±JOIN OUR NEWSLETTER

Get useful expat articles, health and financial news, social media recommendations and more in your inbox each month - free!



We respect your privacy - we don't spam and you can unsubscribe at any time.

±Compare Expat Providers

Expat Health Insurance Quotes

Foreign Currency Exchange Quotes

International Moving Quotes

We're very social! Follow Expat Focus on Facebook, Twitter, Pinterest and Google+

Expat Focus Facebook PageExpat Focus on TwitterExpat Focus Pinterest PageExpat Focus Google+ Page

Notify me when new content is added about a country

±Expat Focus Partners

Articles

Iceland > Articles

Iceland

Managing Your Money As An Expat In Iceland

  Posted Wednesday August 26, 2015 (13:32:09)   (1224 Reads)
Image © Diana Robinson on Flickr
Image © Diana Robinson on Flickr

The home of the first Viking explorers of North America and a volcanically active territory, the Nordic island country of Iceland spans an area of 103,000 sq. km and has the lowest population density among all the European countries. Nature is at its breathtaking best in Iceland, although the region is also prone to natural hazards. Expats moving to Iceland will have the experience of living in a modern nation where the people take great pride in their language and culture.

Economic situation in Iceland

Between 2008 and 2011, Iceland experienced what is largely considered to be one of the biggest financial catastrophes in history when its three privately owned commercial banks defaulted. The resulting severe economic depression also led to political unrest. But Iceland has shown steady recovery since 2011. In fact, this recovery is believed to the fastest ever on record. The GDP started rising once again, along with salaries, and the country’s debt started quickly reducing.

Currency

Iceland is not a part of the European Union and has its own currency called the Icelandic króna (ISK). Expats can either exchange currency in their home country or obtain króna once they arrive in Iceland at the airport. However, the exchange rates at airports may be poor. You can also withdraw Icelandic currency from ATMs in your destination, since they accept most major international bank cards and there is no loss of money in the transaction.

Cost of living

Iceland has bounced back from its economic crisis and the financial sector is once again on track. But some expats may find the cost of living in Iceland to be quite high. Accommodation expenses can amount to as much as 110,000 ISK for monthly rent in the country’s capital of Reykjavik, since the rental market is limited here. Many expats who intend to reside in Iceland in the long term opt for rental apartments outside Reykjavik.

Expats are eligible to receive financial assistance from the government. Those who have rented apartments can apply to Social Services for rent subsidies. This can also be done through the local municipalities. Subsidies may be accorded to individuals aged 18 and above and who have signed a lease for a minimum of six months. They do not apply to those who have rented accommodation with communal kitchens and bathrooms. Only residential housing is taken into consideration when giving rental subsidies, which are renewable on a yearly basis.

Other daily requirements such as food and clothing can also be expensive. In Iceland, the price of alcohol is known to be particularly high. Eating out frequently can turn out to be expensive. Food is more affordable at the local grocery stores where there are daily deals and discounts. The local greenhouse-grown produce, fish and lamb are available at affordable prices, but since most other items are imported, they carry higher price tags. One of the most popular street foods in Iceland, which also happens to be cheap, is the Iceland hot dog made with pork and lamb and found at hot dog stands across cities.

When living in Iceland, knitted clothing like sweaters and scarves come in handy during the chillier months. But these can be expensive in most stores. The more economic alternative is to buy them at flea markets such as Kolaportið, in the old harbor area of Reykjavik.

Taxis are expensive, especially in Reykjavik. But expats who live in the capital city will find that most places are within walking distance and the streets are safe.

Taxes

Income tax does not have to be paid on rent subsidies, although they must be declared in tax returns. More information on rent subsidies can be obtained at the Social Services Office in each municipality.

Non-residents in Iceland are liable to pay tax only on the income earned within the country, while residents are taxed on all income, irrespective of the source. When it comes to taxation, an individual is deemed to be a resident if he or she has stayed in the country for a sum of 183 days within a 12-month period. Iceland has double taxation agreements with different countries, which protects expats from being taxed on the same income in more than one country.

Can we improve this article? Something wrong? Let us know in the comments.


 

  Printer Friendly Format
 

Expat Health Insurance Partners


Aetna International

Our award-winning expatriate business provides health benefits to more than 650,000 members worldwide. In addition, we have helped develop world-class health systems for governments, corporations and providers around the world. We want to be the global leader in delivering world-class health solutions, making quality health care more accessible and empowering people to live healthier lives.

Bupa Global

At Bupa we have been helping individuals and families live longer, healthier, happier lives for over 60 years. We are trusted by expats in 190 different countries and have links with healthcare organisations throughout the world. So whether you're moving abroad for a change of career or a change of scene, with our international private health insurance you will always be in safe hands.

Cigna International

Cigna has worked in international health insurance for more than 30 years. Today, Cigna has over 71 million customer relationships around the world. Looking after them is an international workforce of 31,000 people, plus a network of over 1 million hospitals, physicians, clinics and health and wellness specialists worldwide, meaning you have easy access to treatment.