Do you live in Iceland and work in another Nordic country for a public sector employer?
This information applies to you who are resident in Iceland and work in another Nordic country for a public employer and concerns taxation of your earned income only.
Definition of "public sector employer"
You are deemed to have a public sector employer when you are employed by the central government, regional or municipal authorities or a public law institution, or an equivalent administrative authority in the other Nordic countries. State universities and university colleges in the Nordic countries except Finland are deemed to be public sector employers. The Finnish universities are deemed to be private employers. Companies owned by the state or a municipality etc. are not regarded as public sector employers. Nor will the state, municipality etc. be regarded as a public sector employer if the business in question is a commercial undertaking.
If you do not have a public sector employer, you will be taxed pursuant to the rules described in "Do you live in Iceland and work in another Nordic country for a private sector employer? "
Icelandic public employer
If you work in another Nordic country for an Icelandic public employer, your salary will only be taxed in Iceland.
Public employer which is domiciled in another Nordic country
If you work in another Nordic country for a public employer which is domiciled in that country, your pay is taxed there. However, if you perform all or part of your work in Iceland, you are normally taxed there.
Taxation in Iceland
When you are resident in Iceland, you are subject to full tax liability. In your tax return, you must include all income from Iceland and abroad.
The double taxation of the foreign income is eliminated by reducing the Icelandic tax by the amount of tax which concerns the foreign income. See example in the section "Do you live in Iceland and work in another Nordic country for a private sector employer?"