"Innovation bill" passed in parliament

Yesterday, June 2nd 2016, Alþingi (the Icelandic Parliament) passed a bill dubbed the Innovation bill. The bill, which we’ve previously covered, introduces various reforms to the tax code to lessen the tax burden on startups and their employees.

The highlights of the bill (as it was introduced) are the following. We’ve added changes made to the bill during its discussion in the economic affairs and trade committee:

  1. The ministry proposes a change in taxation of both stock-options and convertible bonds. Both of these financial instruments will be taxed at the realisation of profit, rather than at the date of exercise.
  2. The taxation of stock options is now more lenient in Iceland than in Silicon Valley. Nice!
  3. A tax-break for foreign specialists is proposed, in effect giving foreigners that move to Iceland (and fulfil several criteria) a 25% tax break – i.e. only 75% of their income will be taxed.
  4. A tax-break for equity investments in small companies for individuals –tax-breaks for angel investors.
  5. Minimum investment to be eligible for a tax deduction is  300,000 ISK (~$2,300).
  6. The deduction is 50% of the first 3 million ISK (~$23,000)
  7. Increased tax-refund for company R&D investments.
  8. The committee was urged by some to remove the roof (i.e. a x% refund of R&D investments, with no maximum, just like it’s done in the movie industry in Iceland). After deliberation the committee decided not to increase the roof of the refund, as the bill is aimed at startups and not companies in general.

In general, good news for the startup economy. More commentary in Monday’s Memo. Sign up here.

Photo by mightymightymatze