Iceland, located in the North Atlantic, is a small island nation with an open economy heavily dependent on international trade. As a member of the European Economic Area (EEA), Iceland benefits from close economic integration with the European Union (EU), although it is not an EU member. Iceland implements tariffs on imports from non-EEA countries, while many goods from EEA and European Free Trade Association (EFTA) countries are exempt from tariffs. Iceland’s import tariffs are structured according to the Harmonized System (HS) of classification and vary depending on the type of product and its country of origin.
Tariff Structure in Iceland
Iceland’s tariff system consists of the following types of duties:
- Ad Valorem Duty: A percentage of the value of the imported goods.
- Specific Duty: A fixed amount based on the quantity, weight, or volume of the goods.
- Combined Duty: A mix of ad valorem and specific duties applied to certain goods.
Iceland applies tariff exemptions or reduced tariffs for many goods under its EEA and EFTA agreements, while products imported from non-preferential countries are subject to the full rate of duty. In addition to customs duties, imports may be subject to Value-Added Tax (VAT) and excise duties on specific products, such as alcohol, tobacco, and fuel.
Tariff Rates by Product Category
1. Agricultural Products and Foodstuffs
Agriculture in Iceland is relatively limited due to the country’s harsh climate and rugged terrain, meaning Iceland imports a significant portion of its food supply. Import tariffs on agricultural products are generally higher, reflecting the need to protect domestic producers.
1.1. Fruits and Vegetables
- Fresh fruits: Import tariffs for fresh fruits typically range between 10% and 30%, depending on the type of fruit. Tropical fruits such as pineapples and mangoes tend to have higher tariffs.
- Vegetables: Fresh and frozen vegetables are subject to tariffs ranging from 10% to 20%, depending on the product type and seasonality.
- Processed fruits and vegetables: Canned or frozen fruits and vegetables generally face tariffs between 10% and 25%, depending on the product.
Special Import Duties:
- Bananas from non-EEA countries: Bananas are subject to a specific tariff of approximately €75 per tonne.
- Seasonal tariffs on vegetables: Higher tariffs may be applied to certain vegetables during the Icelandic growing season to protect local farmers.
1.2. Dairy Products
- Milk: Milk imports face tariffs of 20% to 40%, depending on whether the product is fresh, powdered, or processed.
- Cheese: Cheese imports are generally taxed at 10% to 30%, depending on the variety and processing.
- Butter and cream: Import duties on butter and cream range from 20% to 35%.
Special Import Duties:
- Cheese from non-preferential countries: Cheese from non-EEA countries without trade agreements may be subject to additional duties or quotas.
1.3. Meat and Poultry
- Beef: Imports of beef are subject to tariffs ranging from 20% to 50%, depending on whether the product is fresh, frozen, or processed.
- Pork: Pork products face tariffs of 15% to 30%, depending on the type and processing.
- Poultry: Poultry imports are subject to tariffs of 20% to 35%, with higher rates applied to processed products.
Special Import Conditions:
- Meat from EEA/EFTA countries: Tariff reductions or exemptions may apply to meat products imported from EEA or EFTA countries under preferential trade agreements.
2. Manufactured Goods
Manufactured goods form a significant part of Iceland’s imports, as the country has a small industrial base and relies on foreign products for a wide range of goods, from textiles to machinery.
2.1. Textiles and Apparel
- Cotton textiles: Cotton fabrics and garments face import tariffs of 10% to 20%, depending on the product type and level of processing.
- Synthetic textiles: Synthetic fabrics and garments are generally subject to tariffs between 10% and 25%.
- Footwear: Imports of footwear are taxed at rates between 15% and 30%, depending on the material (leather, synthetic, etc.) and intended use.
Special Import Duties:
- Textiles from preferential trade partners: Textiles imported from countries with preferential trade agreements, such as the EEA, may be eligible for reduced or zero tariffs.
- Textiles from non-preferential countries (e.g., China): Higher tariffs or additional duties may be applied to protect domestic industries.
