Iceland: Reviewing Property Para-Fiscal Charges In Iceland

Last Updated: 14 March 2017
Article by Ying Chen

The common understanding is that the four para-fiscal charges effective in Iceland apply only on the Property and Fire lines, and the basis of calculation is sum insured. However, there are some other considerations.

There have been a number of enquiries to our IPT helpdesk in recent months regarding the four para-fiscal charges effective in Iceland:

  • Building safety fee
  • Fire valuation fee
  • Catastrophe fee
  • Avalanche prevention tax.

The common understanding is that these taxes apply only on the Property and Fire lines, and the basis of calculation is sum insured. However there are some considerations as to whether these levies/taxes apply to only the building value, or building plus contents (movables) value, and whether there should be a split between the fire element and non-fire element for tax purposes.

Fire valuation fee

First of all, we need to understand that in Iceland, building owners are obliged to insure all of their buildings against fire. The meaning of "buildings" here is defined in the law as the whole or part of a building that is intended for residential, commercial, storage or other use and is permanently attached to the land. This mandate thus forms a compulsory insurance against fire (compulsory fire insurance) for the insurance market, and the sum insured reflects the material value of the property that can be destroyed in the fire; namely the replacement value of the property. The assessment on obtaining the sum insured value against fire is performed by the Iceland National Registry (INR) upon request, and a fee of 0.00021% is charged on the assessed sum insured value. This is the fire valuation fee.

It is not difficult to conclude that the sum insured does not include the value of building content or movables. The official website of the Iceland National Registry states that compulsory fire insurance covers only a property, but not the building's contents or the financial loss thereafter. Property owners need to insure their contents separately if they wish to cover the content against fire. And this cover (building content/movables) is not subject to the fire valuation fee, as no assessment service is required and delivered.

Catastrophe Fee

This is a premium paid to the Iceland Catastrophe Insurance (ICI) which was founded as a public undertaking by a special Act of the Parliament. This is a statutory insurance that covers risks against earthquakes, volcanic eruptions, and floods etc. Insurance companies should calculate the sum insured of the fire insurance policies they underwrite and pay a percentage of this amount as premiums to the ICI. To work out a correct calculation, the definition of the fire insurance is vital.

Clearly, the compulsory fire insurance we mentioned above is a pure fire insurance policy. Sum insured, ie. the replacement value provided by the INR, is the basis of calculation for the catastrophe fee and a 0.025% rate applies. In the same vein, the replacement value doesn't include the value of building contents/movables. However, if any amount covered exceeds the replacement value and it is covered against fire risk, the excess is also subject to the catastrophe charge, although the excess amount or policy is not considered compulsory. Therefore, if the building content/movables are also covered against fire, the total sum insured will be charged.

Avalanche prevention tax

This is a contribution to the avalanche and earth-slide fund. It is collected to support the fire engines and fire protection facilities of Iceland. It follows the same logic as the catastrophe fee in terms of basis of calculation. The tax rate is currently 0.03%.

Building safety fee

The building safety fee functions as a fire brigade charge seen in other countries. It is collected to support the fire engines and fire protection facilities of Iceland. This fee is applicable only in the case of fire coverage. Therefore, strictly speaking, if risks covered can be identified as non-fire risks, the sum assured of which should not be subject to the fee. For example, if business interruption is covered where fire peril is excluded, the sum assured of business interruption is not charged. The tax rate is currently 0.0045%.

Talk to us

Based on the analysis, the fire valuation fee is charged only on the compulsory fire insurance, and the basis of calculation is the property replacement value stipulated by the authority. Any excess value of fire risk is not included into the charge. In IPT Quote, TMF Group's online calculation tool, the system clarifies the definition of sum assured which is used as a basis of calculation of the fee. 

For the fire valuation fee, the sum assured that is used to calculate the fee is the official registered value of the building. It doesn't need to be equal to the sum assured that is covered in the insurance policy; and the sum assured for contents covered is not subject to the fee.

For the catastrophe fee and the avalanche prevention tax, if contents are not insured, the tax base is the same as that of the fire valuation fee. Namely, the official registered value of the building covered. However, if contents are also insured, the sum assured for contents need to be included in the basis of calculation. This means the tax base for these two taxes is defined as; official registered value plus the sum assured of the contents.

For the building safety fee, a calculation mechanism is configured to facilitate users in splitting fire element value and non-fire element value. For business interruption cover including fire risks, the sum assured for business interruption should be split out and no tax should be due on this amount.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
3 Oct 2019, Webinar, Rotterdam, Netherlands

To view this Webinar in full click here

24 Oct 2019, Business Breakfast, London, UK

Join TMF Group and ACCA for breakfast and a briefing session dedicated to the latest VAT changes and how they affect the UK.

21 Nov 2019, Conference, Shanghai, China

Retail remains a significant growth opportunity even as GDP slows, but the challenge of recruiting and retaining quality staff must never be underestimated and managing these issues successfully can define the winners and losers. TMF Group’s 2019 Annual Retail Summit in Shanghai brings together industry professionals to share opinions on the key differentiators that can lead to achieving growth targets and maintaining momentum for your retail business in China.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions