Iceland enjoys some of the strongest economic freedoms among all countries. Nevertheless, Iceland is very protectionist as regards to the import of farm products and licenses as well as state monopolies of imports (undergoing a dismantling). Some plant products such as potatoes and flowers are subject to seasonal limitations.
Customs Duties and Taxes on Imports
Iceland implements high tariffs on agricultural products in order to protect the domestic agricultural sector. Tariffs on certain varieties of vegetables, e.g. tomatoes, cucumbers and bell peppers are significantly higher during the growing season to protect domestic greenhouse producers. Meat and dairy products, and potatoes are also protected by substantial duties. Animal feed can carry tariffs up to 55%. Visit the Directorate of Customs website.
Iceland applies the Harmonized Customs System of codification and description of the goods. Customs duties are calculated ad valorem (and apply only to farm products of EU member countries). There is no exchange control on the settlement of imported goods. The customs policy is enforced by the Directorate of Customs.
Required documents are listed below:
- Bill of lading
- Certificate of origin
- Cargo release order
- Commercial invoice
- Customs import declaration
- Packing list
Samples may be imported without paying any tax if their value is not high, and they cannot be sold or used. However, samples must be declared at Customs on arrival in the country. To import samples, you must fill in an ATA carnet, a document that facilitates Customs procedures.
Distribution is concentrated around the capital, but cargo to other areas can be transported by air, ship or truck. There are no railroads in Iceland. The biggest port in Iceland for cargo is Sundahofn in Reykjavik where both Eimskip and Samskip, the two largest cargo shipping companies in Iceland, have their HQ and shipping docks. From the docks to the final destination products are either handled through the mail for individuals or wholesalers and their distribution channel.
Very large shops are common in Iceland. Whereas Hypermarkets have gained increasing prominence over the last 20 years in Europe, in Iceland, one company, Hagar, has a 48% market share in the food retail trade (2016 data) with three different types of stores catering to different consumer needs. One peculiarity which is worth noting as well is that in the retail market in Iceland 70% of the volume of all merchandise is imported.
There are many different types of grocery stores in Iceland
- Kronan Grocery Stores: Kronan is a budget grocery store in Iceland and offer a large meat and dairy section as well as fresh foods.
- Netto Supermarkets: Netto is another one of the budget grocery stores in Iceland and it is quite large. It is larger than many Bonus stores and has lots of locations in the east fjords, west fjords, and north of Iceland.
Iceland is among the top countries in the world in terms of internet use, with a penetration rate close to 100%. The country achieved such a diffusion of the internet thanks to its developed infrastructure and a small population (around 334,000 people). Smartphone penetration is also high, at 86.7% (MBL.is, 2016). The most popular web search engines in Iceland are Google (94.7%), Bing and DuckDuckGo (2.8% and 1% respectively).
Although it is not a member of the European Union, Iceland follows the EU e-commerce regulations. Icelanders are increasingly using the internet to shop, as products are generally expensive on the island. Icelanders shop online mainly for clothing, DIY, baby and children’s products and home utensils. The reduction of tariffs on foreign products and improved shipping services boosted cross-board e-commerce (EcommerceNews estimated that 63% of e-shoppers from Iceland made cross-border purchases in 2017.). Icelanders use the internet also to buy online products otherwise not available in the local market. E-commerce platforms like AliExpress are very popular, as well as online retailers from the U.S. and the EU, especially those who offer convenient delivery services to Iceland. The most popular website to sell and buy used goods is Bland, where smaller businesses and individuals can promote their products and services. Local service providers are also increasingly offering their products online (like, iglo+indi, Lín Design, Epal, and Askja Botique, to name a few). The online platform Hopkaup.is also offers a wide range of products. Many Icelandic retailers and service providers use social media to advertise their services. Facebook is the most popular social media, with around 260,000 users (of which 23% are over 55 years old). Instagram is also popular, with 144,000 users in the country, of which 55% are female (Napoleoncat).
Organizing Goods Transport
Main Useful Means of Transport
Coastal sea travel is reserved only for transportation of goods and even so, it is giving way to transportation by trucks. Transportation of goods got almost completely off the sea and on the roads when Iceland's shipping companies quit their scheduled cargo-ship transportation around Iceland from Reykjavik and emphasized on truck transportation of goods.
The main sectors of Icelandic industry are its natural resources: fishing, hydraulic and geothermal energy. The IT and new technologies sector has also experienced strong development over the last few years. Industry employs more than 21% of the population.
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