Iceland
Measures taken in response to coronavirus (COVID-19) pandemic
Adoption date |
Type of measure |
Beneficiaries' sector specification |
Description of measure |
21/04/2020 |
Direct grants |
Non-financial corporations |
Closure subsidies to compensate companies forced to halt their operations for public health reasons. |
21/04/2020 |
Public guarantees |
Non-financial corporations |
Support loans for SME's affected by the crisis. Non-indexed loans with a full government guarantee (up to 10 m.ISK, 85% guarantee of loan amount above 10 m.ISK up to 40 m.ISK), offered at the Central Bank of Iceland's seven-day term deposit rate. |
21/04/2020 |
Tax reliefs |
Non-financial corporations |
Companies are allowed to carry 2020 losses forward to offset 2019 income tax. |
21/03/2020 |
Tax deferrals |
Non-financial corporations |
Companies will be given the opportunity to defer up to three payments of payroll taxes until next year, upon fulfilment of certain requirements. |
21/03/2020 |
Tax deferrals |
Non-financial corporations |
Prepayments of corporate income taxes are defered until October. |
21/03/2020 |
Tax reliefs |
Banking sector |
The bank tax reduction previously passed into law, which was to take effect in increments from 2021-2023, will be expedited and will take effect in full in 2021. |
21/03/2020 |
Tax reliefs |
Non-financial corporations |
Tax on overnight stays (bed-night tax) will be suspended temporarily from 1 April 2020 through 31 December 2021. Due dates for payments from January through March 2020 will be postponed until February 2022. |
21/03/2020 |
Other measures of fiscal nature |
Households |
All individuals who own third-pillar pension savings (private pension savings) can withdraw up to 12 m. ISK over a 15-month period. Each monthly payment can range up to 800 thousand ISK and will be taxed as regular income. |
21/03/2020 |
Tax reliefs |
All non-financial sector |
Reimbursement of value-added tax on labour for home maintenance, renovation or construction work. |
15/03/2020 |
Direct grants |
Households |
Partial unemployment benefits, allowing workers to claim up to 75 per cent of unemployment benefits. Self-employed and freelancers are also eligible for the benefit. The support was extended to the end of May 2021 but from July onwards, the maximum benefit claim will be lowered down to 50 per cent. |
21/03/2020 |
Public guarantees |
Non-financial corporations |
State-backed bridging loans for companies. The Treasury will issue guarantee for up to 70% of new operating loans to companies that are suffering loss of revenue as a result of the COVID-19 pandemic. Guaranteed loans may range up to a maximum of two times the company's annual wage expense for the prior year and are limited to companies whose wage expense accounted for at least 25% of the total expense in 2019. |
28/04/2020 |
Direct grants |
Non-financial corporations |
Support to pay a portion of salary costs during employee notice periods. Support for up to three months plus vacation pay but government support will be capped at 85%. Available to companies that have suffered at least a 75% loss in revenue and are forcasting continued revenue losses at least through 2020. Theses employees will have priority access to jobs when business activities resumes. |
23/03/2020 |
Private moratoria |
Non-financial corporations |
Companies can apply to defer loan payments for up to six months. Available to companies in healthy operations and suffering a temporary loss of income. |
18/08/2020 |
Public guarantees |
Non-financial corporations |
A guarantee of a credit facility to Icelandair amounting to up to 120 m.USD (maximum of 20 m .USD per 30 days). The guarantee is subject to a successful share offering of Icelandair Group. |
29/09/2020 |
Tax reliefs |
Non-financial corporations |
Social security tax tamporarily lowered by 0,25%. |
05/11/2020 |
Direct grants |
Non-financial corporations |
Closure subsidies to compensate companies forced to halt their operations for public health reasons. |
05/11/2020 |
Direct grants |
Non-financial corporations |
Subsidies for companies facing a collapse in revenues due to the pandemic. Granted for up to five full-time equivalents, 400 (500) thousand per month for each equivalent if revenues have dropped between 40-70% (>70%). |
16/12/2020 |
Direct grants |
Non-financial corporations |
Resilience subsidies for companies suffering at least a 60% loss of revenue. |
14/12/2020 |
Other measures of fiscal nature |
Households |
Special supplement over and above basic umeployment benefits. Moreover, a December supplement will be paid to confirmed job-seekers. |
12/03/2021 |
Other measures of fiscal nature |
All non-financial sector |
Employment grants. Multiple measures that aim to create up to 7000 temporary jobs in collaboration with businesses and governmental agencies. |
23/12/2020 |
Tax deferrals |
Non-financial corporations |
Companies will be given the opportunity to defer up to two payments of payroll taxes during 2021 until next year, upon fulfilment of certain requirements. |
17/05/2021 |
Direct grants |
