberalization of 
government procurement within the framework of the Joint Committee.  In addition, a number of the 
agreements provide that if a party grants to a non- party additional benefits w ith regard to the access to 
its procurement markets, it shall agree to enter into negotiations with a view to extending these 
benefits to another party on a reciprocal basis.  In the respective agreements between EFTA and 
Croatia and Israel, parties agreed to work towa rds liberalization of public procurement markets 
beyond levels provided for in the WTO GPA. 
(vi) Intellectual property rights 
156. Iceland has notified its contact points under Article 69 of the TRIPS Agreement to the 
Council for Trade-Related Aspects of Intellectual Property.  These are the Ministry of Education, Science and Culture for copyright and relate d rights, and the Icelandic Patent Office 
(Einkaleyfastofan) for industrial prope rty (other TRIPS-related questions).
86  Iceland's legislation on 
intellectual property (IP) has been reviewed in the TRIPS Council.87 
157. Iceland is a member of the World Intellectual Property Organization (WIPO) and a signatory 
to a number of international agreements on intell ectual property rights (Table AIII.2).  Since its 
previous Review, Iceland has acceded to the Ge neva Act of the Hague Agreement Concerning the 
International Registration of Industrial Designs. 
158. According to the Icelandic authorities, Icel and has implemented all EU regulations and 
directives, as required by its membership of the EE A.  Its legal framework for IPR is equivalent to 
that in other industrialized European countries.88  On 1 November 2004, Iceland acceded to the 
European Patent Convention. 
159. Iceland has made IPR commitments in the c ontext of the EFTA Convention and through each 
of EFTA's free-trade agreements w ith third parties.  While specific provisions vary between respective 
agreements, most include:  agreement among parties to ratify or adhere to certain international 
conventions; certain substantive provisions, whic h include affording effective protection of 
geographical indications through natio nal legislation;  and provisions  on acquisition, maintenance, and 
enforcement of intellectual property rights, inter alia,  to ensure that procedures are not unnecessarily 
complicated and costly, and do not entail unreasonable time limits or unwarranted delays.89 
160. Ratification of the WIPO Copyright Treaty and WIPO Performances and Phonogram Treaty 
is coordinated throughout the EEA with the transposition of Directive 2001/29/EC.  The Directive 
became law on 28 February 2006 and ratification of  these treaties will soon follow.  The International 
Convention for the Protection of New Varieties was sc heduled to be ratified by Iceland in early 2006. 
 
85 This is the case for agreements between EFTA states and Bulgaria, Croatia, Jordan, Macedonia, 
Romania, and Turkey. 
86 WTO document IP/N/3/Rev.7, 19 August 2003. 
87 The relevant WTO documents are:  copyright IP/Q/ISL/1, 21 November 1996);  Designs 
IP/Q2/ISL/1, 21 January 1997 and IP/C/W/39, 14 October 1996;  geographical indications (14 October 1996;  
IP/Q2/ISL/1, 21 January 1997;  IP/C/W/117/Add.15, 10 March 1999; IP/C/W/117/Add.15/Suppl.1, 15 March 
1999);  Layout designs of integrated circuits IP/Q3/IS L/1, 5 December 1997; patents (IP/C/W/73, 3 July 1997;  
IP/Q3/ISL/1, 5 December 1997;  IP/C/W/125/Add.19, 17 July 2000);  trade marks IP/Q2/ISL/1, 21 January 
1997;  and IP/C/W/73, 3 July 1997. 
88 The Icelandic Patent Office. 
89 For the legal texts of these agreements see EFTA online information.  Available at:  
http://www.secretariat.efta.in/web/legaldocuments. Iceland WT/TPR/S/164/Rev.1 
 Page 57 
 
