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The Icelandic government announced its intention to reduce the standard VAT rates in Iceland from 24% to 22.5% from 1 January 2019.
Ever since the start of the financial crisis in 2007, almost all Member States have opted to increase their VAT rates to compensate the decrease on tax revenues. Iceland opted for this solution as during the financial crisis its standard VAT rated was increased to 25.5% in 2010, and then cut to 24% in 2015.
Furthermore, tourism services will be charged at the standard VAT rate temporarily in order to help fund a cut in employer taxes.