James, maybe inappropriately, I was referring to Private Limited Companies in Iceland, which should correspond to UK’s LTDs.

Regarding your PLC question — I’ll try to explain in a few words. Originally I worked as a self-employed freelancer, i.e. used my own “kennitala” (social insurance number), whichwas s perfectly fine. However, at some point in the last few years, taxes were lowered on corporations/businesses, so it became advantageous to establish a company.

Let’s say I earned 100,000 krónur. As a freelancer, I paid regular income tax of that entire sum. However, as a plc. I perhaps paid myself 70,000 kr. as a salary, and the remaining 30,000 was revenue for the company, which was taxed at a lower rate. HOWEVER, at the end of the day it didn’t make that much of a difference, because in any case I had to pay capital gains tax on the dividends paid from the revenues of the company, which came pretty close to income tax levels — but not quite. (That capital gains tax has now been raised from 10 to 18% so it’s even less advantageous.)

So the tax incentive was part of it — the other part was simply that, as a company, I had more options open for tax write-offs. Part of it was also psychological – it was a lot more professional towards clients to work as a company than as an individual.

The advisor I consulted at the time suggested PLC, but in fact I could just as easily have established an LP (limited partnership) — which would have been a lot better for me now, since the new laws do not affect LPs. However, I could not have known that then.

As for your final question, I debated whether to just go back to working as a self-employed freelancer, or to establish the LP. I decided to establish the LP and did so the day before yesterday.

Hope that helps. Good luck with your move — and I think you’re right to just start off as a freelancer with your own social insurance number. You can always establish a company later, if you think that would work better for you.

Being a foreigner, I will likely need the help of an accountant at least at the very beginning (rsk.is has good info, but some documents are still only in Icelandic), to understand how to do things by ourselves later. But believe me, overall there is no comparison with the nightmare that self-employement has always been in Italy.

Thanks again, you cannot imagine how helpful you were

Oh, and happy new year also to you, to Alda, and all people in Iceland! We hope to be there with you next year!

As a journalist my business is VAT-free, so I don’t know how PLC and being self employed differ from each other regarding the VAT system.

Hopefully this helped you a bit

Farsaelt komandi ár!

*) It’s a bit complicated to explain here how the insurance fee (9 %) and the different pension fees (8 % + 4 %) are being calculated (too much excel-stuff), but when I say I pay them from what comes in it gives an idea. (My other costs are pretty small so basically my turnover is my salary.)

1. There will be tremendous expansion of black market.
2. Media will not touch issue until it’s smell is undeniable to everyone.

We are two young web developers/mobile phone developers that are planning to move to Iceland from an EU country. I know it may sound like a crazy move, but we love Iceland so much for a lot of different reasons. This said, the tax increases seem something we need to take into account seriously before doing the move. We had a lot of help from rsk.is, but we are still trying to figure things out.

Anyhow, I do not understand one thing in your post; leaving aside limited liability, which in some cases is not an immediate necessity for a low risk business, what are the advantages of working in a PLC as the only owner/employee vs working as a freelancer, as you did in the past?

Starting up as freelancers, isn’t taxation limited to social security contributions and the personal income tax?

If you could expand a bit on the matter I would be immensely grateful. Also keep us posted about what you decided to do in the light of these new taxes!