Capital Control No More: Iceland Becomes an Attractive Offshore Destination

Tuesday this week is a glorious day for the people of Iceland; finally, after eight full years of hard work, Iceland is officially back on its feet after floored by the recession. The lifting of the capital control means that individual, corporations and pension funds can now have full access to the global capital markets.

But how did Iceland do it?

With the 2008 banking collapse as the tipping point, Iceland has undergone political and economical troubles. Failed in its negotiations on EU membership, defaulted its $85 billion loans, the collapse of its biggest banks, the capital control to prevent capital outflow, and the Icelandic Krona devaluation — to name a few.

Bailed out by the IMF’s $2.1 billion — along with loans from other Nordic countries totaled $2.5 billion — Iceland is gradually recovering. But of course, those alone won’t do much.

So, what changes have Iceland undergone to finally end the capital control?

1. The skyrocketing travel industry

According to BBC, 1.8 million people visited Iceland in 2016 — a whopping 40 percent rise from 2015. Riding at the back of speeding up travel sector, Iceland economy is growing steadily, generating enough resources to support the country’s economic standing.

2. Increased foreign direct investment

There are plenty of good reasons why investing in Iceland is attractive: The low corporate tax, the efficient business environment, the excellent infrastructure, the availability in the labor market, and so on.

Iceland is among the world’s best when it comes to ease of doing business, as well as time required to start a business. Additionally, Iceland is big in green energy, which results in efficiency and sustainability in business operational, reducing costs and, at the same time, carbon footprints.

3. Housing market boom

Mostly driven by the travel sector boom, residential housing prices went up 12.4 percent compared to last year, and are projected to rise further to 30 percent by the end if 2019. The figures are attractive to investors, especially those in construction and hotel/hospitality sectors.

Iceland: An attractive offshore destination?

Iceland is a fertile land offering plenty of opportunities, especially on travel, real estate, infrastructure and green energy sectors. The jurisdiction is indeed a good place to invest, as well as protect your assets, offshore. There are plenty of indicators that make Iceland a great offshore destination:

Low corporate tax

Iceland’s corporate tax is among the lowest in the world, at 20 percent — if your company is formed as an LLC or LLP. More details here.


Just like Cyprus, Iceland is not popularly known as an offshore jurisdiction. However, with the ‘borderline tax haven’ tax rate of 20 percent, solid banks, strong currency, good interest rates and low fees, it’s an attractive jurisdiction to setup a business headquarters — or a shell company, if you will.

Stable politic outlook

The lifted capital control has opened doors not only for Iceland citizens and business entities but also for overseas entities.

Strong economic growth

The 7.2 percent economic growth is a good sign of continuous growth, after the slump back in 2008–2009 period, dropping from 9.5 percent in 2007 to 1.5 percent in 2008 to -4.7 percent in 2009. The unemployment rate is down to 3 percent, and the currency continues to be stronger against the Euro (18 percent rise over the years.)

While future growth is something that’s challenging to predict, the infrastructure and policies for sustained growth are already in place.


While it’s not as friendly as offshore financial centers when it comes to offshore banking, setting up a corporation is a breeze. Of course, there are some requirements to meet, which is quite similar to the UK. More details here.

All in all, Iceland is an interesting offshore option for your asset protection, as well as internationalization endeavor. While it’s true that the tax rates and secrecy aren’t comparable to those offshore financial centers, Iceland’s reputation is making it an attractive jurisdiction for establishing an offshore corporation.