Iceland vs Italy
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.
๐ฎ๐น Italy โ Regional & Municipal Income Taxes
Italy's 20 regions levy addizionale regionale at 0.7%โ3.33%. Municipalities add addizionale comunale up to 0.9%. Sicily, Sardinia, and Trentino-Alto Adige have special autonomous status. IRAP (regional business tax) at ~3.9% applies to businesses. Local property tax (IMU) is set by municipalities on investment properties. Cumulative marginal rates can exceed 50%.
Iceland vs Italy: Key Tax Differences (2026)
๐ฐ Income Tax: ๐ฎ๐น Italy has a higher top income tax rate (~36.94% vs 23โ43%). ๐ฎ๐ธ Iceland is more favourable for high earners.
๐ VAT/Sales Tax: Iceland has a higher consumption tax (11โ24% vs 4โ22%).
๐ข Corporate Tax: ๐ฎ๐ธ Iceland offers a lower corporate rate (20% vs 24%), which can influence business location decisions.
๐ Capital Gains: ๐ฎ๐ธ Iceland taxes investment gains at a lower rate (22% vs 26%), benefiting investors.