Work - Labour Union, National Holidays, Tax, Personal Tax Credit, Pension Funds System, Bank, etc.

Vinnumálastofnun - the Directorate of Labour has information about working in Iceland and tips for job search, unemployment benefits, and contract of employment:
In addition to its headquarters in Reykjavík, the Directorate has eight regional offices around the country, which give job-seekers and employers professional assistance with employment searches and staff engagements. One of them is the Directorate of Labour in South Iceland:

Adresse: Eyravegur 25, 2nd floor, 800 Selfoss
Tel: 515-4800

Opening hours: 9:00-13:00 from Monday to Thursday, 9:00-12:00 on Friday by appointment only:

For general information about working in Iceland:

Labour union - verkalýðsfélag
Verkalýðsfélags Suðurlands is one of the unions in South Iceland. Their office is located in Hella at Suðurlandsvegur 3, 2nd floor. The opening time: 9:00-16:00 from Monday to Friday.

Tel: 487 5000

Its role is to negotiate wages and other employment terms in collective wage agreements on behalf of its members and protect their interest in the labour market. It provides help, advice, and assistance with everything regarding workers' rights.

It supports adults' education and health matters and offers a subsidy for domestic accommodation costs during the summer and other recreational funds.
Verklýðsfélags Suðurlands is a part of the Icelandic Confederation of Labour (ASÍ).

Know your rights in the Icelandic labour market:

National holidays

Major public holidays:

  • New Year's Day (the 1st of January)
  • Good Friday
  • Easter Sunday
  • White Sunday
  • 17. June (Iceland's Independence Day)
  • Christmas Eve (the 24th of December), after 12:00
  • Christmas Day (the 25th of December)
  • New Year's Eve (the 31st of December), after 12:00

Workers pay according to the so-called significant public holiday rate for work these days, which is higher than the regular overtime rate.

General holidays:

  • St. Stephen's Day (the 26th of December)
  • Maundy Thursday
  • Easter Monday
  • First Day of Summer (the first Thursday after the 18th of April)
  • Ascension Day
  • International Labour Day (the 1st of May)/Workers'Day
  • Whit Monday
  • Commerce Day (the first Monday of August)

Workers pay according to the regular overtime rate for work on these days.

Tax – skattar
Iceland has a generous welfare state, and paying taxes is an essential part of contributing to society as a whole. All residents (those who have been in more than six months in Iceland in a rolling 12-month period) must pay taxes on worldwide income in Iceland: 

An individual who stays in Iceland for less than six months in twelve months has a limited tax liability in Iceland. It means he has to pay tax on income arising from sources in Iceland, although he still has an unlimited tax liability in another country:

Tax returns must complete every March for the previous year (tax year is from January to December). Employers can help with this, but the self-employed need to pay withholding taxes each month before tax is due. Accountancy advice can be important.

Personal tax credit
The personal tax credit is a tax deduction employees can use to lower the tax withdrawn from their salaries by the employer. Here you can see updated personal tax credit: The same applies if you have other income such as pension, benefits, etc. Persons moving to or from Iceland or those only temporarily employed in Iceland are entitled to the personal tax credit for each day they are resident in Iceland. Please note that persons from countries outside the EEA and/or EFTA may need a work permit.

The maternity/paternity leave fund – fæðingarorlofssjóður
Application for payments from the Maternity/Paternity Leave Fund:

Icelandic Pension Funds System – lífeyrismál
All employees must pay contributions to the pension fund. From the fund are paid pensions. The employer pays the pension contributions deducted from the employee's salary.
Full entitlement to old-age pension requires a total residence of at least 40 years between 16 to 67 years. If your residence in Iceland is less than 40 years, your entitlement is calculated proportionally based on the residence period.

Banks – bankaþjónusta
Most employers transfer wages directly to a bank account. Banks have different requirements when it comes to opening an account.
One general requirement for opening a bank account is having an Icelandic national ID number and being legally domiciled in Iceland.
The local bank is Arion Banki, located at Ránabraut 1, 870 Vík.