Non-financial corporations |
Resilience subsidies extended through November 2021. Now also available for companies suffering between 40%-60% drop in revenue from the same month in 2019. The lower threshold (40%) applies retroactively to November 2020. |
18/03/2020 |
CCyB |
Banking sector |
The countercyclical capital buffer reduced from 2% to 0% with immidiate effect. The buffer will not be increased in the next 12 months. With the reduction, the Central Bank urged financial institutions to take the high level of economic uncertainty into consideration when taking decisions on divedend payments and stock buybacks in the coming term. |
08/04/2020 |
Credit facilities |
Banking sector |
Special temporary collateralised credit facility with an expanded definition of eligible collateral |
11/03/2020 |
Other measure |
Banking sector |
Average reserve requirement lowered for deposit institutions from 1% to 0%. The fixed reserve requirement remains unchanged at 1%. Minimum reserves can now be used in cases of liquidity outflows during stressed times. |
23/03/2020 |
Asset purchase programme |
All sectors |
The CBI decided that it would begin direct purchases of Treasury bonds in the secondary market. The purchases will amount to up to 150 B. ISK. |
27/03/2020 |
Market liquidity |
Banking sector |
Offerings of Central Bank's one-month term deposits significantly reduced. |
21/04/2020 |
Other labour market measure |
Households |
Funds, amounting to 2.2 B. ISK, set up to support the creation of over 3,400 summer jobs for students. Innovation among young entrepreneurs will also be supported. |
21/04/2020 |
Other measures of fiscal nature (w/o fin. stab. relevance) |
Non-financial corporations |
Additional contributions to companies investing in growth. Reimbursemnet ratios and caps on R&D will be increased. |
20/03/2020 |
Other measure |
Banking sector |
As the owner of two of Iceland's three largest banks, the Government decided to overlook its required return on equity and halt dividend payments during the year 2020. |
21/03/2020 |
Other labour market measure |
Households |
A one-off child benefit payment will be made on 1 June 2020 to all families with children under the age of 18. |
21/03/2020 |
Other measures of fiscal nature (w/o fin. stab. relevance) |
Non-financial corporations |
The Government, along with local municipalities will initiate a special project, aimed at increasing investment in transport, public construction and technology infrastructure. Government contributions to research and science will also be increased. The additional public investment launched this year will amount to 20 B. ISK. |
21/03/2020 |
Direct grants (w/o fin. stab. relevance) |
Non-financial corporations |
All Icelanders will receive a digital gift certificate for travel in Iceland. The Govenment will also allocate 1.5 B. ISK to a marketing campaign featuring Iceland as a travel destination. The campaign will be implemented when air travel resumes. |
21/04/2020 |
Tourism sector measure |
Non-financial corporations |
A fund has been set up where travel agencies can apply for loans to reimburse cancelled trips as a result of the pandemic. |
20/05/2020 |
Market liquidity |
Banking sector |
One-month term deposits will no longer be available. |
09/09/2020 |
Other measure |
All sectors |
A regular programme of selling foreign currency in domestic FX market. The Bank is prepared to sell up to 240 m.EUR (4% of current FX reserves) through year end 2020. The programme has continued in 2021. |
25/08/2020 |
Other labour market measure |
Households |
Right to receive income-related unemployment benefits extended from three to six months. |
25/08/2020 |
Other labour market measure |
Households |
Job applicants eligible to begin studies while receiving full unemployment benefits for one semester. |
06/10/2020 |
Other measures of fiscal nature (w/o fin. stab. relevance) |
Other |
Increased funding, amounting to 4.8 b.ISK, from the Government to municipalities. |
29/12/2020 |
Other measure |
Banking sector |
Adaptation period for minimum liquidity ratio in ISK lenghtened by one year. |
17/05/2021 |
Other labour market measure |
Households |
A one-off child benefit payment will be made on 1 June 2021 to all families receiving income-linked child benefits. |
29/09/2021 |
CCyB |
Banking sector |
The countercyclical capital buffer increased from 0% to 2%. The decision will take effect after twelve months. |
30/06/2021 |
Borrower-based measure |
All sectors |
Maximum loan-to-value ratio (LTV) for consumer mortgages lowered from 85% to 80%. |
29/09/2021 |
Borrower-based measure |
All sectors |
A 35% maximum debt service-to-income ratio (DSTI) implemented (40% for first-time buyers). |
15/06/2022 |
Borrower-based measure |
All sectors |
Maximum LTV for first-time buyers decreased from 90% to 85%. |
15/06/2022 |
Borrower-based measure |
All sectors |
A reference interest rate added to the DSTI calculation, minimum 3% for indexed mortgages ad 5.5% for non-indexed mortgages. Maximum loan maturity used in calculations for indexed loans shortened to 25 years. |