• Service: Tax, Global Transfer Pricing Services
  • Type: Regulatory update
  • Date: 2/4/2014

Iceland - Transfer pricing rules are enacted  

February 4:  Legislation passed by Iceland’s Parliament introduces a transfer pricing regime in Iceland. The effective date is 1 January 2014.


Previously, Iceland did not have clearly defined transfer pricing rules.

Up to now, the tax authorities had access only a general anti-avoidance provision (one that permitted price adjustments for transactions when the authorities demonstrated that the basis for the price, as reported, was abnormal).

Follows OECD guidelines

The new transfer pricing rules are based in general on the arm’s length principle. If prices are not in accordance with the arm’s length principle, the prices are to be adjusted (pursuant to OECD’s transfer pricing guidelines).

The definition of who is a related party applies to both direct or indirect majority ownership and/or control of legal entities as well as to individuals who are considered to be related by family and/or financial ties.


Companies that have total revenue or assets as of the beginning of the year or at year-end exceeding 1,000 million ISK (approximately U.S. $8.7 million) must maintain documentation about:

  • The nature and extent of transactions with related parties (including subsidiaries or permanent establishments)
  • The nature of the related-party relationship
  • The basis for the price(s) asserted

The document requirement also refers to the OECD transfer pricing guidelines.

For more information, contact a tax professional with KPMG’s Global Transfer Pricing Services practice:

Ágúst Karl Guðmundsson


Or contact a tax professional with KPMG's Global Transfer Pricing Services.

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