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Internal Market: Iceland must abolish establishment requirements on temporary employment agencies



Iceland must allow temporary work agencies established in other EEA States to provide their services in Iceland without requiring them to go through the process of establishing themselves again in Iceland. This is the conclusion of a reasoned opinion sent to Iceland by the EFTA Surveillance Authority.

Under current Icelandic rules and administrative procedures, foreign temporary work agencies will not be recognised as employers for tax purposes unless they establish themselves in Iceland first. Only then will they receive an identification number which is a precondition for being registered as a taxable employer.

The Authority takes the view that this requirement is in breach of EEA law. 

According to EEA law, EEA nationals can chose whether to pursue their economic activities in another EEA State through an establishment on its territory or by providing their services cross-border from the country where they are established in the EEA.

The difference between the two freedoms must be reflected in the national tax rules, but the Icelandic establishment requirement effectively eliminates any cross-border service.

The Authority considers that the matter can be resolved by introducing a simpler notification system instead of the establishment requirement. Such a notification system would at the same time meet the needs of the Icelandic tax authorities for information about taxable persons and collection of taxes.

A reasoned opinion is the second stage in infringement proceedings. The Authority may bring the matter before the EFTA Court if Iceland fails to take the measures necessary to comply with the reasoned opinion within two months.


For further information, please contact:

Mr. Trygve Mellvang-Berg
Press & Information Officer
Tel. (+32) (0)2 286 18 66
Mob. (+32)(0)492 900 187

Other EEA Institutions

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