The Hardest Market · Iceland

Iceland's HR data

The rules and costs of employing people in Iceland (Reykjavík), from official sources, in English and Japanese.

37.3%women in management (2023, ILO)
1.19×employer's total cost on kr 950,000 a month, as a multiple of salary
14public holidays (2026)
Take-home pay calculatorJapan take-home pay

Employment rules

Statutory annual leave24 working days; up to 30 by agreement
Public holidays (2026)14 days
Notice of dismissal1-3 months by law; 3 months common
Severance required by lawNone by law
Typical negotiated exitNo official benchmark
Probation3 months under collective agreements
Working hours48 h/week average; 36 h norm
How hard is dismissal?Easy: no just-cause rule in private sector

Employer contributions

Mandatory pension fund contribution (employer)11.5%
Social security tax (tryggingagjald)6.35%applied to 111.5% of annual salary

Employee contributions

Mandatory pension fund contribution (employee)4%

Take-home pay and employer cost by monthly salary

Monthly salaryEmployee contributionsIncome taxTake-homeEmployer costCost ÷ salary
kr 700,000kr 28,000kr 150,625kr 521,375kr 830,0621.19×
kr 950,000kr 38,000kr 241,873kr 670,127kr 1,126,5121.19×
kr 1,250,000kr 50,000kr 351,371kr 848,630kr 1,482,2531.19×
kr 1,700,000kr 68,000kr 535,002kr 1,096,998kr 2,015,8641.19×

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.

Sources: [1] [2] [3] [4] Checked 2026-11-08; 2026 rates.