Icelandic VAT on Stripe Digital Services in QuickBooks

A US software company has a few hundred subscribers in Iceland, a handful of Icelandic agencies on its team plan, and a template pack it sells for a one-off price. Iceland's rules for that business are short, but they don't match Stripe's threshold monitor, they don't match Norway's business-customer rule, and they convert currency on a different day than Stripe does. Each of those gaps lands in QuickBooks as a number that won't tie to the return.

Skatturinn, Iceland's Directorate of Internal Revenue, starts from a narrow rule. "Foreign companies that only supply goods and services from abroad to recipients in Iceland, excluding electronically supplied services, are not liable for VAT in Iceland." Electronically supplied services are the exception. Once a foreign seller's consumer sales of them pass ISK 2,000,000 in any twelve months, it has to register and collect Icelandic VAT.

This guide covers what Skatturinn treats as an electronic service, how the ISK 2,000,000 line is measured and where Stripe's monitor counts differently, the simplified VOES registration versus the ordinary one, business customers and the two Icelandic tax IDs in Stripe, the rates, a worked two-month period, the declaration and its currency rule, and what reaches QuickBooks. It is bookkeeping guidance, not tax advice. Our Norway VOEC services guide covers Iceland's nearest neighbor, and the contrast comes up more than once below.

Acodei brings Stripe Tax amounts into QuickBooks, so Icelandic VAT is already in your liability account when the period closes. Start a free trial.

Which digital services Iceland taxes when you sell from abroad

Skatturinn's VAT page for companies defines the scope by example. "Electronic services include download or streaming of software, apps for smartphones, e-books, electronic games, music, movies or television programs." Where they are taxed is fixed too: "The services are always regarded as used where the buyer of the services resides or has a place of business."

The simplified scheme, VOES (VAT on Electronic Services), is a little wider than that list. Skatturinn says it is open to foreign companies selling these to "non-taxable persons (including individuals) in Iceland":

• Electronically supplied services
• Telecommunication services
• Paper and magazine subscriptions
• Television and radio broadcasting services
• Services sold by tourist service providers (only services subject to VAT)

For a SaaS company, the first line is the one that matters. Subscriptions, downloads, in-app purchases and streamed content all sit inside it.

Some services are outside VAT in Iceland altogether. Skatturinn's exemption list includes healthcare, the "operation of schools and education institutions," and the activities of authors and composers, among others. Whether an online course you sell is an exempt education service or a taxable electronic one is not something the English page settles. Take that one to an adviser before you pick a product tax code.

What VOES doesn't cover: goods. Skatturinn says "the importation of goods is taxable and VAT is payable at the time of importation by the owner of the goods." A seller of physical products to Iceland is in a different regime, and this guide doesn't address it.

The ISK 2,000,000 line, and why Stripe's monitor can run ahead of it

The trigger, in Skatturinn's words: a foreign company that supplies electronic services "to non-taxable persons (B2C) in Iceland, where the value of those sales exceed a threshold of 2.000.000 ISK in any twelve-month period, is required to register and account for VAT in Iceland."

Three details in that sentence shape the test:

1. It counts consumer sales only. Sales to VAT-registered Icelandic businesses are out of VOES, so they are out of the threshold as well.
2. The window rolls. "Any twelve-month period" is not the calendar year. A strong spring can cross the line in August.
3. The line is "exceed." Sales of exactly ISK 2,000,000 don't trigger it.

At an illustrative rate of 125 krónur to the dollar, ISK 2,000,000 is about $16,000 of Icelandic consumer revenue. Use the Central Bank of Iceland's official exchange rates for the real figure, because the dollar equivalent moves with the króna.

Stripe's Iceland tax guide shows the same number, "2000000 ISK per rolling 12 months," but lists the transactions in its obligations monitoring as "B2C and B2B digital products." The same page then says "Sales to VAT-registered businesses where the customer pays for the VAT through the reverse charge mechanism don't count towards the threshold."

Read together, Stripe's monitor watches a wider set of sales than the threshold measures. A company with a large Icelandic business base can see Stripe flag Iceland before its consumer sales are anywhere near the line. That isn't harmful, since registering early is allowed, but it can push you into a registration you don't yet need. The glossary entry on Stripe Tax threshold monitoring explains what the monitor does and doesn't see.

