Are you ready for a change of pace? Freelancing gives you the freedom to manage your professional life on your own terms. You can choose how much you want to work, which clients you want to work with and even how much you charge for goods and services. Iceland is a scenic Nordic island that has a peaceful ambiance and friendly people. As a freelancer, you also can choose where you want to work, and Iceland is a great choice.
Before you accept your first gig, however, you need to learn how to become a freelancer in Iceland. By walking through a few steps today to set up your business, you could be ready to start freelancing soon.
You can use your trade skills, knowledge and professional experience to freelance in Iceland. Regardless of whether you are a professional digital marketer, a website developer, an accountant or another type of professional, opportunities may be available to you. You will need to ensure that you have the appropriate licenses, permits and other credentials for your specific profession. However, many professions do not require special credentials. For example, you can work as an artist, journalist or even a dog walker in Iceland without obtaining profession-specific credentials.
The average working wage for a professional in Iceland is 731,000 ISK per month. However, it is important to note that the income potential for professionals differs. In addition, for many types of professions, there is a substantial range of incomes based on the professional’s work experience and credentials, specializations and other factors. The best way to determine what you could charge as a freelancer in Iceland is to research the rates charged by other similar professionals.
The first step to take if you want to freelance in Iceland is to line up the proper work visa. If you plan to stay in the country for more than six months and are from an EU country, you simply need to sign up through the National Registry. If you are moving to Iceland from outside the EU, you will need a residence visa. It can take a few months to obtain the visa, so it may be beneficial to get started today.
After you have your appropriate residence status established and have researched professional requirements for your specific trade, you can request a personal ID number. If you plan to run your individual company, or sole proprietorship, through a special name other than your personal name, you must register that business name with the Companies Register. Finally, you will need to register to pay VAT, or value-added tax.
Iceland has a pay-as-you-go system, which means that your taxes are paid on a monthly basis based on the income that you earned. The income tax rate is flat at 46.25%. You will also be responsible for paying the social security tax, which covers health benefits, unemployment and more. The social security tax rate is 10.1%. Because there are various tax forms that must be filed in a timely manner, it may benefit you to hire a local accountant.
When you freelance in Iceland, you will be required to register for and pay VAT. There is a minimum threshold of 2,000,000 ISK. If you make less than this amount annually, you are not responsible for VAT. To pay VAT, you will need to register through the Iceland Revenue and Customs department. After registering, you must keep up with making monthly or quarterly VAT payments to this department.
The VAT rate in Iceland is 24%, but there is a reduced 11% rate that may apply under special circumstances. While some countries have special VAT rules for expats, this is not the case in Iceland. All residents working in Iceland have the same VAT rate and threshold. If you do not have a permanent residence in Iceland, you must appoint a special financial representative to manage this important aspect of your business.
Managing VAT payments and keeping track of the various requirements can be a challenge. You can conveniently find all of the information you need through this VAT guide for freelancers in Iceland.
Regardless of whether you operate your business as an individual company or as another entity, you are required to keep accurate financial records. More than that, you must file the appropriate tax documents on a monthly basis so that you can keep up with your personal and social security tax obligations.
You also must track VAT payments by maintaining records for your invoices. Invoices should be issued for all sales, and they need to display specific information. For example, they should show the VAT tax rate, the VAT tax paid, the buyer’s and seller’s contact information, a description of the item or service, a unique invoice ID number and the purchase date. You should track invoices and income in real-time. This will enable you to determine if and when you need to register for VAT and start paying that tax.
Before you launch your new freelancing business, you should prepare a financial management system. After all, you may need to start tracking expenses well before you make your first sale. This is because there are various startup fees associated with running a freelance business. These include setting up a workspace, lining up marketing, applying for a residence permit and more. Once your business is established and income starts rolling in, you need to keep track of finances. However, you may want to minimize the amount of time and energy that you spend managing this aspect of your business.
At Xolo, we know how stressful it can be to monitor and track your income and expenses. We want to make this aspect of your operations as easy as possible for you to manage. Through Xolo Go, you can conveniently manage many key aspects of the financial side of your business. For example, Xolo Go offers convenient digital payment methods with affordable credit card processing rates. We also have a streamlined invoice creation application that enables you to prepare a new invoice in a matter of minutes. Xolo Go also gives you full access to a comprehensive yet easy-to-understand dashboard that lets you view your financial status in real-time.
Before you start your freelancing business in Iceland, you must determine which business structure is right for you. An individual company is most popular among freelancers because there are minimal setup requirements and no additional tax reporting and payment rules. If you plan to use a special name for your business, you simply need to register that name. Do you plan to hire employees to support your business activities? An LLC may be right for you in that case. However, there are more significant setup and taxation requirements for an LLC.
Now that you know more about how to become a freelancer in Iceland, you may be ready to walk through the steps. Compared to other European countries, the process to launch your freelancing business in Iceland is relatively easy to do, but it can vary based on your field or profession. What are the steps that you need to follow to register to freelance in Iceland?
Are you interested in running an Iceland freelance business from another location? Through Xolo Leap, you can use e-Residency to establish and manage your new business from anywhere you choose.
Being a freelancer in Iceland may seem like a distant dream right now, but the reality is that this could be your life soon. The process for setting up a freelance business in Iceland is straightforward, and most steps can be done quickly and without hassle. Once the steps have been completed, you are free to start looking for work as a freelancer in Iceland.
At Xolo, we pave the way for freelance individuals like you to enjoy the lifestyle you dream of. Freelancing in Iceland can improve your life and take your career to the next level, but you understandably want to take advantage of all of the resources available to you. Xolo Go and Xolo Leap are excellent solutions that can streamline your efforts to set up and manage your business. To start your journey as a freelancer in Iceland, learn more about our products and reach out to us today.