With this change, Iceland will have four VAT rates on goods and services:
- The standard VAT rate of 25.5%
- The VAT rate of 14% on hotel and guestrooms and other accommodation services
- A reduced VAT rate of 7% applies to specific goods and services
- A VAT rate of 0% on certain services and goods (for example, exported goods as well as labor and services provided abroad)
Another VAT change is that effective 1 January 2013, movie tickets to Icelandic films are no longer exempt from VAT, but are subject to the standard VAT rate of 25.5%.
Effective 1 July 2013, the VAT rate on condoms, reusable diapers, and diaper fillers (custom 9619.0091) will be reduced from 25.5% to 7%.