Market
How 2026 import-duty changes affect car prices in Iceland
The phase-out of EV VAT relief continues. Here's what it means for buyers shopping new and imported used cars.
The Icelandic government's gradual restructuring of vehicle taxation entered a new phase in 2026. Here's what changed and how it shows up on the sticker.
What changed
- The flat EV grant (ívilnun) was reduced by 100 000 ISK and now caps out on cars priced under 10 million ISK.
- The CO₂-based registration fee scale was steepened — petrol SUVs above 180 g/km now attract noticeably higher upfront tax.
- Used imports from the EEA continue to receive their existing tax treatment, but the koltvíoxíðsgjald is now applied at the same rates as new cars of the same emissions class.
Net effect on common cars
- Toyota Yaris Hybrid — roughly +80 000 ISK
- Kia Sportage 1.6 PHEV — roughly +160 000 ISK
- VW ID.4 — roughly +100 000 ISK after grant reduction
- Toyota Land Cruiser 250 diesel — +400 000 ISK and up, depending on spec
What to do about it
If you've been on the fence about a low-CO₂ car, the math still favours buying sooner rather than later — the trajectory of these rates is upward. For high-emission SUVs, expect bigger jumps in 2027.