 
161. Iceland has adopted three new IPR-related la ws over the review period:  the Design 
Protection Act (2001);  the Act Respecting Co llective Marks (2002) and the Act respecting 
Employees' Inventions (2004).  In addition, the Patents Act has been amended six times, the Design 
Act twice, the Trademark Act twice (2000 and 2004), and the Copyright Act was amended in 
May 2000 (Table III.14). 
Table III.14 
Summary of main IPR legislation, 2006 
National legislation Responsible 
ministry/agency Coverage Term of protection 
Patents 
The Patents Act No. 
17/1991 (as amended by 
Acts No.:  67/1993;  
36/1996; 91/1996;  132/1997; 28/2002; 
72/2003: 22/2004;  
53/2004; 54/2004 and 12/2005) 
  
Icelandic Patent Office (under Minister of 
Industry)  
Any inventions, in any 
field of technology, 
which are susceptible of 
industrial application (includes legal protection 
of biotechnical 
inventions)b 
20 years from date of filing of application; a 
supplementary protection for pharmaceutical 
products and agrochemi cals, extending patent 
protection up to 25 yearsa
Designs 
Design Protection Act 
No. 46/2001 (as amended by Acts No. 
76/2002;  54/2004) 
  
Icelandic Patent Office 
(under Minister of Industry) 
  
New designs with an individual character  
One or more five-year periods from the date of filing;  renewable for five-year periods to a maximum of 25 years of protection 
 
Copyright 
Copyright Act No. 73/1972 (as amended by Acts No. 78/1984; 
57/1992; 145/1996; 
60/2000)  
Minister of Culture and Education (advised by Copyright Committee)  
Literary and artistic works, maps, drawings, mouldings, models and 
other similar devices that 
present information or explanations on subjects (inc. computer 
programs) 
  
Author's life plus 70 years from the end of the year 
of the authors death or last surviving author for a collective work;  for anonymous works, 70 years 
from end of year in which they were publicly 
presented 
 
50 years from the end of the year in which the 
performance was made 
 
Exclusive right to special protection for producers of lists, tables, forms, databases, or similar works 
that contain a substantial collection of information or are the result of considerable investment;  
protection is for 15 years from the end of the year 
in which the work was produced or from the end of the year in which the database is deemed to be 
made accessible to the public (applies to nationals 
of, or persons domiciled in, EEA countries) 
 
Under certain conditions, shorter periods for protection (five years) apply to certain composite works, consisting of selections from works by 
many authors and compiled for use in religious 
services, classroom instruction or educational broadcasting 
 
Trade Marks 
Trade Marks Act No. 
45/1997 
 
Act Respecting 
Collective Marks (2002) 
  
Icelandic Patent Office 
(under Minister of 
Industry) 
  
Includes any visible sign 
to distinguish goods or 
services  
From the moment the application for registration is 
submitted and for ten years from the date of 
registration; 
Renewable for periods of ten years, indefinitely 
 
Table III.14 (cont'd) WT/TPR/S/164/Rev.1 Trade Policy Review 
Page 58 
 
 
National legislation Responsible 
ministry/agency Coverage Term of protection 
Layout designs of 
integrated circuits 
Act No. 78/1993 concerning the protection of 
topographies of 
integrated circuits on semiconductors (amended by Act No. 
19/1995 concerning the 
protection of 
topographies of 
integrated circuits on 
semi-conductor products)  
 
Icelandic Patent Office 
(under Minister of Industry) 
  
 
Design of topography of integrated circuits  
 
Exclusive rights for the exploitation of topographies of integrated circuits of semiconductors for ten years from the calendar 
year when the topography was first commercially 
exploited anywhere in the world 
 
a This stems from Iceland's participation in the EEA and its  obligation to implement Council Regulation 92/1768 concerning the 
 creation of a supplementary protection certificate for medicina l products and Regulation 96/1610 of the European Parliament an d 
 of the Council concerning the creation of a supplementary protection certificate for plant protection products. 
b Stems from Iceland's implementation of Directive 98/44 of the European Parliament and of the Council on the legal protection of 
 biotechnical inventions.  This was adopted. 
 
