E-invoices in Iceland 2026: who requires them and how to send them

Kassify · 6 November 2026

An e-invoice (rafrænn reikningur) is a data message in XML that goes straight from the seller's accounting system into the buyer's, not a PDF sent by email. Since 1 January 2020 every invoice for the Icelandic state's purchases of goods and services has had to be electronic, and the City of Reykjavík only accepts invoices sent electronically.

Below are the rules, the standard the message follows, one invoice to a state body taken apart, what sending costs and the mistakes that hold up payment.

What an e-invoice is

A PDF is a picture of an invoice. Whoever receives it has to read it and type the figures in. In an e-invoice every piece of information sits in its own field: the seller's and buyer's kennitala, each line, the VAT rate, the amounts, the due date and the bank account. The buyer's accounting system reads the message and books it with nothing typed in.

The rules are in Regulation no. 505/2013 on electronic invoices, electronic bookkeeping, message brokering, message services, storage of electronic data and minimum requirements for electronic invoicing and bookkeeping systems. It defines an e-invoice as an invoice issued as an electronic document under the regulation, and its aim is for paper and electronic invoices to stand on an equal footing. Three provisions matter most:

• The electronic document carries the same information as a traditional supporting document (art. 14). The general rules of the Bookkeeping Act no. 145/1994 govern its content, and for VAT-registered parties so does Regulation no. 50/1993 (art. 15).
• The electronic external source document of an invoice is its original (art. 13). The message itself is the original, not a printout or a PDF copy of it.
• Electronic books and their electronic supporting documents are kept for seven years from the end of the financial year (art. 6).

Skatturinn uses the word more broadly. A sales invoice created in an electronic accounting system counts as an electronic sales invoice whether it reaches the buyer electronically or printed on paper. The printed copy must then show that it is the original, for example with a note such as „Þessi reikningur er rafrænt ytra frumgagn skv. reglugerð nr. 505/2013.“ (This invoice is an electronic external source document under Regulation no. 505/2013.) When a state body or the City of Reykjavík asks for an e-invoice, though, it means the XML message, sent through a message broker.

Who has to send e-invoices

The duty comes from two directions. Regulation no. 44/2019 on electronic invoices in public contracts requires public buyers to receive and process e-invoices that meet the European standard EN 16931. The Ministry of Finance and Economic Affairs then decided that from 1 January 2020 every invoice for the state's purchases must be electronic. In practice the seller carries the duty: whoever sells to the state sends an e-invoice or gets the invoice sent back.

The rules took effect in this order:

Peppol, EN 16931 and TS 236

EN 16931 is the European standard for the content and structure of an e-invoice. Peppol BIS Billing 3.0 is an implementation of it in the UBL XML format, so an invoice that passes Peppol BIS also meets EN 16931. Staðlaráð Íslands, the Icelandic standards body, publishes the technical specification TS 236, which implements Peppol BIS Billing 3.0 in Iceland, and Regulation 44/2019 refers to TS 236:2017.

Peppol is a set of rules for how documents are formatted and sent between companies and public bodies. The seller connects to one Peppol-accredited service provider, the buyer to another, and the providers pass the message between them. This is called the four-corner model: seller, seller's provider, buyer's provider and buyer.

Peppol BIS holds ten Icelandic rules that apply when the seller is Icelandic. A message that breaks them fails the standard, except IS-R-001, which only gives a warning:

Example: an invoice to a state body

Assume Hönnunarstofan ehf. sells a state body 14 hours of consulting at 17.500 kr. an hour and issues the invoice on Friday 6 November 2026. The name, hours, rate and dates are assumptions for the example. This is the message, field by field:

The message goes to the message broker the same day. At FSRE the credit period runs from delivery at the message broker, so the 25-day minimum would have allowed a due date of Tuesday 1 December. With 7 December the body gets 31 days. Supporting documents, such as a timesheet, go along as attachments, and no paper copy is sent on top.

