Japan
Iceland
Exchange rates: European Central Bank reference rates, 2026-10-23. Japan: Tokyo, Kyokai Kenpo, salary paid evenly each month with no bonus, no dependants. Iceland: Employee living in Reykjavík, Icelandic tax resident and an Icelandic national (no foreign-expert 25% income exclusion), single with no children, salary only paid evenly as monthly pay (no bonus or benefits in kind), income year 2026. Mandatory 4% employee pension contribution, deductible from the tax base; no voluntary supplementary pension (séreign); union dues ignored. Income tax in three brackets plus Reykjavík municipal tax (útsvar 14.97%), less the full personal tax credit. Employer side: 11.5% mandatory pension contribution and the social security tax (tryggingagjald) on pay plus the employer pension contribution.
At three salary levels
| Salary (US$ equivalent) | Japan | Iceland |
|---|---|---|
| $60,000 | Cost 1.14× Keeps 73% ¥9,408,202 | Cost 1.19× Keeps 77% kr 7,300,992 |
| $120,000 | Cost 1.10× Keeps 66% ¥18,816,403 | Cost 1.19× Keeps 68% kr 14,601,983 |
| $250,000 | Cost 1.05× Keeps 57% ¥39,200,840 | Cost 1.19× Keeps 60% kr 30,420,799 |
Employment rules compared
| Japan | Iceland | |
|---|---|---|
| Statutory annual leave | 10 days after six months, rising to 20; 5 days must be taken | 24 working days; up to 30 by agreement |
| Public holidays in 2026 | 18 | 14 (Reykjavík) |
| Notice of dismissal | 30 days, or pay in lieu | 1-3 months by law; 3 months common |
| Severance required by law | None | None by law |
| Typical negotiated exit | Commonly 3–6 months’ pay plus unused leave | No official benchmark |
| Probation | Commonly 3–6 months; dismissal still needs grounds | 3 months under collective agreements |
| Working hours | 40 a week; overtime capped at 45 a month and 360 a year | 48 h/week average; 36 h norm |
| How hard is dismissal? | Very hard: needs objectively reasonable grounds | Easy: no just-cause rule in private sector |
| Women in management (ILO) | 14.5% (2023) | 37.3% (2023) |
Questions
What does a US$120,000 salary cost an employer in Japan and Iceland?
With the rates and exchange rates as of October 2026, in Japan (Tokyo, ¥18,816,403) the employer’s total cost is 1.10 times the salary; in Iceland (kr 14,601,983) it is 1.19 times. The employee keeps 66% of salary in Japan and 68% in Iceland.
Is it cheaper to employ someone in Japan or Iceland?
At this salary, the employer’s on-cost is lower in Japan. The ratio changes with pay, though: where contributions are capped, the on-cost falls as a share of salary for high earners. Enter the real salary in the calculator above to compare.
How do notice and severance compare?
Japan: 30 days, or pay in lieu; no severance is required by law, and negotiated exits are commonly 3–6 months’ pay plus unused leave. Iceland: notice is 1-3 months by law; 3 months common; severance required by law: none by law; typical negotiated exit: no official benchmark.
Which has more paid leave and public holidays?
Japan: 10 days after six months, rising to 20; 5 days must be taken, and 18 public holidays in 2026. Iceland: 24 working days; up to 30 by agreement, and 14 public holidays in 2026.
Sources: Japan (Kyokai Kenpo, Japan Pension Service, MHLW, National Tax Agency, MIC). Iceland: every rate and rule is listed with its primary source on Iceland's HR data. Exchange rates: ECB reference rates (2026-10-23); for currencies the ECB does not quote, the central bank's rate.
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