Source:  Icelandic national legislation. 
(a) Copyright 
162. The Minister for Education, Science and Cultu re is ultimately responsible for copyright 
issues.  A Copyright Committee comprising five people is appointed by the Minister, for a four-year 
term.  The Copyright Act also provides for the creation of a Copyright Council, which is to be informed of and discuss questions concerning copyrigh t of current interest.  This Council has not yet 
been appointed (as at February 2006). 
163. Iceland notified the Copyright Act (with amendments up to 1992) to the WTO in July 199690, 
and an updated list of other laws  and regulations pertaining to copyright and related rights in 
May 1997.91 
164. Icelandic copyright legislation was amended in 2000.  The changes included:  clarification 
that databases are considered as composite wo rks and hence subject to copyright protection 
(Article 6);  a prohibition on the electronic reprod uction of readable copies of databases and an 
extension and clarification of the rules regarding compensation to authors of works that have been 
issued on an audio or video recording (Article 11);  a provision allowing for back-up and security 
copies to be made of computer programs, notw ithstanding the general prohibition on copying of 
computer programs (Article 11a);  a time-limit on cl aims for fees paid to the visual artists' copyright 
fund in the absence of an identified legal heir, a nd a requirement for parties handling the resale of 
works of art on a commercial basis to submit a summary of sales of art works during the preceding period attested to by a certified accountant (Article  25b);  and provisions for the dissolution of the 
Icelandic Visual Art Fund (Article 63) (which  has since been dissolved).  Regulation 486/2001 
replaces the Visual Artists' Copyright Fund with the Icelandic Visual Arts Copyright Association;  
which takes over the role of collection and distribut ion of royalties.  A bill of law for the transposition 
of Directive 2001/84/EC of the European Parliame nt and of the Council on the resale rights benefiting 
the author of an original work of art has been introduced in the Althingi.  The bill proposes to lower 
the current rate of 10% resale right royalty fo r works of art where the sale price exceeds €3,000. 
                                                      
90 WTO document IP/N/1/ISL/C/1, 22 July 1996. 
91 WTO document IP/N/1/ISL/1/Add.1, 28 May 1997. Iceland WT/TPR/S/164/Rev.1 
 Page 59 
 
 
165. Copyright is extended to the author of a literary  or artistic work.  Protection is extended to 
maps, drawings, casts, models, and other similar devices, presenting information or explanations on 
subjects (Article 1).  Computer programs are protected as literary works under Article 1 of the 
Copyright Act.  Right holders of computer programs and cinematographic works are granted the 
rental rights for their work (Article 24.2). 
166. Authors of works broadcast or published in the form of an audio or video recording are 
entitled to special remuneration, which is levied  through fees on equipment for audio and video 
recording whether imported into or produced in Iceland.  Producers and impor ters are responsible for 
paying this levy, which is collected and distributed to beneficiaries through their member societies.   For equipment, the charge is 4% of the impor t price or of the production price for domestic 
production.  This has not changed since Iceland's last review.  Other fees, however have increased 
slightly  (Table III.15).
92  Levies, which are due upon importation or manufacture of the relevant 
goods and equipment, are collected through the Customs Authorities. An umbrella organization 
formed of the relevant copyright collection soci eties, Innheimtumidstod Gjalda, (IHM), receives all 
collected levies and distributes them to relevant right holders.  In 2004, ISK 93 million was collected 
through Customs and IHM. 
Table III.15 
Fees on audio and video recording equipment, 2006 
Product Fee 
Blank music tape ISK 35 to ISK 175 depending on duration of tape 
Bank video tape ISK 100 to ISK 500 depending on duration of tape 
Blank CD-R/DVD-/+R ISK 17 to ISK 50 depending on capacity 
Tape recorders 4% on import price 
Digital recording equipment, including CD/DVD burners, 
minidisc recorders, MP3 4% on import price 
Video recorders 4% on import price 
Combined radio receivers and cassette recorders 2% on import price 
Radio receivers with CD players  1% on import price 
 
