New tourist tax will soon make visiting Iceland more expensive

Iceland plans to introduce a tourist tax to help protect its unspoilt nature.

The Nordic country has seen a sharp rise in tourists over the past decade. Visitor numbers grew by more than 400 per cent between 2010 and 2018, when they reached more than 2.3 million. Those numbers have quickly rebounded since the pandemic, reaching 1.7 million in 2022.

In an interview with news agency Bloomberg last week, Iceland’s Prime Minister Katrín Jakobsdóttir said that a tourism tax could help combat the impact visitors have on the country’s climate and environment.

“Most of our guests who are coming to us are visiting the unspoilt nature, and obviously it creates a pressure,” she said.

The country has set ambitious climate goals, including to reach net zero by 2040.

How much will Iceland’s tourist tax be?

While Jakobsdóttir did not specify the exact amount of Iceland’s tourist tax, she told Bloomberg it would “not be high, to begin with”.

She said that the scheme would be introduced as city taxes for people who stay in Iceland.

Companies in country’s the tourism sector are also improving sustainability, for example by utilising the circular economy and using electric vehicles, Jakobsdóttir added.

“It is happening, but it is a challenge,” she conceded.

How does tourist tax help the environment?

Tourists place a burden on infrastructure, public services and facilities in the destinations they visit.

Tourism tax can both help these places to cope with the burden of tourists and discourage visitors to limit crowding. It can be used to fund public transport infrastructure, reverse damage done by crowds, and support sustainability initiatives.

Iceland isn’t the only destination to introduce a tourist tax.

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Such schemes are already common across Europe with levies in place in major cities like Paris, Berlin, Amsterdam and Rome.

The UK city of Manchester announced it would start charging a nightly tax for visitors earlier this year, while Santiago de Compostela in Spain said it planned to introduce a regional tax to combat overcrowding this summer.

Venice in Italy has long teased a visitor fee and recently set a launch date of summer 2024.