Before proceeding with the registration of a company in Iceland, it’s crucial to have a clear understanding of the various business structures available. Fionza Consultants will work closely with you to comprehensively assess your business needs and recommend the most suitable business entity in Iceland.
The choice of business structure significantly impacts various aspects, including daily operations, taxation, personal asset protection, and more. Selecting the right business structure is essential to strike the right balance between legal safeguards and benefits. Your chosen structure will affect tax liabilities, fundraising capabilities, administrative requirements, and personal liability.
1. Sole Proprietorship or Individual Company:
A sole proprietorship is a business operated by a single individual. It offers simplicity and independence to the owner. However, the owner assumes direct and unlimited liability, making it less suitable for large businesses with substantial risks.
2. Limited Liability Company (Private Limited Company – Einkahlutafélög (ehf.)):
A private limited company is a common choice for foreign investors in Iceland. Directors are not personally liable for the company’s debts beyond a specified amount of liability insurance. Requirements include at least one member and manager, with specific residency criteria. Establishing an LLC in Iceland offers advantages such as low startup costs and enhanced privacy protection.
3. Public Limited Company (Hlutafélög (hf.)):
This business form is used by larger companies seeking capital from multiple investors. Requirements are similar to private limited companies but stricter in some aspects. A Public Limited Company must have at least two shareholders and a board of directors with specific residency requirements.
4. Partnerships (Sameignarfélög (sf.)):
Partnership companies require at least two partners, who can be individuals or legal entities. All partners have direct and unlimited liability for the company’s obligations. Initial costs are low, and the legal framework is relatively simple.
This business form combines aspects of partnerships and private limited companies, with at least one owner assuming unlimited liability. It has gained popularity due to favorable dividend taxation and fund distribution regulations.
6. Private Foundations:
Private foundations are established with specific commitments and serve unique purposes, often associated with nonprofit organizations or charities.
Foreign companies can establish branches in Iceland, subject to the same conditions as local companies. Branches can engage in the same activities as the parent company but require registration and a resident manager.
8. Representative Office:
Representative offices are non-commercial entities primarily engaged in promotional activities.
Choosing the right business structure in Iceland is a critical decision, and Fionza Consultants can provide tailored guidance to ensure your business aligns with your goals and complies with local regulations. Contact us for comprehensive assistance with your Iceland business registration needs.