2.2. Machinery and Electronics
- Industrial machinery: Machinery for agricultural, construction, and industrial purposes typically faces 0% to 5% tariffs, as these goods are considered essential for economic growth.
- Consumer electronics: Imports of televisions, radios, mobile phones, and other consumer electronics are subject to tariffs of 5% to 15%, depending on the product.
- Computers and peripherals: Computers and related equipment generally face 0% tariffs due to their classification as essential goods for technological development.
Special Import Conditions:
- Electronics from non-preferential countries: Electronics from non-EEA/EFTA countries may face higher tariffs, especially if there are no applicable trade agreements.
2.3. Automobiles and Automotive Parts
- Passenger vehicles: Imported vehicles are subject to 25% tariffs, reflecting their classification as consumer goods.
- Trucks and commercial vehicles: Commercial vehicles such as trucks and vans are typically taxed at rates of 10% to 15%.
- Automotive parts: Imports of automotive parts and accessories are subject to tariffs of 5% to 10%, depending on the type and use of the product.
Special Import Duties:
- Luxury cars: Higher tariffs may apply to luxury and high-performance vehicles, particularly those with large engines.
- Used vehicles: Restrictions and higher tariffs may apply to the importation of used vehicles, depending on their age and environmental impact.
3. Chemical Products
Iceland imports a wide range of chemical products for both industrial and domestic use. The tariffs on these products vary depending on their classification and intended use.
3.1. Pharmaceuticals
- Medicinal products: Essential medicines and pharmaceutical products are typically subject to 0% tariffs, ensuring affordable access to healthcare.
- Non-essential pharmaceuticals: Non-essential pharmaceutical products, such as vitamins and supplements, face tariffs of 5% to 10%.
Special Import Duties:
- Pharmaceuticals from non-preferential countries: Some medicinal products from non-preferential countries may be subject to higher tariffs if no trade agreements are in place.
3.2. Plastics and Polymers
- Raw plastics: Imports of raw plastic materials, such as polymers used in manufacturing, are taxed at 5% to 10%.
- Finished plastic products: Plastic products such as containers, packaging, and consumer goods face tariffs ranging from 10% to 20%, depending on the type and use.
4. Wood and Paper Products
While Iceland has some domestic production of wood and paper products, the country imports most of its finished wood and paper goods.
4.1. Lumber and Timber
- Raw wood: Imports of unprocessed wood, such as logs and sawn timber, face 0% to 5% tariffs, encouraging the use of raw materials for local production.
- Processed wood: Imports of processed wood products, such as plywood and veneer, are subject to 10% to 20% tariffs, depending on the level of processing.
4.2. Paper and Paperboard
- Newsprint: Essential for the publishing industry, newsprint is typically taxed at 0% to 5%.
- Coated paper: Imports of coated or glossy paper products are subject to tariffs of 5% to 10%.
- Packaging materials: Paperboard and other packaging materials face tariffs of 10% to 15%, depending on the intended use.
5. Metals and Metal Products
Iceland imports a variety of metal products to support its construction, manufacturing, and energy sectors. The country also has an active aluminum industry, producing and exporting aluminum products.
5.1. Iron and Steel
- Raw iron and steel: Imports of raw iron and steel for industrial use are typically subject to 0% to 5% tariffs, depending on the level of processing.
- Finished steel products: Imports of finished steel products, such as beams, bars, and pipes, face tariffs of 5% to 10%, depending on their application.
5.2. Aluminum
- Raw aluminum: Iceland’s aluminum imports, particularly raw aluminum ingots, are generally subject to 0% tariffs, given the country’s involvement in the aluminum industry.
- Aluminum products: Finished aluminum products, such as cans, sheets, and consumer goods, are taxed at 5% to 10%.
Special Import Duties:
- Steel and aluminum from non-preferential countries: Imports of steel and aluminum products from non-preferential countries may face additional duties or anti-dumping tariffs.
6. Energy Products
Energy products, including both fossil fuels and renewable energy equipment, are critical to Iceland’s economy, which is heavily reliant on geothermal and hydropower.
6.1. Fossil Fuels
- Crude oil: Imports of crude oil and other fossil fuels are typically subject to 0% tariffs, given their importance to the country’s energy security.
