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Living in Iceland · Money

Money & investment

From the day you start work, Iceland puts you into a pension. That is one of many money decisions made for you, and most foreigners only learn the rules when it is too late to change them. This page goes through the ones that matter most.

Opening a bank account when you are new

You cannot really live in Iceland without an Icelandic bank account. Your pay, your tax refund, your child benefit, your rent and almost every bill need one. Here is what happens when you go to open it.

Last verified 4 August 2026 · landsbankinn.is, islandsbanki.is, arionbanki.is, indo.is

What the bank will ask for

What actually happens
The three big banks (Landsbankinn, Íslandsbanki, Arion) and the online-only bank Indó all need the same things before they open an account for you: your kennitala (say: KEN-ni-tah-la, your personal ID number), a valid passport or national ID, and an Icelandic address registered with Þjóðskrá (say: THYOAD-skrau, the national register of people and addresses). Some banks also ask where your money comes from: your employer, an old account abroad, the sale of a house. They must ask this. It is the law against money laundering.
What to do
Wait until you have your kennitala and your address is registered. Then book a meeting at one of the three big banks, or open an account online with Indó. Bring your passport, your kennitala, and a payslip or work contract if you have one. If they ask where a bigger transfer came from, give a simple honest answer in writing.
The common trap
Going to the bank before your kennitala is in Þjóðskrá. By law they cannot open a personal account without it, and you will be sent home however friendly the talk was.

Debit and credit cards: the bill comes later

What actually happens
A debit card takes the money from your account straight away. A credit card does not. Everything you buy in a month goes onto one bill. The bill comes later, usually at the start of the next month.

Remember that credit-card spending has not yet left your bank account. Check the amount due and the due date, and make sure you understand how your particular card is set up to be paid. Depending on your bank and card, you may be able to pay the full bill automatically, pay it by hand, or spread some or all of the amount over several months. Instalment plans have their own terms, interest and fees, so check what your bank offers before using one. It is the same card either way. Only the way of paying is different, and you choose it.
What to do
Ask the bank three questions when they give you a card. First: is this a debit card or a credit card? Second: does the monthly bill pay itself from my account, or do I pay it? Third: if I cannot pay the full bill, what instalment options does the bank offer, and what do they cost? If the bill pays itself, set a reminder in your phone for the end of every month. Look at the total and keep that money in the account.
The common trap
Using a credit card as if the money has already been taken from your bank account. It has not. Your purchases are added to your credit-card bill. When the bill is due, the full amount may be taken from your bank account at once. If you choose to spread the bill over several months, check the interest, fees and how long it will take to pay off.

Sending money by app: Aur and Kass

What actually happens
Icelanders rarely use cash. Sending money from one Icelandic bank account to another is free and takes seconds, if you have the other person's kennitala and account number. The apps Aur and Kass also let you send small amounts to a phone number. That is how people split a restaurant bill or pay a friend.
What to do
When your account is open, install your bank's app and either Aur or Kass. Send yourself one króna first, so you can see exactly which fields you need before you send real money.
The common trap
Sending money to a kennitala that someone only said out loud. One wrong number sends it to a stranger, and getting it back is slow paperwork handled by their bank, not yours.

If your card is lost or stolen

What actually happens
Every Icelandic bank app has a button to freeze your card. It works at once and you can undo it. So if you lose your wallet at the swimming pool, you can lock the card from your phone and open it again ten minutes later when you find it. Cancelling the card is different: a new one comes in the post and you wait a few days.
What to do
On the day your card arrives, find the freeze button and the cancel button in the app, so you are not searching for them in a panic later. Save your bank's 24-hour lost-card phone number in your contacts too. The app is fastest, but the phone line works when the app does not.

Pensions (Lífeyrissjóðir)

Lífeyrissjóðir (say: LEE-fay-ris-syoh-thir) means pension funds. There is one you must pay into, one you can choose, and rules about what you can take with you when you leave.

Last verified 4 August 2026 · lifeyrismal.is, stjornarradid.is

The pension you must pay into

What actually happens
If you work in Iceland and you are between 16 and 70, the law says you must pay into a pension fund. Normally about 4% comes out of your pay, and your employer adds at least 11.5% on top. You do not choose whether to join. In most cases you only choose which fund.
What to do
Look at your first payslip and check that both your part and your employer's part are shown. If one is missing, write to your employer that same month. Your pension information goes to Landssamtök lífeyrissjóða (the pension funds association), where you can see later what you have built up.
The common trap
Thinking a cash job is “easier”. If your employer pays nothing into a pension, you also lose the cover the fund gives you if you become disabled, and the money it pays your family if you die.

