Fully Managed Payroll in Iceland.
No admin. No guesswork. Just accurate payments and expert support just a phone call away.
TopSource rated 5/5 by our customers
Every Payslip Filed. Every Question Answered.
Icelandic payroll requires careful attention. With mandatory pension fund contributions, union fees, and progressive income tax managed through the Directorate of Internal Revenue (RSK), compliance demands accuracy. Employers must also navigate collective bargaining agreements, which often set sector‑specific rules for wages and benefits, adding another layer of complexity.
Our specialist‑led services and payroll platform make it simple to run accurate, compliant payroll in Iceland. And whenever questions arise, your dedicated support team is just a phone call away.
So you can focus on growing your business, not Iceland’s intricate payroll rules.
TopSource runs it as part of our global payroll services.
More than a payroll platform
Simplified Payroll
Dedicated Support
Access to Expertise
Sync with your HR Systems
“Their expertise and understanding of the unique hiring, payment, and human resource practices in each country has been nothing short of outstanding. Our Client Success Manager, has done just that … ensured our success. Her availability and willingness to engage on a personal level has made all the difference.”
“Excellent service, especially from our account manager who has gone above and beyond to help us use the platform effectively. Our manager, significantly simplifies my workload. It is like having your own TopSource HR representative on your team.”
“TopSource has been our go-to resource for international hiring. They are responsive, thorough, respectful and knowledgeable. The Client Success team has provided us with the utmost customer service, and the more we use TopSource, the more, it gives us access to more resources and knowledge.”
Other services
Accelerating your growth in Iceland and beyond
TopSource goes far beyond payroll, acting as your end-to-end partner in global workforce management. From Employer of Record (EOR) services and seamless entity setup to localized accountancy and fractional HR support, we cover every aspect of international employment.
Meet our experts for Iceland
Whether you’re entering the market or scaling operations, our specialists provide the insight and guidance you need to succeed in one of the world’s most dynamic and regulated employment landscapes. With TopSource, you’re backed by real experts, every step of the way.
Beyond a payroll serviceA globalization accelerator
Payroll platform
Global payroll simplified
Your intuitive hub for paying global teams. Simple, powerful, and designed to scale with you — no complexity, just clarity.
Audit
Eliminate barriers to growth
Avoid compliance issues across your global workforce and uncover opportunities to improve profitability. On a quarterly basis we’ll help you audit your global talent strategy to ensure it aligns with your business goals.
Intelligence
Build a data-driven talent strategy
Grow confidently and profitably with access to the latest TopSource insights & data on hiring markets, salary benchmarking & benefits.
Advisory
Expert guidance that turns complexity into clarity.
Whether you’re managing a global acquisition or entering a new market, you get clear guidance to navigate complex decisions, avoid delays, and accelerate your global expansion.
Looking at other markets too?
We help organizations with employ and pay teams in over 180 countries.
Iceland payroll: frequently asked questions
A specialist provider runs your payroll in Iceland end to end — calculating gross-to-net pay in Icelandic króna (ISK), withholding staðgreiðsla (pay-as-you-earn withholding of state income tax and municipal tax), applying social security charge (tryggingagjald) and mandatory pension fund contributions where required, and filing and remitting to Iceland Revenue and Customs (Skatturinn) by the local deadlines. You keep managing your team while the compliance and administrative burden shifts to the provider, so you avoid penalties and stay current with local rules.
staðgreiðsla (pay-as-you-earn withholding of state income tax and municipal tax) is withheld from each employee’s pay and remitted to Iceland Revenue and Customs (Skatturinn). A provider applies the correct brackets, reliefs and deductions and files the required returns on time; resident and non-resident employees can be taxed differently, so accurate set-up matters.
Payroll in Iceland includes social security charge (tryggingagjald) and mandatory pension fund contributions, funded by employer and (where applicable) employee contributions. Pension fund membership is compulsory for employees aged 16 to 70. A provider registers your staff, calculates each contribution and remits it with the payroll cycle so nothing is missed.
On top of gross salary in Icelandic króna (ISK), employers typically fund their share of social security charge (tryggingagjald) and mandatory pension fund contributions and any statutory levies or end-of-service entitlements. A personal tax credit reduces the monthly withholding for each employee. Exact rates change with legislation, so a provider keeps your cost calculations accurate as the rules update.
Employers report and remit payroll deductions and contributions to Iceland Revenue and Customs (Skatturinn) and the relevant social bodies on the local statutory calendar. Missing a deadline triggers penalties, so a provider manages the full filing and payment schedule on your behalf.
To hire and pay staff directly you generally need a registered entity in Iceland plus the associated tax and social-security registrations, which takes time to set up. Alternatively, an Employer of Record (EOR) already has a compliant local entity and can employ, payroll and onboard your workers in Iceland without you incorporating.