The check to run yourself: total your Icelandic sales for the trailing twelve months from your own data, and exclude customers with a valid Icelandic VAT number. That figure, in krónur, is the one Skatturinn's test uses. Our guide to Stripe Tax registration thresholds covers this kind of tracking across countries.

Skatturinn's English page doesn't say how soon after crossing the line you must register. Plan to apply as soon as you see it coming.

VOES or the ordinary VAT register: the representative question

Iceland offers two ways in, and the difference is mostly about who else has to be involved.

VOES, the simplified route. You apply online at voes.rsk.is, which describes itself as the place where foreign suppliers of electronic services "must calculate and collect VAT on their B2C sales to Iceland." Stripe's guide says VOES "doesn't require fiscal representation." Skatturinn says it "is not an option if a permanent establishment in Iceland provides the sale of goods and services."

The ordinary register. This is form RSK 5.02, the same registration Icelandic companies use. Skatturinn's rule for a foreign company "selling taxable services in Iceland" without a permanent establishment is that "it must entrust an agent domiciled in Iceland to serve as its representative." The foreign company and the representative "are both responsible for the collection and payment of VAT." The representative also "shall keep complete VAT accounts" and keep them, with sales documents and vouchers, "in Iceland for at least seven years." Stripe's guide puts it the same way: registration above the threshold "requires fiscal representation," and VOES is the exception. Our glossary entry on the tax representative explains what that joint liability means in practice.

For a US company that sells software to Icelandic consumers and has nothing else in Iceland, VOES is the route without a local agent.

The trade-off VOES makes

"VOES registration is a pay-only supplier registration, which means sellers cannot deduct input tax." Icelandic VAT you pay on your own costs doesn't reduce what you owe on the VOES declaration. Don't set up an Icelandic input VAT asset in QuickBooks expecting it to offset the period.

The VOES section adds that "Sellers may apply for reimbursement of VAT" and links Skatturinn's reimbursement page for foreign enterprises. Read that page's conditions before counting on it. One of them is that the enterprise "shall neither have sold goods nor taxable services in Iceland during the period to which the application refers." How that applies to a VOES seller is a question for Skatturinn or your adviser.

Business customers: the VAT number, not the kennitala

Skatturinn excludes business sales from VOES in one sentence: "Registration is not required when the buyer is registered according to Art. 5 of the VAT Act and can account for the VAT on the electronically supplied services as part of the input tax (B2B)."

The test is the buyer's VAT registration. That is where Iceland and Norway part ways. Norway treats a buyer with a business organisation number as a business, VAT-registered or not. Skatturinn's wording ties the Icelandic exclusion to registration under the VAT Act.

Stripe's customer tax ID table lists two Icelandic types, and only one affects tax:

Stripe type	What it is	Example format	Impact on tax calculation
is_vat	Icelandic VAT number	123456	Yes
is_kt	Iceland Tax Identification Number (kennitala)	1234567890	No

The kennitala is the ten-digit national ID that every Icelandic person and company has. Skatturinn's invoicing rules for registered sellers require the "Icelandic Id. no. (kennitala) of the purchaser and seller," so you may want it on file and on the invoice. But it doesn't tell you the customer is VAT-registered, and Stripe doesn't treat it as if it did.

So the two cases run like this:

• A customer with a valid is_vat number. It meets Skatturinn's B2B test. Stripe Tax should not charge Icelandic VAT, and the transaction's taxability_reason should show reverse_charge. Check that on your first Icelandic business sale. The glossary entry on the Stripe taxability reason lists the other values you might see.
• A company with only a kennitala. As Skatturinn words the rule, a company that isn't registered for VAT isn't excluded, and Stripe charges it VAT like a consumer. Unlike in Norway, that is probably the right outcome. If the customer says it is VAT-registered, ask for the number and add it as is_vat.

Don't set a "reverse" tax status on Icelandic companies to stop the charge unless you've confirmed they're registered. Our guide to Stripe customer tax IDs covers collecting the number at checkout, and the glossary entry on Stripe customer tax exempt status explains what the reverse setting does.