Source:  The authorities of Iceland. 
167. The Copyright Act does not have a provision for compulsory licensing, however Article 23 
provides for transfer of rights through extensi ons of agreed collective licenses for mass uses. 
168. Article 24(2) of the current Copyrigh t Act, as amended by transposition of 
Directive 92/100/ECE on rental and lending rights, provides that a right holder can oppose the parallel 
importation of cinematographic works.  A recent am endment of the Copyright Act for transposition of 
Directive 2001/29/EC has introduced the general rule of regional exhaustion of distribution rights for 
work protected by copyright.  Th is means that parallel importation from outside the EEA is no longer 
be possible without the consent of the right holder. 
(b) Patents 
169. Icelandic legislation with respect to patent s was notified to the WTO in March 1997, and 
includes the Patent Act No. 17/1991, a regulation on patent applicati ons and a regulation on 
advertisement of instructions c oncerning patent applications.93 
                                                      
92 Regulation 125/2001 (as amended), on the Collecti on of Copyright Levies acco rding to Article 11(3) 
and 11(4) of the Copyright Act. 
93 WTO documents IP/N/1/ISL/P/1, 18 March 1997, and IP/N/1/ISL/P/2, 18 March 1997. WT/TPR/S/164/Rev.1 Trade Policy Review 
Page 60 
 
 
                                                     170. The most substantial changes to the Patents Act over the review period are to bring legislation 
into line with EEA requirements, the Eur opean Patent Convention, and WTO rules. 
171. The Icelandic Patents Act contains a list of s ubject matter not considered to be inventions.  
These include: scientific theories and mathemati cal methods, aesthetic creations, mental acts, 
presentation of information, computer programs, and business methods.  Excluded from patentability 
are:  plant and animal varieties (with specified exceptions);  diagnostic, therapeutic and surgical 
methods for the treatment of human s and animals, and inventions contrary to morality and public 
order. 
172. Exceptions to the exclusive rights conferred by a patent are:  private use;  compulsory 
licences, research and/or experimental exception;   preparation of medicines in accordance with 
medical prescriptions by physicians;  prior users' ri ght, and clinical trials for the purpose of obtaining 
a generic drug's regulatory approval (Bolar provis ion).  The latter was introduced in March 2005 in 
order to implement Directive 2004/37/EC, and was approved through Act No. 12/2005. 
173. Compulsory licensing (Part IV of Patents Act) ma y be granted if a patentable invention is not 
given commercial use within three years from the date  the patent was granted, or four years from the 
filing of the application.  Compulsory licensing may also be granted if it is required for the 
exploitation of a patent for an invention representing an important technical advance, with considerable economic significance;  when required by important public interests;  or when a person was already commercially exploiting an invention at the time when a patent was granted without 
knowledge of the application.  Compulsory licences do not prevent the patent holder from 
commercially exploiting the invention, and may be granted only when the licence could not be 
obtained on reasonable terms and to  a person deemed to be capable of using it commercially.  Special 
provisions apply for the compulsory licensing of  semi-conductor technology, which may take place 
only for public exploitation not of  a commercial nature, or to prevent anti-competitive behaviour.
94  
Compulsory licences are granted by the Reykjavik C ity Court, and are subject to compensation.  An 
amendment to the Patents Act in 2004, allows the hol der of a plant variety to request a compulsory 
licence, where acquisition or exploitation of a pl ant variety right would not be possible without 
infringing a prior patent.  The plant variety holder must show that the variety involves technologically 
important progress and leads to cons iderable financial benefit compar ed with the invention in the 
patent.  No compulsory licences have be en granted over the review period. 
174. The Icelandic Parliament adopted amendments to the Patents Act in December 2005 to give 
effect to provisions of Article 31(b) of the TRIPS Agreement allowing the otherwise mandatory 
negotiations with the patent holder to be wa ived in cases of national emergency or other 
circumstances of extreme emergency.  The amendments also provide for the implementation of 
paragraph 6 of the Doha Declar ation concerning public health. 
175. Since 1 January 2002, it has been possible to file patent applications in Icelandic, Danish, 
Norwegian, Swedish or English;  previously they had to be provided in Icelandic.  An Icelandic 
translation of the claims and abstract must be provi ded before the application is made public, and, in 
their final form, if the patent is granted.  The specification documents, howev er, may be furnished in 
Icelandic or English.  Provisional applications may not be filed.  Upon filing of an application, a 
search and examination system is initiated;  consideration is given to the criteria of novelty, inventive step/non-obviousness, and industrial applicability/ utility.  The Danish Patent Office undertakes 
searches and examinations in the case of national applications;  PCT applicants may choose between the European Patent Organization or the Swedish Patent Office. 
 