The extra pension (séreignarsparnaður)

What actually happens
On top of the pension you must pay, you can choose to put an extra 2% to 4% of your pay into a personal pension account (séreignarsparnaður, say: SAIR-ay-gnar-spar-na-thur). If you do, your employer must add up to 2% as well. In plain words: that is extra pay you only get if you say yes.
What to do
Sign up with a provider. Your bank or your pension fund usually offers it. Set your part at least at the level that gets the full 2% from your employer. It is one form.
The common trap
Leaving your employer's 2% behind because the paperwork feels strange. Every month you wait is money your employer was ready to pay you.Editor’s note · VictoriaMost foreigners who miss this say the same thing: “I am only here for a year, I will not need it.” Then one year becomes six, and all that matched money is gone. My advice is simple. The day you sign a contract with your employer, apply for the extra pension. It does not matter how long you plan to stay. Do not wait until you understand every rule about taking the money out. You can learn that later. Just start paying in now.And the paperwork really is easy. You do not need to go into a branch. You can do it in your bank app: look for séreignarsparnaður, type in your employer’s kennitala, and that is it. The bank sorts out the rest with the payroll office. Only go into the branch if the app confuses you. You do not have to call your employer or chase anyone. The money simply starts coming out of your next pay.Questions foreigners often ask“I am only staying a year or two. Is it still worth it?”Yes. The 2% your employer adds is money you only get if you say yes. Even one year of paying in, plus that match, is more than most people save alone in that time. And if one year quietly turns into five, you will have five years of it instead of nothing.“Can I take the money out when I leave Iceland?”The extra pension follows different rules from the pension you must pay. In most cases you can take it when you reach the right age, wherever you live. Some providers also allow you to take it earlier in certain cases. Ask your provider in writing and keep the answer.“What if I change employer?”The account stays yours. You give the bank the new employer’s kennitala and the payments carry on from the next payday. You lose nothing you have already paid in.“Do I need to ask my employer first?”No. You do not need permission and you do not fill in anything at work. Most people do it in the bank app: open séreignarsparnaður, type the employer’s kennitala, confirm. If the app confuses you, walk into the branch and sign one form. Either way the bank does the rest.“How much should I pay in?”At the very least, pay in the amount that gets you the full 2% from your employer, usually 2% of your pay. Less than that means leaving money behind. You can raise it later.

Taking your pension with you when you leave Iceland

What actually happens
The rules are very different depending on your citizenship and your fund. People from outside the EEA have in some cases been able to ask for their money back when they leave for good, but this is not a clear right in law. It depends on the fund's own rules and on any social security agreement between Iceland and your country. People from the EEA or EU usually cannot take it out early. The money stays in the Icelandic fund and is paid to them abroad when they retire.
What to do
Before you leave, write to your own pension fund and ask what you may take, based on your citizenship, how long you lived here, and any agreement between the two countries. Keep their written answer. The extra pension has its own rules, so ask that provider separately what you can take and when.
The common trap
Thinking a friend's story is your story. The answer depends on your citizenship, your fund's own rules, and the agreement between countries, not on how long you lived here.

Buying property

Who may buy, the permission that buyers from outside the EEA may need, and the difference between the two kinds of home loan now live on their own page: Buying property in Iceland.

Sending money home

Banks, apps, and what gets reported.

Last verified 4 August 2026 · Central Bank of Iceland; Skatturinn

Through an Icelandic bank

What actually happens
Sending money abroad through Arion, Íslandsbanki or Landsbankinn (a bank wire, also called SWIFT) is safe and easy to trace. But there is a fixed fee, and the exchange rate they give you is usually worse than the real market rate.
What to do
Use the bank for large, formal transfers where the paper trail matters: property, inheritance, sums the tax office may ask about. Before you confirm, compare the bank's rate with the real market rate. The gap is the true cost.