Icelandic VAT rates: 24 percent, 11 percent, and the fractions

"The standard rate of VAT in Iceland is 24%." Most electronic services, including software and app subscriptions, fall under it.

The reduced rate is 11 percent. Skatturinn's list includes several items that overlap with digital sales:

• "The sale of books, musical notation as well as their audio recordings, compact discs and other similar media as well as electronic media"
• "The sale of newspapers, magazines and district newspapers"
• "Radio and TV subscription charges"

Skatturinn lists e-books as an electronic service and lists books "as well as electronic media" at 11 percent. It doesn't give an e-book rate in one sentence. If e-books are a real share of your Icelandic sales, assign them a specific Stripe product tax code and confirm on the first sale which rate Stripe applied.

The fractions help with inclusive prices. Skatturinn's invoicing rules say an invoice can state the VAT amount or state that it "amounts to 19.35% (standard rate) of the total price, or 9.91% (reduced rate)." Those are 24/124 and 11/111. If you set Icelandic prices tax-inclusive, the VAT inside an ISK 4,960 or $49.60 price at the standard rate is 19.35 percent of it, or 960 and $9.60. That is the quickest sense check on any inclusive Icelandic line in QuickBooks.

A worked two-month period for a software business

Take a Texas company that sells a design app. Its Icelandic consumer sales passed ISK 2,000,000 in the summer, it registered for VOES, and it added an Iceland registration in Stripe Tax. It prices in USD, with most prices VAT-exclusive and one product priced VAT-inclusive.

Stripe treats the króna as a special case. Its currency guide says "ISK transitioned to a zero-decimal currency, but backward compatibility requires you to represent it as a two-decimal value," and "You can't charge fractions of ISK." This example uses USD so that the arithmetic stays about tax, not about currency representation. If you're considering ISK pricing, test how every system downstream of Stripe handles it first.

The period is September to October 2026:

1. A monthly plan to a consumer in Reykjavík, $20. Standard rate, so VAT is $4.80 and the customer pays $24.80. Two months is $9.60.
2. An annual plan to a consumer in Akureyri, $240, billed in September. VAT is $57.60. The whole year's VAT falls in this period, because the invoice does.
3. A template pack to a consumer in Hafnarfjörður, priced at $49.60 including VAT. Inclusive, so the VAT is 19.35 percent of the price: $9.60, on $40.00 of revenue.
4. A team plan to a Reykjavík agency with an is_vat number, $600. B2B under Skatturinn's rule. No Icelandic VAT, and reverse_charge on the transaction.
5. The same team plan to a two-person company with only a kennitala, $600. Not VAT-registered, so Stripe charges VAT like a consumer sale: $144.00.
6. The Reykjavík consumer from order 1 asks for October's charge back. You refund it through a credit note for $24.80. That reverses $4.80 of VAT.

VAT for the period in dollars: $9.60 plus $57.60 plus $9.60 plus $144.00, less the $4.80 refund, is $216.00. Order 4 carries none. Orders 5 and 4 are the same product to the same kind of customer, and the only difference is a VAT number.

Order 5 also counts toward the ISK 2,000,000 line, and order 4 doesn't. If you had relied on Stripe's monitor, order 4 would have counted.

Filing the VOES declaration, and the exchange rate it uses

VOES runs on two-month periods. "The VOES declaration covers a two months period commencing on 1 January, 1 March, 1 May, 1 July, 1 September and 1 November." The deadline "for the submission of declarations and payments is one month and five days after the end of the two month period," and a deadline on a weekend or Icelandic holiday moves to the next working day.

For the next two periods, that gives:

Period	Nominal due date	Actual due date
September to October 2026	Saturday, 5 December 2026	Monday, 7 December 2026
November to December 2026	Friday, 5 February 2027	Friday, 5 February 2027

You file and pay through the declaration link on voes.rsk.is.

The currency rule: rates on the due date, not at the sale

This is the detail most likely to break a tie-out. Skatturinn says "Declaration are submitted in Icelandic Krónur (ISK) using VAT foreign currency rates on due date," and links the Central Bank of Iceland's official rates.

