Tax and Legal

Value added tax

It is important to ensure that VAT is in accordance with law and regulations and that taxable persons enjoy the rights guaranteed to them by law. It is therefore necessary to understand all aspects of VAT in order to prevent damage and the application of punitive sanctions.

We employ specialists who have expertise in VAT and provide our customers with all general advice and services in relation with VAT. Our service in the field of VAT is diverse, but mainly consists of the following:

• General advice regarding VAT, e.g. tax liability, tax percentage, accounting period, income registration, corrections, appeals etc.

• Registration and deregistration of the VAT register.

• Special and free registration (construction and rental of commercial real estate).

• Joint registration of limited liability companies.

• Advice and service in relation with settlements and VAT returns.

• Complaints to the Directorate of Internal Revenue, the Internal Revenue Board and the Ministry.

• Supervision of submission of VAT reports for both individuals and companies

International tax law

Those who engage in international business must keep in mind that different tax rules apply between countries. Individuals moving between countries must also be aware of their tax status and how it changes with migration.

It is especially important to pay close attention to tax issues when planning the activities of companies and companies operating in an international environment. Tax planning in particular transactions can have a major impact on the profit ratio of the company in question, but in such circumstances various factors are considered, such as how financing should be arranged, which legal form is chosen, ownership, pricing of transactions and services as well as debit entries authorizations, etc. In this context, it is also important that double taxation agreements apply between the countries in question that prevent double taxation.

PwC's lawyers and other experts offer comprehensive advice in this area, i.e. ranging from advice to individuals and advice on the application and interpretation of double taxation agreements to more specialized assessment and tax planning in connection with international trade, e.g. transfer pricing rules, application of CFC rules, rules on limited interest deduction, rules on permanent establishment, etc.

Example of services provided by PwC’s experts in connection with international tax law:

• How the taxation of income of domestic and foreign parties who receive income from elsewhere is structured

• Interpretation and application of double taxation agreements

• Requests for tax exemption

• International staff

• Transfer pricing

• CFC rules

• Rules on limited interest deduction

• Permanent establishment

• Withholding taxes

Human resources internationally

Many factors need to be considered when companies hire foreign employees or send their employees to work in another country. Find ways to ensure the interests of the company while at the same time ensuring social and tax security for the employee.

In this context, the interplay between Icelandic tax rules, double taxation agreements and the tax rules of other countries is often tested, whether an employee of a company has to stay abroad for a longer or shorter period of time.

PwC employees have extensive experience and knowledge in this field. Examples of our services include;

• Advice when employees come to Iceland to work for a company or when employees are sent to other countries

• Counselling and administration in connection with residence and work permits and registration in the country

• Administration in connection with registrations and notifications to the Directorate of Labor

• All administration and communication with the tax authorities

• Social security, A1 certificate, etc.

• Stock option agreements, bonus payments and work-related benefits

• Employment contracts and implementation of the content of such contracts

Tax due diligence

A due diligence is a service provided by PwC for parties with special interests, e.g. buyers and sellers of companies, etc. The due diligence is thus intended to reduce the risk for the stakeholder involved.

When conducting a tax due diligence, the tax filings of the taxpayer in question are examined with a view to examining the company's financial and tax position as well as identifying possible risk factors in the operation that could give rise to tax authorities' re-imposition of taxes and fees.

The purpose of due diligence is thus to verify and analyse information that is important to specific stakeholders in decision-making. It is therefore important that the due diligence is carried out by an impartial, expert party and that its conclusion is presented in a sufficiently clear and efficient manner for the party to whom it is intended.

The Tax and Legal Service can conduct a tax due diligence for your company and employs lawyers and other experts with extensive experience in such work.

General legal advice

PwC’s tax and legal service offers a wide range of legal advice, particularly in the field of corporate law, contract, contract law, employment law and inheritance law. Below is an example of the services we provide:

• Introduction to different legal forms and assistance in choosing a legal form 

• Establishment, dissolution and deregistration of companies

• Assistance with increasing  / decreasing share capital

• Merger and division of companies

• Assistance with issuing bonds 

• Employment contracts and other contracts with employees

• Shareholder agreement

• Purchase agreements

• Stock option plans and stock options

• Wills and inheritance reports

• Assistance in concluding and reviewing contracts