Iceland offers incentives for research and development in the form of tax credits for innovation companies. The aid is granted as a reimbursement of the companies´ paid income tax. The tax credit is 20% of the actual R&D cost with a current annual ceiling of a total actual cost of ISK 300 million for internal R&D or ISK 450 million for R&D cooperation between two independent innovation companies. This support will be increased already next year and the ceiling on the reimbursement removed during the Fiscal Plan period as outlined in the published coalition government strategy.
The government has also announced a reduction in payroll taxes and is seeking new measures to further relieve the general tax burden.