Funds, associations and institutions are considered residents of Iceland if they are registered in Iceland, if Iceland is their place of residency according to their bylaws, or if their effective management takes place in Iceland. Instead of levying special municipal income taxes on companies, municipalities receive revenues from other taxes such as a tax on office buildings and buildings used for the wholesale and retail business. Taxable Income Taxable income includes business profits, capital gains, dividends, interest, and royalties. It is determined from the company's results according to its accounts, adjusted for tax purposes. Deductions Expenses are deductible if incurred to acquire, secure or maintain income or in other cases if specifically designated as deductible.
Various limitations apply to the carryforward of losses.
No carryback is allowed. Corporate Assessments and Payments Income tax is charged on the taxable income in a given income year, which generally corresponds to the calendar year. Local tax authorities may permit taxpayers to use a different income year. A company must file a return by 31 May in the year after the income year. However, the director of internal revenue can, on application, grant a general extension of time for filing the return.