Shopping in Iceland wouldn’t be classified as a bargain; despite the devaluation of the kronur, luxury goods are still quite pricey. But, you can defer some of that cost by collecting your tax refund whenever you are eligible. The VAT (value-added tax) in Iceland is 25.5% or 7% on special goods. Taxes are always included in the price tag of a specific items, so that means that all prices include a VAT rate which corresponds to 20.32% or 6.54% of the total selling price. The tax is used for social purposes in Iceland, so foreigners are allowed to claim that tax back.
In order to qualify for the 15% tax refund, you must shop at an establishment that participates in the program (service providers like restaurants and tour companies do not, nor do some resale shops), spend over 4,000 ISK on goods that you are taking outside of the country, have a permanent address outside of Iceland, and collect a tax-free from from the establishment.
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After you have made all your purchases, there are a few ways to get your refund:
- Write your credit card number on the tax-free form and mail it in an Iceland Refund envelope for a direct refund to your credit card.
- Get your refund prepaid, before you leave the country, at the malls. Then put your forms in the mailbox in the departure hall in Keflavik airport or mail it from abroad in an Iceland Refund envelope.
- Or the easiest way, head to the airport with your receipts and stop by the Landsbanki office for a cash (kronur) refund.
Note: If the refund amount of a single receipt exceeds ISK 5.000 you must have a export varification stamp by customs before you check-in your goods. (This does not apply to woolen goods.)
It’s that easy, and depending on how much you shop while in Iceland, can mean quite a bit of cash back in your pocket.
Photo by Andy Teach