Global Tax Alert (News from Transfer Pricing) | 11 February 2014

Iceland introduces new transfer pricing rules

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On 1 January 2014, the Icelandic Parliament introduced new transfer pricing rules. The rules are now regulated by Article 57 of Act No. 90/2003 on Income Tax.

According to the law, tax authorities may assess and adjust pricing between related parties. The pricing methods are based on the OECD Guidelines. The provision does not specify any one method or prioritize the methods in any way.

Legal entities that have turnover or total assets exceeding ISK1 billion (approximately US$8.6 million) in the previous year are required to document the nature and extent of transactions with related parties, including reasoning for transaction prices and other terms. The duty exists as of the beginning of the next operational year.

The Government shall issue a regulation with additional guidelines on the subject of documentation and pricing. The regulation has not yet been introduced. Future Alerts will cover developments.

For additional information with respect to this Alert, please contact the following:

Ernst & Young ehf, Reykjavík
  • Ásta Kristjánsdóttir
    +354 595 2500
    asta.kristjansdottir@is.ey.com
Ernst & Young LLP, Scandinavian Tax Desk, New York
  • Martin Norin
    1 212 773 2982
    martin.norin@ey.com

EYG no. CM4171