94 Act No. 36/1996, section 19. Iceland WT/TPR/S/164/Rev.1 
 Page 61 
 
 
                                                     176. Applicants who are not domiciled in Iceland,  must have a representative domiciled in the 
European Economic Area.  Accordin g to the Icelandic authorities, applications from abroad are 
mainly for pharmaceuticals.95 
177. Patents that have been granted, may be opposed  within nine months from their publication in 
the IPO Gazette.  Patents may also be challenged through the courts. 
178. As reported in Iceland's previous review, the owner of an Icelandic patent has the right to 
preclude the importation of products protected by the patent, and the principle of regional exhaustion 
applies within the EEA. 
(c) Designs 
179. A new Design Protection Act was introduced in 200 1.  According to the authorities, the main 
impetus for this new legislation was to bring Iceland into compliance with EU Directive 98/71 and the Hague Agreement Concerning the Internati onal Registration of Industrial Designs.  
180. Design rights do not include: certain specified features of the appearance of a product;  acts 
done for private purposes; acts done for experimental  purposes, and reproduction for use in citations 
or teaching, provided that such acts are compatible with fair trade practices, do not unduly prejudice 
the normal exploitation of the design, and that men tion is made of the source; equipment on ships and 
aircraft registered in another country when these are temporarily located under Icelandic jurisdiction; 
the import into Iceland of spare parts and accessories for the purpose of repairing ships and aircraft;  
execution of repairs on ships and aircraft. 
181. Registration applications must be filed with th e Icelandic Patent Office in Icelandic.  No 
examinations are conducted prior to registration, although an examination for novelty can be made 
upon request.  Applications by non-residents must  be conveyed through a representative domiciled in 
the EEA.  Regional exhaustion applies with respect to parallel imports. 
(d) Trade marks 
182. Iceland's legislation on trade marks has been amended twice over the review period, in 2000 
and in 2004.  Iceland notified the Trade Marks Act No. 45/1997 to the WTO in October 1997.  Trade 
mark rights in Iceland apply to goods and services:  they grant the exclusiv e commercial use of a sign 
and the right to prevent its use in the same or similar goods and services or if there is danger of 
confusion.  Trade mark protection is established by  use or registration.  Transfer and licensing (non-
compulsory) of a trade mark are provided for.  Acco rding to the Icelandic authorities, the Trade Mark 
Act is in compliance with EU Directive 89/104. 
183. A registration application must be filed, in Icel andic, with the IPO, and the goods and services 
listed in the application must be classified in acco rdance with the Nice classification.  Applications 
are subject to examination and, if granted, are a nnounced in the IPO Gazette.  Applications by non-
residents must be conveyed through a representative domiciled in Iceland.  The IPO maintains a 
Register of Trade Marks.  This includes interna tional trade marks according to the Madrid Protocol, 
which are entered in the register in English. 
184. As outlined in Iceland's previous review, a registered trade mark may be invalidated if:  it has 
been out of use for an uninterrupted period of five years; on a right of priority basis, an earlier trade 
mark application has been filed in another WTO Me mber (or party to the Paris Convention), or by a 
 