Through Wise, Revolut, PaySend or WorldRemit

What actually happens
These are the services most foreigners in Iceland really use. Wise and Revolut are common for Europe and general transfers. PaySend and WorldRemit are used a lot for the Philippines, Poland, Ukraine, Latin America and parts of Africa, often straight to a bank account, a card, or cash pickup. Fees are usually lower than a bank wire and the exchange rate is closer to the real one. Every transfer is still recorded and can be traced.
What to do
Prove who you are properly the first time (passport and kennitala), so the service does not stop a transfer halfway. Before a big transfer, compare the total cost on two services: the fee and the exchange rate together decide what arrives. Keep receipts. Skatturinn (the tax office) may ask where money came from or went, above all around the yearly tax return.

Large transfers and what must be reported

What actually happens
Nothing stops you from moving money you earned legally out of Iceland. But banks and payment services must, by Icelandic law against money laundering (Lög nr. 140/2018), watch for and report payments that look unusual for you. There is also a separate rule at the border: if you carry cash worth 10,000 euros or more, you must declare it to customs.
What to do
If you are moving a large sum (you sold a house, you inherited money, you are taking your savings home), tell the bank first where the money came from and keep the papers. Being reported is not trouble. A transfer nobody can explain is. See the Central Bank of Iceland (Seðlabanki Íslands), which took over financial supervision from the old FME in 2020, for how this is watched.
The common trap
Cutting one big transfer into many small ones to stay under a limit you think exists. That pattern is itself a reason for a report.

Money you may already have a right to

Iceland quietly adds money to some households through the tax system. Sometimes you do not have to apply, because it is worked out when you file your tax return. But you do have to file, and your details have to be right. Foreigners often miss this money simply because nobody told them it exists.

Last verified 4 August 2026 · skatturinn.is, hms.is, island.is

Child benefit (barnabætur)

What actually happens
Barnabætur (say: BAR-na-buy-tur, money for families with children). If you have children under 18 living with you in Iceland and you have filed an Icelandic tax return, Skatturinn works it out for your household once a year. How much depends on your household income, how many children you have, and whether you are one parent or two. It is paid into your bank account in parts. Normally you do not apply for it.
What to do
Make sure your children are registered at the same address as you in Þjóðskrá, and make sure both parents (if both are in Iceland) file a tax return on time in spring. Skatturinn's page on barnabætur shows the exact rules and the payment dates for this year.
The common trap
Not filing a tax return because you had no income. If you do not file, Skatturinn cannot work out the benefit, and no money comes.

Housing benefit (húsnæðisbætur) for renters

What actually happens
Húsnæðisbætur (say: HOOS-nye-this-buy-tur) is monthly help with rent, paid by HMS, the state housing office. You may get it if you rent your home and the rental contract is registered. How much depends on your household income, how many people live with you, and the rent you pay. Unlike child benefit, you must apply, on island.is with your electronic ID.
What to do
Ask your landlord to register the rental contract (this is normally the landlord's job), then apply on the HMS húsnæðisbætur page. They ask for the contract, who lives with you, and your bank details. Payment starts from the month you apply, not the month you moved in.
The common trap
Renting on a spoken promise with no registered contract. Without a contract on file, HMS has nothing to work from, and you also lose the protection the rental law gives registered tenants.

Help with loan interest (vaxtabætur) for owners

What actually happens
Vaxtabætur (say: VAKS-ta-buy-tur) is money back on part of the interest you pay on a loan for the home you live in. Skatturinn works it out when you file your tax return. It depends on your household income and what you own, so people who earn a lot or owe little often get little or nothing, while first-time buyers with modest income get the most.
What to do
On your spring tax return, check that the interest numbers your bank filled in match the yearly statement your lender sent you. Skatturinn's vaxtabætur page shows the income and asset limits for this year.
The common trap
Thinking this is for rented homes or for a normal consumer loan. It is only for interest on a loan secured on the home you live in.

Investing from Iceland

Shares, funds, crypto, and what you owe at tax time.

