Iceland’s 11% fuel VAT expires on 1 September 2026
- Jurisdiction
- Iceland
- Tax
- VAT
- Change type
- Rate change
- Status
- Enacted
- Impact
- Action required
- Announced
- 3 August 2026
- Effective
- 1 September 2026
- Instrument
- IS-LAW-34-2026
- Authority
- Stjórnartíðindi (Icelandic Official Gazette), A-deild 34/2026
- Systems
- POS, Tax engine, ERP
- Verified
- Fetched from official source · high confidence
Sellers of petrol and diesel in Iceland. Nothing has to be enacted for the rate to go back to 24% — the temporary provision expires by its own terms on 31 August 2026, so the risk is a system left on 11% rather than a change to watch for.
Revert POS and tax-engine VAT on petrol and diesel (tariff codes 2710.1221, 2710.1229, 2710.1930, 2710.2021, 2710.2029, 2710.2065 and 3826.0000) from 11% to the 24% standard rate on 1 September 2026, unless an extension is published before 31 August 2026.
POSTax engineERP
Iceland's temporary 11% VAT rate on petrol and diesel, introduced by Lög nr. 34/2026 which added ákvæði til bráðabirgða XLIX to VAT Act nr. 50/1988, applies only from 1 May 2026 to 31 August 2026. By the law's own terms the rate reverts to the 24% standard rate from 1 September 2026. As at 3 August 2026 no extending or repealing law had been published in Stjórnartíðindi A-deild, whose most recent entry is dated 30 July 2026.
What changed in detail
The temporary 11% VAT rate on petrol and diesel was introduced by Lög nr. 34/2026 with an expiry written into the law itself: it applies only from 1 May to 31 August 2026. No extending or repealing law had been published in Stjórnartíðindi A-deild as at 3 August 2026, the most recent entry being 30 July. Absent an extension, the rate reverts to the 24% standard rate on 1 September. (Stjórnartíðindi, Skatturinn)
What it means
This is a reversion that happens by default — nobody has to legislate for the rate to go back up, which is exactly why it gets missed. A 13-point move on fuel, at the pump, with four weeks’ notice and no announcement to prompt it.
Proof
skal virðisaukaskattur vera 11% við innflutning og skattskylda sölu á eldsneyti sem fellur undir tollskrárnúmer 2710.1221, 2710.1229, 2710.1930, 2710.2021, 2710.2029, 2710.2065 og 3826.0000 á tímabilinu frá og með 1. maí 2026 til og með 31. ágúst 2026.
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