Stripe converts at a different moment. Its tax reporting guide says that when the price currency differs from the filing currency, "Stripe Tax converts amounts using available exchange rates at the time of the transaction." So on USD sales, the ISK figure in Stripe's export is a sum of conversions at many different dates. Skatturinn wants one conversion, at one date.

For the worked period, the $216.00 of VAT is converted at the rate for 7 December 2026. At an illustrative 125 krónur to the dollar, that is ISK 27,000. Stripe's filing_tax_amount column will show a different krónur total, built from September and October rates. Neither is wrong for its own purpose. The one you declare is Skatturinn's.

Two practical consequences:

• Work from the USD tax total. Sum tax_amount in your integration currency, then convert once at the due-date rate. Keep the rate and its source with the declaration.
• Your liability account won't match the payment exactly. It holds dollars. The payment is krónur converted at a later date. The next section covers how to clear it.

The glossary entry on the Stripe Tax filing currency explains the filing columns and when they are blank.

From Stripe's export to the declaration

Stripe's reporting guide says location reports cover "your registrations in the US and Canada," so there is no Iceland report. The source is the itemized export:

1. Download the itemized export for the two-month period, filtered to Iceland. Keep the untaxed rows. They are your evidence for business sales.
2. Separate standard-rate and reduced-rate lines, if you have any at 11 percent.
3. Sum the tax for transactions and subtract reversals from credit notes and refunds, in your integration currency.
4. Convert at the Central Bank of Iceland's rate for the due date.
5. Declare, pay, and archive the export and the rate together.

The glossary entry on the itemized export describes its columns.

Quiet periods and late payments

Skatturinn's general VAT chapter says "Electronic filing of VAT statements is mandatory even if no sales have been made in the relevant period." If a statement isn't filed, "RSK will estimate sales and output tax," and a surcharge of ISK 5,000 applies when a statement is later filed in place of the estimate. That chapter is written for ordinary registrations and doesn't restate the rule for VOES, so treat a quiet period as one that still needs a declaration, and confirm with Skatturinn.

The same chapter sets late-payment penalties at "1% penalty charge for each day past due date up to a total of 10%," with late-payment interest added after a month. On a VAT bill this small the penalty is minor, but a missed estimate notice is not, so set a calendar reminder for every period.

What reaches QuickBooks, and how the payment clears it

Acodei syncs the tax Stripe Tax calculated, so the Iceland registration in Stripe has to be in place first. For Acodei to read those amounts, Stripe Tax has to be active in your Stripe account.

For a US QuickBooks company, Acodei's method is the Tax Product: a non-inventory "Sales Tax" product mapped to a liability account, with all Stripe Tax amounts on a sale rolled into one line on the QuickBooks invoice or sales receipt. QuickBooks' Sales Tax Center doesn't let third parties create official tax rates for US companies, which is why the product approach is the one that works there. Acodei's documentation notes this needs Stripe Tax used with Stripe Invoicing or Stripe Checkout. You file from Stripe's reports and pay from the liability account.

For a QuickBooks company outside the US, Acodei's documentation describes a second option: mapping individual Stripe tax rates to QuickBooks tax codes you set up, such as a 24 percent and an 11 percent Icelandic code.

For the worked period, orders 1, 2, 3 and 5 carry Icelandic VAT that Stripe calculated, and that is the tax that reaches QuickBooks. Order 4 has no Icelandic VAT to carry.

The inclusive line, order 3. If you set Acodei's tax setting to Inclusive, Acodei turns on its manual inclusive tax calculation so the QuickBooks totals align with Stripe's tax. Acodei's documentation notes that inclusive tax on daily summaries can produce small rounding differences, so a summary day with many inclusive Icelandic sales may show a small difference against the export. The 19.35 percent check above is the fastest way to confirm a line is right.

The refund, order 6. Acodei's documentation says a refund issued through a credit note carries the line-level tax breakdown. A refund made on the payment alone may not show how much was tax, and that case can need a manual adjustment in QuickBooks. Use credit notes for Icelandic refunds. Our guide to refunding Stripe Tax in QuickBooks walks through both cases.

