Please note that this press release was corrected 7 December 2022 at 11:30. Environmental taxes in 2021 were 55,244 million ISK instead of 54,346 million ISK as stated in the previous version.

In 2021, revenues from taxes and social contribution were 1,139,766 million ISK, with 55,244 million ISK (4.8%) classified as environmental taxes. In Iceland, households paid 59% of the environmental taxes in 2020. This ratio is among the highest in Europe. Statistics Iceland releases now for the first time data on environmental taxes in Iceland.

According to Eurostat, a tax is considered an environmental tax if the tax base has a proven, specific negative impact on the environment. To make international comparison easier, Eurostat has released a list of environmental relevant tax bases for both goods and services. The revenue of environmental taxes is not necessarily earmarked for environmental purposes.

*Different categories of environmental taxes
There are four categories of environmental taxes; energy taxes, transport taxes, pollution taxes and resource taxes.

Energy taxes are levied on energy production and use. Taxes on petrol, diesel and other energy sources for transport as well as carbon dioxide taxes are categorised as energy taxes. Government revenue from sales of emissions permits are also treated as energy tax. Taxes on production and use of energy are categorised as energy tax whether the energy is from a renewable source or not.

Transport taxes are taxes related to the ownership and use of motor vehicles, excluding taxes on fuel.

Pollution taxes are taxes on pollutant emission, excluding greenhouse gases. Tax on collection, treatment and disposal of waste is also treated as pollution tax.

Resource taxes include taxes on harvesting (e.g. hunted and fished species), landscape changes and extraction of raw material. Many products are taxed with value added tax in addition to the environmental tax, but value added tax is never treated as environmental tax.

Environmental tax revenue in Iceland is primarily from energy taxes with minority revenue resource taxes.

Taxes on owning and operating cars weigh a lot
In 2021, taxes on fuel weighed 46% of all environmental taxes and other taxes on owning and operating cars weighed much as well.

There are three environmental taxes on petrol from pump; excise duties on petrol and oil, specific excise on petrol and carbon tax. There are two environmental taxes on diesel: specific excise on oil and carbon tax. All these taxes are collected as fixed amount per liter fuel.

„Taxes on cars“ is collected twice a year as a fixed amount in addition to an amount that is emission dependent. „Excise duties, automobiles“, one-off payment collected when cars are imported, is another example of an environmental tax.

Fishing fee is not a tax
Fishing fee („veiðigjald“) is not considered a tax but a property income that owners of fishing vessels pay the government. Fishing fee is 33% of a base for each marine species where the base depends on the value of catch after fixed and variable cost has been deducted according to a method listed in laws on fishing fee. Considerable variation has been in the amount of fishing fee over the last few yeas reflecting variation in profit of the payers.