Tax-free shopping in Iceland is definitely worth considering, if you are planning a visit to this amazing country in the near future. It’s a great way to stretch your budget and make sure you get gifts for everyone! But how do you go about getting a lot of the things you buy tax free? Well, read on to discover the essentials.
To receive a tax refund (or VAT refund) there are some conditions. Value-added tax can be refunded on purchases over 6000 ISK (Icelandic Króna). To put that into perspective, the average price for a regular cup of coffee in Iceland is around 550 ISK at the time of writing this article (late 2016).
6000 ISK equals roughly 50 Euros or 53 US dollars.
It’s the total amount that matters. If you are buying more than one item at the same store and the price of some of the items doesn’t reach 6000 ISK, but the total amount of the bill does, you can still get the tax returned.
You can even combine multiple receipts from the same store to reach the minimum amount, if you happen to make a purchase on more than one occasion.
How to get a tax refund
If you purchase items while shopping in Iceland, and you intend to export them from the country within three months, you should request a tax-free form from the shop for a claim. The salesperson will sign the form and have the original purchase receipt attached to it. Then you fill out the other details.
It’s easy to fill out the Tax Free form. Just add your name, address, country, credit card number, passport number and your signature. See the instructions on the picture below.
There are two global tax free companies operating in Iceland. One is Premier Tax Free and the other is Global Blue. They both operate worldwide. So if you see either of these logos in a store in Reykjavik or anywhere else in Iceland you know they can provide a valid tax free receipt.
On departure from Iceland through Keflavik International Airport you need to claim your refund before checking in. So upon leaving the country, take the forms, your goods, and your receipts to the Tax Free refund agent, which is operated by Arion bank and located in the arrivals hall of the airport. Make sure you don‘t pack your goods away in your check-in luggage, you need to show them for export validation along with your passport and flight ticket. To receive a tax refund you need to have a permanent residence outside of Iceland.
But what if my departure time is really early or really late? Will the refund agent be open? According to the Keflavik International Airport website, it will: “Opening hours match flight schedules. As a rule, the desk opens three hours before the scheduled departure of each flight.”
How much will I get back?
Value-added Tax in Iceland is always included in the price of the product or service. It’s collected in two brackets, 11% and 24%, depending on the goods and services. To calculate it, 20% (19,35%, to be precise) of the total retail price for the higher bracket is taken and 10% (9,91%) of the lower bracket. The maximum VAT reclaim you can get is 14% of the retail price in the higher bracket and 7% in the lower. Services are not refunded, only goods.
[bctt tweet=”Shop Tax Free in Iceland – Up to 14% Off” username=”IcelandCloseup”]Shopping at Keflavik Airport
When you have checked in and survived the security inspection you are welcomed by a number of excellent shops. The stores offer quality brands, both local and foreign. You can find an excellent selection of Icelandic designs and a variety of Icelandic food that you can take home with you, from dried fish to candy. After shopping you can wine and dine at a nice range of restaurants.
Shopping at Keflavik Airport is Tax and Duty free both for incoming and departing passengers. So whether you’re starting your holiday, stopping over, or finishing your trip you can shop at the airport.
Icelandic currency
The currency in Iceland is known as Icelandic Króna or Crowns (ISK). The country does not use Euros, although some shops, restaurants and bars accept foreign currency, mainly Euros, US and Canadian dollars. British, Norwegian, Swedish and Danish currencies are also sometimes accepted. If you pay with foreign currency, normally your change will be given in Icelandic Kronas. Generally speaking, Icelanders don‘t really carry a lot of cash, most prefer to use credit cards and debit cards.
Banking hours are Monday to Friday from 09:00-16:00 (9 a.m. to 4 p.m.).
You can convert your cash into Icelandic Kronas at any bank in Iceland, but note that Icelandic banks only accept foreign notes or bills, not coins. Some hotels also offer this service to their guests.
ATMs are a pretty common sight, so don’t worry about not being able to withdraw from your card, they are usually located next to or inside banks. You might be charged an international fee for an ATM withdrawal, you can check this at your bank.
Most common credit cards
Visa, MasterCard and Maestro are the most commonly accepted cards. American Express is also widely used but you still might run into trouble once in awhile. Certain places throughout Iceland will take other cards such as JCB, Diners Club, Discover and Union Pay, but don’t rely on this too much!
To sum up – these are the tax refund conditions
- The buyer needs to have a permanent address outside of Iceland.
- The buyer will bring the goods out of the country within three months from the purchase date.
- The purchase price of the goods including VAT is a minimum of ISK 6000.
- The goods along with the required documents are presented on departure.
- The buyer of the goods is the one departing.
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