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European Alternative Fuels Observatory

Iceland

Incentives and Legislation

The incentives and legislations section is updated for beginning of 2024, as of 23rd April 2024.

Incentives and legislation that aim to increase uptake of alternative fuels vehicles and infrastructure.

If you know of other national or local incentives that should be included in this section, please send us an email, or use the button on the right, and let us know.

Registration tax benefits

Registration tax for passenger vehicles is based on CO2 emission. The tax is 5% for emissions up to 75 g/km (NEDC). Therefore, BEV's, hydrogen vehicles and most PHEV's are not taxed at registration. Methane and methanol vehicle are exempted from registration tax up to 1.250.000 ISK per vehicle. 

Ownership tax benefits

No incentives are currently available.

VAT benefits

Temporary tax expenditure:

  • iVAT exemption for purchase of BEVs and hydro vehicles, with a cap of 15 000 vehicles of each type. The maximum amount of VAT exemptions is ISK 1 440 000 per vehicle.
  • VAT exemption for purchase of PHEVs, with a cap of 15 000 vehicles. The maximum amount of VAT exemptions is ISK 960 000 per vehicle.
  • Full VAT refund for purchase and installation of home-charging stations at residential properties.

 

Other financial benefits

Free parking is availble for up to two hours for BEV's in Reykjavik and Akureyri 

AF infrastructure incentives

Incentives for charging infrastructure

Purchase Subsidies

As of 2024: New vehicles in category M1 with a purchase value of less than ISK 10 million are eligible for funding in the amount of ISK 900,000. New vehicles in category N1 with a purchase value of less than ISK 10 million. are eligible for funding in the amount of ISK 500,000. The Islandic government will make one billion ISK available for rental companies to purchase electric cars

AF Infrastructure Incentives

As of 2024 Electric and hybrid vehicles will pay road taks per kilometer driven, this will be 6 ISK per km. For diesel and petrol cars this will go into effect one year later in 2025.

Interesting links
Institutions involved in Incentives

Iceland Revenue and Customs

Are you aware of further incentives you want to bring to the Observatory's attention? Let us know by filling in this form.

Incentives and Legislation

The incentives and legislations section is updated for beginning of 2024, as of 23rd April 2024.

Incentives and legislation that aim to increase uptake of alternative fuels vehicles and infrastructure.

If you know of other national or local incentives that should be included in this section, please send us an email, or use the button on the right, and let us know.