Routes to Market in Iceland
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Iceland Routes to Market
So you've decided to expand your business in Iceland and researched your market. Now it's time to decide how you will register and set up a business in Iceland. What is the best, most viable option for your company, your products, and yourself? Which is the path of least resistance?
For businesses looking to expand to Iceland, foreign ownership of companies is mostly unrestricted. There are some limitations in sectors such as fishing, fish processing, energy production and aviation.
Any new business in Iceland must register with Register of Limited Companies. This process includes the publication of the incorporation notice in the official gazette and costs around ISK 95,000. A company name must also be created using the company name database, which takes a day.
There ways of incorporating a business in Iceland:
Limited Liability Companies
A limited liability company is the most popular form of foreign business in Iceland. The owners are only liable to the amount they invest in the business. The registration fee for a private limited company is ISK 88,500 and the business requires an initial capital investment of ISK 500,000. The company must have one founder, one shareholder, and one director (with one deputy). There is no obligation to have a manager. The business must register with the Register of Enterprises.
Branches of a foreign incorporated business with limited liability need to be registered with the Register of Limited Companies. The registration fee is ISK171,000 and the business is accountable to local taxation.
A partnership is where two individuals agree to open a business. The registration fee for a partnership is ISK61,000.
A sole proprietorship is a way for one individual to set up a business. Sole proprietorships are taxed 35.72% on business income. A sole proprietorship is not an entity so the owner will be personally liable for any losses the business might make.
Licensing is the permission for someone else to use your intellectual property rights: either a patent, trademark, trade secret, or copyright. Different types of license include:
Non-Exclusive License - A non-exclusive license implies that your intellectual property rights can be awarded to more than one licensee.
Exclusive License - A little more complex because, although the license may not be exclusive to one licensee, it may be exclusive to a geographic location, a certain product, or limited area of use. For instance, you may grant a licensee exclusive use of the rights in France, yet grant another licensee its use in Germany.
Patent License - The allowance of another party to use your patented product, design or process.
Trademark License - Trademark licensing means permission is awarded to a licensee to sell a product or service. However, the licensor retains more control in order to ensure that quality is maintained. Quality control is in place to uphold the image of the brand / product / service / licensor, and therefore sustain customer confidence and satisfaction.
Franchising In Iceland
Franchising is the licensing out of a business name, product, technique, philosophy, trademark, etc, for a percentage of the income. Instead of setting up new outlets as part of your expansion, you license your existing business blueprint out to franchisees who then set up and manage it for you.
The benefits of franchising your business in Iceland include: more freedom, as the franchisee takes on major responsibilities; minimal expense; lower cost and higher profits; potential for fast growth; brand building.
Disadvantages of franchising a business in Iceland: although few, rely predominantly on your franchisees. They include: poor quality franchisees; franchisees not declaring all income; poor performance.
Organisations that can assist with Routes to Market
Do you need advice from an expert in your field, on the ground? Need help finding the best route to market for your product or service?