Iceland vs Germany
Tax Rate Comparison
Enter your income below for a personal tax estimate, then scroll down for full rate breakdowns.
๐ฐ Personal Income Tax Calculator
Enter your income to see your estimated annual tax liability in each country โ side by side.
๐ฎ๐ธ Iceland โ Municipal Income Tax
Iceland's 69 municipalities set their own local income tax rates, ranging from ~12.44% to ~14.52%, averaging ~14.45%. This is added to the national income tax. The combined effective rate for most earners is about 36.94% (national + municipal). Iceland has no inheritance tax on direct heirs. Real estate transfer tax (stimpilgjald) is 0.8% on property transfers. Iceland is not an EU member but belongs to the EEA, affecting VAT and trade rules.
๐ฉ๐ช Germany โ Trade Tax (Gewerbesteuer) & Church Tax
Germany's 16 Bundeslรคnder apply federal income tax rates uniformly โ no state income tax variation. Municipalities levy Gewerbesteuer (trade tax) on business profits at ~7โ17% effective. Church tax (Kirchensteuer) of 8โ9% of income tax applies to registered members. The solidarity surcharge (Soli) now only applies to the top ~10% of earners.
Iceland vs Germany: Key Tax Differences (2026)
๐ฐ Income Tax: ๐ฉ๐ช Germany has a higher top income tax rate (~36.94% vs 14โ45%). ๐ฎ๐ธ Iceland is more favourable for high earners.
๐ VAT/Sales Tax: Iceland has a higher consumption tax (11โ24% vs 7โ19%).
๐ข Corporate Tax: ๐ฎ๐ธ Iceland offers a lower corporate rate (20% vs 29%), which can influence business location decisions.
๐ Capital Gains: ๐ฎ๐ธ Iceland taxes investment gains at a lower rate (22% vs 25%), benefiting investors.