Tax Evasion at Icelandic Banks Before Collapse Skip to content

Tax Evasion at Icelandic Banks Before Collapse

The Icelandic banks avoided paying approximately ISK 100 billion (USD 790 million, EUR 580 million) in taxes for derivatives trading before their collapse in the autumn of 2008, according to an investigation undertaken on behalf of the Ministry of Finance.

The headquarters of Glitnir Bank in Reykjavík. Copyright: Icelandic Photo Agency.

The Directorate of Tax Investigations and other related offices will be reinforced with 20 new employees for further investigation of this extensive tax evasion, Stöd 2 reports.

The investigation was aimed at the executives of the banks, employees and large customers. Derivatives trading, along with dealing with shares, write-offs of loans and contracted service from foreign institutions were investigated.

“It appears, unfortunately, that extensive tax evasion was practiced, especially in regard to derivatives trading,” said Minister of Finance Steingrímur J. Sigfússon. Some of these cases will be referred to the Special Prosecutor.

The minister said everything would be done to collect the unpaid taxes, pointing out that a bill has been submitted to parliament to authorize the freezing of assets in case of tax evasion. “It is very important that this matter will be handled quickly.”

RÚV calls this practice a “black economy” within the banks.

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