Member Article

This memorandum is intended to provide information on measures undertaken by the Icelandic government in response to disruption of businesses on account of the SARSCoV2 virus. The memo will be updated as the occasion arises.

Status as on Tuesday 31 March 2020

On 31 March 2020, the Icelandic Parliament (Althingi) passed amendments to various laws in order to implement the government´s announced measures in response to COVID-19.

The following is a brief overview of the said amendments, primarily focused don the business environment.

1) Amendments to the Act No 45/1987, on the Withholding of Public Levies at Source. Deferral of payment.

Employers facing significant difficulties in 2020 due to a sudden and unforeseen decrease in income, resulting from a general decline domestically and globally, may apply for deferral of returns of up to three payments of withholding tax on wages that are
due from 1 April 2020 until 1 December 2020. The deferred final due date under the conditions of the Act will be 15 January 2021.

In order to be eligible, the employer may not be in arrears with government fees, taxes and tax fines that were due at the end of 31 December 2019. Furthermore, taxes and fees levied may also not be based on estimates of tax returns and reports for the past
three years or since the operation began.

Employers that consider themselves eligible must request for the deferral of payment when or before they file the withholding tax statement for the month in question. The tax authorities must receive the applications for deferral no later than the end of the relevant
payment period.

The amendments stipulate e.g. that if a company issues a dividend or purchases its own shares in 2020 it will not be assumed that it is in significant operational difficulties within the meaning of the Act and the conditions for the deferral will not be met. The same
applies if the owners´ withdrawal within 2020 exceeds their calculated remuneration.

Employer may request a further deferral and a distribution of these payments until the 15th of June, July and August 2021. Application for extended deadline or distribution shall be sent to the tax authorities before 15 January 2021.

These amendments do not apply to public entities or a withholding tax in accordance with the Act on Financial Management Tax.

 

To read the entire document, please click here

 

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