Capital income is the income individuals earn from assets, outside of any business activity. In Iceland, an individual's gains from selling CryptocurrencyCryptocurrencyA digital currency secured by cryptography and recorded on a shared ledger, with no bank or government issuing or controlling it. count as capital income, and 22% capital income tax is paid on them. The Icelandic term is fjármagnstekjur.
What counts as capital income?
Skatturinn, the Icelandic tax authority, lists among other things:
- interest, for example on bank deposits and bonds
- dividends from shares
- capital gainsCapital gainsThe profit from selling an asset for more than it cost you; for individuals in Iceland, gains on crypto are taxed as capital income., for example from selling crypto
- rental income, under certain conditions
A capital gain is the difference between the sale price and the cost basisCost basisWhat an asset cost you, meaning the purchase price plus commission. A capital gain is the sale price minus the cost basis.. It can arise when you sell for krónur, but also when you swap one crypto for another or pay with crypto.
How is it taxed?
- The rate is 22%. It has been unchanged since 1 January 2018.
- No municipal tax. Municipal tax (útsvar) is not charged on capital income, and it doesn't affect which income tax bracket your wages fall into. It is, however, included when interest relief (vaxtabætur) and child benefit (barnabætur) are calculated.
- Paid afterwards. Tax on interest and dividends is usually withheld at source. Tax on capital gains, by contrast, is paid afterwards, when tax is assessed, after you have declared the gain on your tax returnTax returnThe yearly report to Skatturinn on last year's income and your assets and debts at year end. Crypto must be declared, even if you sold nothing..
- The allowance doesn't cover crypto. The capital income allowance of ISK 300,000 per person applies to interest, and to dividends and gains on shares in listed companies.
If your crypto trading counts as a business, the gain is taxed as business income. Skatturinn generally considers it likely, though, that individuals investing in crypto in their own name are outside business activity.
Read more on Skatturinn's page on capital income tax (in Icelandic). Talk to your accountant or Skatturinn about your own situation.
Everything in Myntkaup Learn is written and regularly reviewed by the Myntkaup editorial team. It is for education and is not investment advice. Editorial policy. Updated 18 October 2026.