Why Iceland is the Perfect Spot to Do Business

Halfway Between Europe and the US:

WHY ICELAND IS THE PERFECT SPOT TO DO BUSINESS

O[ en referred to as “the land of fi re and ice“, Iceland is known for its stunning landscapes. It’s a country of extreme geological contrasts: Iceland holds some of the largest glaciers in Europe, as well as some of the world’s most acঞ ve volcanoes. But there’s more to Iceland than just its sweeping nature. Iceland is actually one of the most innovaঞ ve countries in the world and is responsible for quite a few ‘fi rsts’: the fi rst elected female president, the fi rst country to force employers to address the gender pay gap, etc. This small Nordic country with a populaঞ on of fewer than 400 thousand people is also a perfect place to do business. “Once every decade or two, I come across a market overseas which is most a‚ racࢼ ve and is worth considering,” said Gervais Williams, a por olio manager at London-based Miton Group, an investment management company. “That last happened in 1995 in Ireland and Iceland is the market I now like.“ And there are more than a few reasons for that for sure. Iceland is known for its economic compeঞঞ veness, as it’s regularly ranked among the 30 most compeঞঞ ve countries in the world. It also ranks 5th globally regarding the quality of the educaঞ onal system and is the world leader when it comes to the availability of the latest technologies in companies and fi rm-level technology absorpঞ on. Besides,

Iceland is the only country in Western Europe that sঞ ll has considerable resources of compeঞঞ vely priced, renewable energy remaining to be harnessed. The country is very open to investment and the business environment there is highly effi cient. In fact, Iceland’s business environment is so good, that in 2020 Doing Business ranking by the World Bank, Iceland ranks 26th out of 190 countries. It’s relaঞ vely easy to start a business there, and in this category, according to the World Bank, Iceland is also one of the top countries in the world. And there’s a good reason why: when establishing a business enঞ ty in Iceland, you are required to complete a fairly simple task of applying for a VAT ID number by fi lling in a twopage form. The process usually takes 2-3 days. What is more, Iceland’s corporate income tax of 20 percent is one of the lowest in Europe and among the OECD member countries. In order to make things even be‚ er, the government aims to encourage foreign investment in the country, and off ers incenঞ ves to companies that are invesঞ ng in commercial operaঞ ons. The investment must meet certain requirements, such as being benefi cial for the Icelandic economy and society. This requirement could be met through the creaঞ on of jobs, rural development, export, tax revenues, and knowledge. Although back in 2008 the country was struck by a fi nancial crisis, Iceland’s clean energy, its marine resources, strong infrastructure, and well-educated workforce provided a solid basis to overcome the economic diffi culঞ es and implement all the necessary reforms. As a result, in recent years, Iceland has demonstrated high and consistent economic growth rates, low infl aঞ on, and unemployment. Although fi sheries have been the single most important part of the Icelandic economy for a long ঞ me, in the last decade it has been diversifying into manufacturing and service industries, parঞ cularly within the fi elds of so[ ware producঞ on, biotechnology, and tourism, which is the largest Iceland’s export sector by far. Aside from tourism, Iceland’s data center and technology sectors have been some of the fastest-growing areas of the Icelandic economy. Iceland has a small but vibrant tech scene creaঞ ng innovaঞ ve soluঞ ons in gaming, biotech, fi ntech, tourism, and even the fi shing industry. What is more, Island’s abundant geothermal and hydropower energy sources have attracted considerable foreign investment in the aluminum sector, boosted economic growth, and magneঞ zed some high-tech companies, looking to establish data centers using cheap green energy. To be more specifi c, Iceland is recognized as a world leader in the uঞ lizaঞ on of geothermal energy. The Swissbased Internaঞ onal Insঞ tute for Management Development (IMD) considers Iceland’s hydro and geothermal electricity infrastructure to be the most reliable in the world. Iceland has all the necessary components to ensure and provide certain advantages for the internaঞ onal business community: strong export industry, favorable taxaঞ on system, modern and effi cient infrastructures, and a qualifi ed workforce. Speaking about the last one, the labor force in Iceland is rela ঞ vely young compared with neighboring countries, with 67 percent of the populaঞ on aged between 15 and 64. It’s also an incredibly safe country to live in. Crime rates and drug use are low compared to most European countries, and more than 95 percent of the police force is unarmed. What is more, Iceland has an extensive Free Trade Agreement (FTA) with China. Combined with Iceland’s membership of the common European Market, its ideal locaঞ on between North America and Europe, as well as an advanced business environment and infrastructure, this FTA opens up a range of new opportuniঞ es for investors from the US, Canada, and Europe, interested in the dynamic Chinese market.