95 The Icelandic Patent Office. WT/TPR/S/164/Rev.1 Trade Policy Review 
Page 62 
 
 
                                                     national of a WTO Member;  an application is made that is deemed to have right of priority and would 
have had the effect of preventing the original registration. 
185. The Act Respecting Collective Marks entered into force on 18 December 2002 and at the 
same time Act No. 89/1935 respecting General Qua lity Marks (as amended) was repealed.  The new 
legislation applies to applications for collective ma rks from the time of the Act's entry into force.  
Where not stipulated in the Act, the provisions of the Act respecting Trade Marks No. 45/1997 apply 
to Collective marks.  Collective marks include  joint marks for goods or services acquired by 
associations or unions for their members to use in  business activities, as well as marks acquired that 
apply to the supervision or determination of  standards for goods or services by authorities, 
establishments, associations or unions.  Sole right s to use these marks accrue to owners of these 
marks.  Collective marks may also include mark s or information that in business indicate the 
geographical origin of goods or services, however, th e owner of the mark may not forbid use of this 
mark or information for professional purpose, provided such use is in conformity with good business 
practices. 
186. There is some uncertainty about whether parallel imports are allowed under current 
legislation. 
(e) Geographical indications 
187. There is no specific legislation concerning geograp hical indications in Iceland, but the Trade 
Marks Act and the Competition Act contain provisions that grant protection to such indications.  The 
Trade Marks Act contains provisions that prohi bit the use of deceptive trade marks, including 
geographical indications (although this  is not explicitly stated).  Arti cle 14 prohibits the registration of 
a mark that causes confusion regarding its origin, or of a trade mark for wines and spirits that implies 
a geographical name unless the product originates at  the location in question.  Misleading use of 
geographical indications is also implicitly forbidden under Article 21 of the Competition Act.96 
188. Over the review period, Iceland has participated in joint submissions with a number of other 
WTO Members on issues related to geographical indica tions in the Council for TRIPS;  all related to 
extension of additional protection for geographical indications to products other than wines and 
spirits.97 
(f) Complaints and enforcement 
189. In October 1997, Iceland provided to the TR IPS Council, its response to the checklist of 
issues on enforcement98;  its legislation was discussed at a meeting of the Council in November 
1997.99 
190. Civil lawsuits concerning intellectual property are governed by the Civil Procedure 
Act No. 91/1991.  Criminal prosecution is governed  by the Criminal Procedures Act No. 19/1991. 
 
96 See WTO documents IP/C/W/117/Add.15, 10 March 1999 and IP/C/W/117/Add.15/Suppl.1 for 
Iceland's response to the checklist of questions from the review under Article 24.2 of the application of the 
provisions of the section of the TRIPS Agreement on geographical indications. 
97 WTO documents IP/C/W/204/Rev.1, 2 October 2000;  IP/C/W/247/Rev.1, 17 May 2001;  
IP/C/W/308/Rev.1, 2 October 2001;  and IP/C/W/353, 24 June 2002. 
98 WTO document IP/N/6/ISL/1, 22 October 1997. 
99 WTO document IP/Q4/ISL/, 23 March 1998. Iceland WT/TPR/S/164/Rev.1 
 Page 63 
 
 
                                                     191. The Icelandic Customs Act No. 55/1987 was amended in 1995 to comply with the TRIPS 
Agreement.100  Proceedings leading to a decision are primar ily judicial;  injunctions can be granted on 
the basis of administrative proceedings, but the plai ntiff must initiate court proceedings in order to 
confirm the injunction before court.  The district courts and the Icelandic Supreme Court handle both 
civil and criminal cases and have jurisdiction over intellectual property right infringement cases. 
192. At the written request of the right holder, the Head of Customs is authorized to delay the 
release of imports suspected of infringing intellect ual property rights.  Action against the import of 
counterfeit or pirated goods may be requested by a right holder through an application in writing to 
Customs.  Once the application is examined, Custom s may delay the release of the goods or retain 
them for up to 14 days.  The owner, importer or receiver may request the release of the goods against 
a security to protect the interests of the right holder.  Customs must give the right holder an opportunity to inspect the goods.  Such import delay does not apply to imports of goods put on the market in another country with the consent of the right holder or to goods destined for export (Article 50 A (5)). 
 
100 The relevant provisions in the new Customs Act No. 88/2005, which enter into force on 1 January 
2006, are the same as the Act currently in force.