Hire and pay employees in Iceland, hassle-free
With Deel, your business can easily hire employees in Iceland. No more worrying about local laws, complex tax systems, or managing international payroll. Deel takes care of everything in 150+ countries. The average onboarding time frame in the Iceland is 2 days with Deel.

Onboard, pay and manage employees in Iceland with Deel
Usually, to hire in Iceland, your business needs an entity. That means a local office, an address registered as a subsidiary, and an account with a local bank. All of this, plus navigating regional benefits, payroll, tax, and HR laws, can take months.
Now you can hire employees in Iceland quickly, easily, and compliantly. Automate tax document collection, payroll, benefits, and more. For your existing direct employees, we can manage your entire payroll operation from end-to-end.

All the necessary benefits for Iceland built right in
Deel allows you to provide localized benefits for employees in Iceland within minutes. All in one manageable online dashboard in a single HR platform.
- Employee Sickness Fund
- Pension Fund
- Provident Fund
- Social Security
- Trade Union Fund
- Private Healthcare - Allianz (optional)
- Global Life Insurance - Allianz

Our quickstart guide to hiring in Iceland
Navigate the tabs below to learn everything you need to know about hiring an employee in Iceland
Minimum Wage Requirements
In Iceland, the applicable minimum wage is complex. There is no national minimum wage by law. Instead, the minimum wage is determined by which Trade Union an employee is part of. Trade Unions determine minimum wage based on the age of the employee and job type.
CBA Mandatory Salary Increases:
Employees in Iceland may be entitled to salary increases depending on whether they have joined a Union and the respective CBA. For 2025, most CBAs in Iceland will require employees’ salaries to be increased annually by 3.5%, with a minimum of ISK 23,750.
Individual Income Tax
The individual income tax ranges from 31.48% to 46.28%. Income tax is calculated according to progressive rates. Multiple additional factors may impact overall rates such as the household status and the number of children.
Gross Annual Income | Tax Rate (%) |
---|---|
ISK 0 –446 ,136 | 31.48% |
ISK 446,137 - 1,252,501 | 37.98% |
Over ISK 1,252,501 | 46.28% |
Payroll Cost
The employer cost is approximately 22.07% of the employee's salary.
- Provident Fund - 11.5%
- Pension Fund - 2.0%
- Insurance Fund - 6.92%
- Employee Sickness Fund - 1.0%
- Employee Training Fund - 0.3%
- Trade Union - Summer house benefits - 0.25%
- Recreational Fund - 0.1%
These costs are provided as estimates and are intended solely for general informational purposes. To fully comprehend all associated costs and fees related to the terms of any employment agreement for this country, please contact our Sales team for a quote.
Overtime Pay & Maximum Hours
Standard working hours are 8 hours per day, 40 hours per week. The standard workweek is from Monday to Friday. For Deel EOR employees, the standard working hours are 36,75 hour per week with 7,35 hours per day.
Overtime payment is mandatory and cannot be included in the salary. Hours outside of standard work hours are considered overtime. Employees can work a maximum of 162.5 hours of overtime a month. For additional hours, employees are paid:
- 0.875% of the hourly rate, the first 162.5 hours of overtime a month.
- 1.0385% of the hourly rate, the first 162.5 hours of overtime a month if they work from home.
Overtime payment is not mandatory for managerial roles in Iceland.
Hiring in Iceland, hassle-free
With Deel, your business can easily hire employees in Iceland with our EOR solution. If you have an entity, our Global Payroll solution takes care of payroll and compliance for your direct employees. Our 250+ in-house experts handle everything from managing local laws, complex tax systems, or your payroll in Iceland and 150+ countries.
Management fee

Starting at
$599
/month
Estimated Employer Cost

22%
of employee salary