Last verified 4 August 2026 · skatturinn.is

How to start investing from here

What actually happens
You do not need a separate broker to start. The three big banks, Landsbankinn, Íslandsbanki and Arion banki, each let you open a securities account (verðbréfareikningur, say: VERTH-bref-a-rake-ning-ur, an account for shares and funds) inside the same app you use every day. You can then buy shares listed on Nasdaq Iceland or units in Icelandic funds. To invest outside Iceland (US or European shares, global funds) most people use a foreign broker. That is allowed, but the account and every trade must still be written on your Icelandic tax return.
What to do
Open the securities account in your bank app first. It is usually one form and an electronic signature. Start with a small amount so you learn how it works: how long a trade takes, the fees, the currency. If you use a foreign broker, keep every confirmation email from day one. You will need them years later to work out the gain in Icelandic króna at tax time.
The common trap
Treating an investment account like a savings account. The value can fall, the money can be locked for a few days while a trade settles, and selling at a profit creates tax you must declare the next spring.

Tax on profit from shares, funds and property

What actually happens
Profit from selling shares, funds or property pays capital income tax in Iceland, now 22%. You must declare every investment account on your yearly Icelandic tax return, including accounts you hold abroad.
What to do
Keep a clear record of every buy and sell: the date, the amount, the currency, the fees. At tax time, declare foreign accounts even if you sold nothing that year. Iceland shares financial information with most countries where you might hold an account.
The common trap
Thinking “it is abroad, so Iceland cannot see it”. If you are a tax resident here, income from anywhere in the world must be reported here.

Cryptocurrency

What actually happens
Skatturinn has said that profit from trading or selling cryptocurrency is taxed as capital income, and that crypto you receive as payment or from mining is taxed as ordinary income at your normal rate. The rules for special cases (staking, DeFi, airdrops) are still changing, so if you do anything more than simple buying and selling, ask Skatturinn in writing.
What to do
Download the full transaction history from every exchange or wallet you use, and keep it. At tax time, work out the gain in Icelandic króna using the exchange rate on the day of each transaction. See Skatturinn's guidance on capital income.

Your credit record (Creditinfo)

How money records work in a small country.

Last verified 4 August 2026 · creditinfo.is

The list of unpaid debts (Vanskilaskrá)

What actually happens
Iceland does not give you a credit score with points, as the US or the UK do. Instead, Creditinfo (Lánstraust) keeps a list of bad marks only. You start clean. You only get a bad record if your name goes on the official Vanskilaskrá (say: VAN-skil-a-skrow, the register of unpaid debts), after a bill has passed its final warning.
What to do
If you get a formal collection letter (innheimtubréf, say: IN-hame-tu-bref), deal with it before the final date, even if you think the bill is wrong. Once you are on Vanskilaskrá it is hard to rent a home, hard to get a phone contract, and almost impossible to get a home loan.
The common trap
Ignoring a small bill because it is small. It is not the amount that puts you on the list. It is the missed date.

If you fall into debt

What debt collectors can do, and what they cannot.

Last verified 19 August 2026 · syslumenn.is; island.is; Icelandic enforcement law

How a debt is enforced (fjárnám)

What actually happens
A person or company you owe money to cannot take money from your account or your pay by themselves. They must first have a legal basis, such as a court judgment, and then ask the District Commissioner (Sýslumaður, say: SEES-lu-mah-thur, the local state office) for an attachment. This is called fjárnám (say: FYOWR-nowm). At that meeting the office records what you own that can cover the debt. If nothing can be attached, that is written down too, and it becomes a record against you.
What to do
If you get a letter about a fjárnám meeting, go. Do not stay away, because the case continues without you. Bring papers that show your income, your rent and who depends on you, and ask the creditor in writing for a payment plan before the meeting.
The common trap
Believing that a private creditor can order your employer to hand over part of your wages. In Iceland, taking money straight from pay (launaafdráttur) is used by the state collection authorities for unpaid public claims such as taxes, not by ordinary debt collectors.

What cannot be taken from you

What actually happens
Enforcement has limits. The law protects things you need for a normal life and for your work, and unpaid public claims that are collected straight from your pay must still leave you enough to live on. The amount depends on your real costs and on how many people depend on you, not on one fixed number.
What to do
Bring proof of your rent, your regular bills and the people who depend on you to the meeting at Sýslumaður, and ask the office to explain in plain words which of your things can be taken and which cannot.
The common trap
Thinking a decision is fixed for ever. Payment terms can usually be changed if your life changes, but only if you ask for it formally and in writing.

Sources

This page puts Icelandic rules on banking, pensions, benefits, sending money home, investing, credit and debt into simple words. It is not personal financial or legal advice. For decisions about real money, talk to your pension fund, your bank, Skatturinn, or a qualified Icelandic advisor.

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