The payment to Skatturinn. Your liability account carries $216.00 of Icelandic VAT for the period. The payment is ISK 27,000 at the due-date rate, and your bank's conversion of it will cost a little more or less than $216.00. When it clears, reduce the liability by the $216.00 carried for the period, and post the difference to the account your accountant uses for exchange gains and losses. The liability account also holds US sales tax and any other foreign tax from Stripe Tax, so keep a note of the Icelandic slice for each period. Our Stripe multicurrency guide explains why Stripe's and QuickBooks' exchange rates often disagree.

Skatturinn's general VAT chapter gives an IBAN at the Central Bank of Iceland for paying VAT from a foreign bank account, with an instruction to put "the VAT registration number, year and period in the comments field." If you pay that way, confirm with Skatturinn that the same account and reference apply to VOES payments, and keep the bank confirmation with the declaration.

Because VOES is pay-only, the Icelandic slice goes to Skatturinn in full.

Common mistakes with Icelandic VAT on Stripe digital sales

• Registering on Stripe's monitor alone. It counts business sales that Skatturinn's line excludes. Check your consumer total first.
• Treating a kennitala as a VAT number. Every Icelandic company has one. Only is_vat tells Stripe the customer is registered.
• Copying the Norway rule. In Norway an organisation number is enough. In Iceland, as Skatturinn words it, VAT registration is what counts.
• Declaring Stripe's converted krónur figure. VOES uses the rate on the due date. Convert your period total once.
• Missing the extra five days, or the weekend shift. The deadline is one month and five days after the period, moved to the next working day. September to October 2026 is due on 7 December.
• Expecting to offset Icelandic costs. VOES is pay-only.
• Assuming e-books are standard-rated. Skatturinn's reduced-rate list includes electronic media. Confirm the rate Stripe applied.

Frequently Asked Questions

Do foreign companies have to charge Icelandic VAT on digital services?

Yes, once their sales of electronically supplied services to non-taxable persons in Iceland exceed ISK 2,000,000 in any twelve-month period. Skatturinn says foreign companies supplying from abroad are not otherwise liable for VAT, with electronic services as the exception. Most register through the simplified VOES scheme, which is limited to consumer sales and doesn't need an Icelandic representative.

What is the VAT rate on digital services in Iceland?

24 percent for most electronic services, including software and app subscriptions. The reduced rate of 11 percent applies to items such as books and electronic media, newspapers and magazines, and radio and TV subscriptions. For a tax-inclusive price, the VAT is 19.35 percent of the total at the standard rate and 9.91 percent at the reduced rate.

Do I charge Icelandic VAT to a business customer?

Not if the customer is VAT-registered in Iceland and can account for the VAT itself. Skatturinn's exclusion turns on that registration. In Stripe, add the customer's Icelandic VAT number as an is_vat tax ID, which affects the tax calculation. The ten-digit kennitala (is_kt) does not, and a company with only a kennitala is charged VAT like a consumer.

When is the Icelandic VOES declaration due?

Every two months. Periods start on 1 January, 1 March, 1 May, 1 July, 1 September and 1 November, and the declaration and payment are due one month and five days after each period ends. A deadline on a weekend or Icelandic holiday moves to the next working day. The September to October 2026 period is due on Monday, 7 December 2026.

Which exchange rate do I use on the VOES declaration?

Skatturinn says declarations are submitted in krónur "using VAT foreign currency rates on due date," and points to the Central Bank of Iceland's official rates. Stripe converts each transaction at the time of the sale, so on USD-priced sales its krónur total will differ. Convert your period's tax total once, at the due-date rate.

The three Icelandic details that decide your numbers

Iceland's VOES rules fit on one page, and the hard parts are all comparisons. Its threshold counts fewer sales than Stripe's monitor watches. Its business rule asks for a VAT number where Norway accepts an organisation number. And its declaration converts at the due date, where Stripe converts at the sale. Track your own consumer total, collect is_vat from registered customers, and convert each period once from your dollar tax total. Then the Icelandic slice of your liability account will tie to what you pay.

Acodei syncs Stripe Tax into QuickBooks, so each two-month Icelandic tie-out starts from the liability account instead of a spreadsheet. Start a free trial.