- Refined petroleum products: Gasoline, diesel, and other refined petroleum products are subject to tariffs of 5% to 10%, with additional excise duties applied.
- Coal: Coal imports face 5% tariffs, depending on their use for industrial purposes.
6.2. Renewable Energy Equipment
- Solar panels: Imports of renewable energy equipment, such as solar panels, are subject to 0% tariffs, reflecting Iceland’s commitment to clean energy development.
- Wind turbines: Wind turbines and other renewable energy equipment are typically exempt from tariffs, as the country encourages investment in renewable energy infrastructure.
Special Import Duties by Country
1. European Economic Area (EEA)
As a member of the EEA, Iceland benefits from duty-free trade with other EEA member states, which includes all EU countries and the other EFTA members (Norway, Switzerland, and Liechtenstein). Goods imported from these countries generally face zero tariffs, provided they meet rules of origin requirements.
2. United States
Goods imported from the United States are subject to standard tariff rates, as Iceland does not have a free trade agreement with the U.S. However, some U.S. products may qualify for reduced tariffs under preferential trade arrangements in specific sectors, such as technology or energy.
3. China
China is one of Iceland’s largest trading partners, particularly for electronics, machinery, and consumer goods. Most goods imported from China are subject to the standard tariff rates, although Iceland and China signed a free trade agreement (FTA) in 2013, which reduces tariffs on certain goods, particularly seafood and industrial products.
4. Developing Countries
Iceland, as part of the EFTA, offers preferential tariff rates for goods imported from certain developing countries under the Generalized System of Preferences (GSP). This allows for reduced tariffs or duty-free access for specific products from developing nations, especially for agricultural goods and textiles.
Country Facts: Iceland
- Formal Name: Republic of Iceland (Lýðveldið Ísland)
- Capital City: Reykjavík
- Largest Cities:
- Reykjavík
- Kópavogur
- Hafnarfjörður
- Per Capita Income: $55,000 (2023 estimate)
- Population: 375,000 (2023 estimate)
- Official Language: Icelandic
- Currency: Icelandic króna (ISK)
- Location: Northern Europe, in the North Atlantic Ocean, situated between Greenland, Norway, and the British Isles.
Description of Iceland’s Geography, Economy, and Major Industries
Geography
Iceland is a small island nation located in the North Atlantic, known for its unique geological features, including volcanoes, glaciers, geysers, and hot springs. The country is geologically active, with regular volcanic activity and earthquakes. The landscape is dominated by rugged mountains, fjords, and vast lava fields, contributing to its sparse population distribution. Iceland’s location gives it access to rich fishing grounds and renewable energy resources, particularly geothermal and hydropower.
Economy
Iceland’s economy is highly developed and diverse, with major sectors including fisheries, tourism, renewable energy, and aluminum production. The country has one of the highest standards of living in the world, with a well-educated population and strong social welfare systems. Iceland’s economy is export-oriented, with seafood being a primary export, along with aluminum and renewable energy technology.
Iceland’s economic policy emphasizes sustainability, with a focus on clean energy and environmentally friendly industries. The country is almost entirely powered by renewable energy, and it has become a global leader in geothermal energy development.
Major Industries
- Fishing: The fishing industry is critical to Iceland’s economy, accounting for a significant portion of exports. The country exports fish products such as cod, haddock, and mackerel to markets worldwide.
- Tourism: Tourism has grown rapidly in recent years, driven by Iceland’s unique natural attractions, including geysers, volcanoes, waterfalls, and northern lights.
- Renewable Energy: Iceland is a leader in geothermal energy production, using it to power homes, industries, and greenhouses. The country also exports technology and expertise in this field.
- Aluminum Production: Iceland’s energy-intensive aluminum smelting industry is one of the largest in the world, relying on the country’s abundant geothermal and hydropower resources.
- Technology and Services: Iceland’s technology sector, particularly in software development and data storage, has seen significant growth due to the country’s reliable energy infrastructure and cool climate, which is ideal for data centers.