How a small company starts sending

1. 1
   Choose how to send

   An invoicing system that sends e-invoices, or a portal such as Signet Invoice, formerly Skúffan, which Ísland.is pointed to for those who send few invoices. The system or portal handles the connection to a message broker.

2. 2
   Register the company correctly

   Kennitala, VAT number, address with street name and postcode, and a 12-digit bank account. These are the fields the Icelandic rules in Peppol BIS require.

3. 3
   Get the buyer's details

   The kennitala of the body the invoice is addressed to and the work order or purchase order number, which goes in the invoice description.

4. 4
   Send the message with its attachments

   Timesheets and other supporting documents go along as attachments. The City of Reykjavík asks for them as PDF and says a link to a document is not enough.

5. 5
   Book it and keep it

   The invoice is booked as a sale, and the XML message is kept for seven years from the end of the financial year.

Prices per month excluding VAT, from each company's site on 5 November 2026:

Assume a company sends 40 e-invoices a month. At Signet Invoice that costs 1.350 kr. plus 10 times 32 kr., 1.670 kr. a month or 20.040 kr. a year. Regla's add-on costs 3.600 kr. plus 30 times 40 kr., 4.800 kr. a month or 57.600 kr. a year, on top of the system subscription. Either way the money buys only the sending. Someone still has to make the invoice, book it, follow the payment and file VAT on the sale.

The invoice that gives the buyer input VAT

The buyer only gets input VAT on an invoice that shows, among other things, an invoice number in an unbroken sequence, the seller's kennitala and VAT number, the buyer's kennitala and the VAT amount and rate, and an e-invoice counts as the original. The full list is in the article on VAT.

The mistakes that hold up payment

• A PDF by email. The state does not accept PDF invoices by email, and paper invoices are returned with a request for an e-invoice.
• No work order number. FSRE says it is very important that the number is entered in the invoice description.
• A paper copy sent as well. The same invoice then arrives twice. FSRE asks specifically that this is not done.
• A wrong or missing buyer kennitala. The invoice is addressed to the kennitala of the body that bought, and without the buyer's kennitala the message fails IS-R-004.
• Too short a credit period. At FSRE it is at least 25 days from delivery at the message broker, not from the invoice date.
• A final due date before the due date. The message then fails IS-R-010, and the date has to be in the form YYYY-MM-DD.
• An invoice changed after sending. A wrong invoice is corrected with a credit note, type 381, and a new invoice is sent.
• Only the PDF copy kept. The message is the original and is kept for seven years from the end of the financial year.

The invoice sent. The payment booked.

Everything above comes with every invoice: the right kennitala, the work order number, VAT on each line, the right due date, the message sent and the payment matched to the invoice when it arrives. Kassify is an accounting firm that uses AI, a whole finance department at a fixed price, and invoicing is part of it.

• The state and larger companies get the invoice electronically, to EN 16931 and Peppol through Unimaze. Everyone else pays by card, Apple Pay or Google Pay on the payment page, or by a claim in their online bank.
• VAT at 24%, 11% or exempt, chosen per line, with Icelandic invoice numbering and kennitala.
• The payment matches itself to the invoice and is booked. Each bank is connected directly, and manual entries are 0.
• Invoices are part of the fixed monthly price, as many as the company sends, with no fee per invoice.
• Kassify's bookkeepers run the bookkeeping, the VAT returns and payroll. A bookkeeper replies within 24 hours, and accredited bookkeepers and certified auditors stand behind the work.

The fixed monthly price covers bookkeeping, payroll, VAT returns, the app, the annual accounts and the tax return and is 20% below a traditional accounting firm. The price comes in writing before the company decides. The move takes less than 7 days and is included in the price: Kassify talks to the old bookkeeper and the history comes along. More on Kassify's invoicing page, and on filing VAT on sales in the article on VAT returns.

Questions

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