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.

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”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.