Working in Iceland as a French National: Right to Work, Pay, Tax, Contributions and the Economy

Iceland applies the free movement of the European Economic Area: a French national takes up employment or self-employment without a work permit or visa. An employee who works in a single country of the European Economic Area comes in principle under that country’s social security law (island.is). The formalities relate to settling in: registration with the national register (Þjóðskrá) for a stay of more than three months and obtaining the personal identification number (France Diplomatie, the French foreign ministry). The page on living in Iceland details these steps.

The employer registers its employees and pays the overall contribution of 6.35% of the payroll to the tax authority (CLEISS). This contribution funds old-age, invalidity and survivors’ pensions, unemployment, maternity and paternity benefits and accidents at work; healthcare is funded by taxation.

In its table of monthly minimum wages in euros, Eurostat publishes values for many countries, but none for Iceland: the observation is marked “does not exist”, as for Norway and Denmark. A sector’s minimum pay is therefore read in the industry’s collective agreements and in the employment contract; it is worth comparing them before accepting an offer.

• Salary levels: Statistics Iceland publishes wages by sector and by region on its website, to be consulted before signing.
• Sickness benefits: CLEISS describes a flat-rate allowance, paid after a 14-day waiting period, for people with six months of residence and two months of activity before the leave, for a maximum of 52 weeks per 24-month period; the employer may maintain salary depending on seniority and collective agreements.
• Parental leave: four months per parent plus two shareable months, paid at 80% of average income, subject to six consecutive months of activity before the birth (CLEISS).

CLEISS publishes the rates: the overall contribution (tryggingagjald) is 6.35% and is paid by the employer and the self-employed worker; it funds pensions, unemployment, maternity and paternity benefits and accidents at work. Healthcare and sickness benefits are funded by taxation.

• Mandatory occupational pension: every worker aged 16 to 70 joins a pension fund set by collective agreement or employment contract; the minimum contribution is 15.5% of salary, generally 4% for the employee and 11.5% for the employer (CLEISS).
• Voluntary payment: up to 4% of total salary can be added; from 2%, the employer generally adds 2% under most collective agreements (CLEISS).
• Tax deduction: the employee’s pension contributions, mandatory and supplementary, are deductible from income tax up to 8% (CLEISS).
• Vocational rehabilitation: 0.10% of salary paid by the employer for the VIRK fund (CLEISS).

The detail of the care obtained in exchange is set out on the page on the healthcare system in Iceland.

The Icelandic tax authority publishes every year the withholding tax rates on salaries, which are progressive depending on the monthly bracket. The authority’s page also mentions a personal tax credit whose amount can be read in its dedicated section.

France and Iceland signed a convention against double taxation in Reykjavik on 29 August 1990, which entered into force on 1 June 1992 (BOFiP, the French tax administration’s official bulletin). An employee who settles in Iceland in principle becomes a tax resident there and declares their local income; income that stays in France follows the convention’s rules, to be checked on impots.gouv.fr, the French tax authority’s website, or with individual advice.

An employee posted by a French employer stays affiliated to the French scheme during the assignment. The A1 form proves it, for 24 months at most, with no registration with the host country’s social security (europa.eu); the European coordination regulations apply in Iceland as in the Union (CLEISS). See posted worker or expatriate and the glossary entry on the A1 form.

An employee on a local contract comes under the Icelandic scheme; they can top this up by joining the Caisse des Français de l’Étranger (CFE, the voluntary social security fund for French nationals abroad), which spares them waiting periods on returning to France (ameli.fr, the website of the French Assurance Maladie, the national health insurance) and can cover the period before local entitlement opens.

A self-employed person pays the overall contribution of 6.35% themselves and must join a pension fund; they can also contribute up to 4% more (CLEISS). See also insurance for digital nomads.

Cross-border remote work falls under the European framework agreement where the States concerned have signed it; the CLEISS page consulted does not list Iceland among the parties, hence the need to check its status before planning such an arrangement.

According to the French Treasury (Direction générale du Trésor), tourism, fishing and aluminium together account for 70% of Iceland’s exports. Tourism represents about 30% of exports and nearly 8% of GDP, with more than 30,000 jobs of which more than 40% held by people from an immigrant background; fishing employs about 4,500 people and represents a little over 20% of exports of goods and services; aluminium weighs about 3% of GDP and 20% of exports.

IT, scientific and technical services and cultural activities are growing in exports, and data centres are a new driver. For a French national, opportunities are concentrated in tourism, services, fishing and energy; English is enough in many jobs, while Icelandic opens up more positions. The “Economic indicators” block on this page tracks growth, inflation, unemployment and the exchange rate continuously.