Iceland

In general, all corporations incorporated and registered in Iceland are considered to be tax residents in Iceland. The same applies to corporations that have their home address in Iceland according to their articles of association or if the management of the company is carried out in Iceland.

Foreign corporations are regarded as Icelandic tax residents if the effective management is carried out in Iceland.

The Internal Revenue Directorate can decide with a ruling whether a corporation’s residence is in Iceland. The ruling can be appealed to the Internal Revenue Board or to a court of law.

Permanent establishment (PE)

The definition of a 'permanent establishment' is in order with the Organisation for Economic Co-operation and Development (OECD) definition of a PE in Article 5. The main difference is that a building site or construction or installation project constitutes a PE only if it lasts more than six months, not 12 months as in the OECD Model Treaty. Another difference is that if a foreign company owns servers or similar computer systems to support the business’s primary field of business, that in itself does not constitute a PE if used in relation to data storage and gathering.