Register a Company in India from Iceland

Author: Manu Rao | Updated: March 2026

At a Glance

Why Icelandic Investors Are Setting Up Companies in India

The EFTA-India Trade and Economic Partnership Agreement (TEPA) changed everything. On 1 October 2025, a trade deal 17 years in the making finally entered into force — linking Iceland (along with Switzerland, Norway, and Liechtenstein) to India through preferential tariffs, services market access, and a legally binding USD 100 billion investment commitment over 15 years. For Icelandic businesses, India just became significantly more accessible.

Bilateral trade between India and Iceland is modest — India exported approximately USD 12.41 million to Iceland in 2024, and Iceland's imports from India reached USD 86.48 million in 2025. But the TEPA is designed to change that trajectory dramatically. EFTA committed to USD 50 billion of FDI in the first 10 years and USD 50 billion more in the following 5 years, with a safeguard clause allowing India to claw back tariff concessions if the investment targets are not met.

Under the TEPA, 92.2% of EFTA tariff lines (covering 99.6% of India's exports) receive preferential treatment, while India has committed to liberalizing 82.7% of tariff lines covering 95.3% of EFTA exports. Iceland made commitments across 110 service sub-sectors, giving Icelandic firms access to India's IT, education, audio-visual, and professional services markets.

Where Iceland brings unique value is in geothermal energy and fisheries. Iceland generates approximately 85% of its total primary energy from domestically produced renewable sources — about 65% from geothermal and 20% from hydropower. India's massive renewable energy buildout (targeting 500 GW by 2030) needs exactly this expertise. An Icelandic firm has already announced a USD 30 million investment in an Indian fisheries company in Maharashtra, expected to create 800-1,000 jobs in Aurangabad. A special India-Iceland project group on geothermal energy cooperation has been established, with two geothermal projects already in progress — one for electricity production and one for cold storage applications.

India and Iceland have signed agreements in foreign office consultations (2005), science and technology (2005), culture (2005), fisheries (2007, renewed 2019), renewable energy (2007), and now the TEPA (2024). The India-Iceland DTAA provides favorable 10% withholding rates across all income categories, further reducing the cost of cross-border investment.

The EFTA-India TEPA: What Icelandic Investors Must Understand

The Trade and Economic Partnership Agreement is the defining framework for Icelandic investment in India. Signed on 10 March 2024 in New Delhi after 21 rounds of negotiations that began in 2008, it entered into force on 1 October 2025. Here is what matters for you.

Tariff reductions: India is eliminating or reducing tariffs on 82.7% of tariff lines, covering 95.3% of EFTA exports. Implementation happens in phases — some tariffs eliminated immediately, others reduced over 3, 5, 7, or 10 years. Gold (EFTA's largest export to India) remains outside effective duty changes.

Services access: Iceland committed to opening 110 service sub-sectors to Indian service providers, and in return gained access to India's services market across 105 sub-sectors. Mutual Recognition Arrangements (MRAs) for professional services expand opportunities for Icelandic professionals in India. IT, education, and audio-visual sectors see expanded access.

Investment chapter: Article 7.1 of TEPA sets the investment target: USD 50 billion in FDI from EFTA investors into India within 10 years, plus USD 50 billion in the next 5 years. An India-EFTA Desk has been operational since February 2025 to facilitate these investments. India has a safeguard clause to claw back TEPA benefits if investment targets are not met — making this a legally binding commitment with teeth.

Intellectual property: The framework aligns with WTO's TRIPS Agreement while explicitly safeguarding India's ability to produce affordable generic pharmaceuticals — a nuanced balance that protects both Icelandic IP holders and India's pharma sector.

Rules of origin: Products must meet specific origin criteria to qualify for preferential tariffs. Icelandic fisheries exports to India, for example, must demonstrate Icelandic origin under the agreement's rules.

Choose Your Entity Type

Four main options exist for Icelandic investors entering India.

Private Limited Company — the most common choice. Requires at least two directors (one must be an Indian resident who stayed 182+ days in India during the financial year under Section 149(3) of the Companies Act, 2013). Allows 100% FDI through the automatic route in most sectors. Full limited liability. Mandatory statutory audit every year. This is what most European investors pick for an Indian subsidiary.

Limited Liability Partnership (LLP) — lighter compliance than a Private Limited company. No mandatory audit below INR 40 lakh contribution or INR 25 lakh turnover thresholds. The designated partner must have stayed in India for 182 days. FDI in LLPs is allowed only under the automatic route in sectors where 100% FDI is permitted.

Branch Office — approved by RBI under FEMA regulations. Can carry out the same business activities as the Icelandic parent company. Profits are taxable in India at 35% plus surcharge and cess. Useful for Icelandic geothermal or fisheries companies that want to execute specific projects without full incorporation.

Liaison Office — the most restricted option. Cannot earn income in India. Limited to market research, communication, and promotional activities. RBI approval needed. Permission granted for 3 years, renewable.

FDI Route and Sector Rules

Iceland is not a bordering country, so Press Note 3 (2020) does not apply. Icelandic investors can use the automatic route for most sectors without government approval.

Sectors allowing 100% FDI via automatic route include renewable energy (directly relevant for Iceland's geothermal expertise), food processing and fisheries, IT and software, manufacturing, pharmaceuticals, e-commerce (marketplace model), healthcare, and single-brand retail (up to 100%).

Government approval is required for defence (beyond 74%), print media, multi-brand retail, and broadcasting.

Prohibited sectors remain off-limits regardless of origin: atomic energy, lottery, gambling, chit funds, Nidhi companies, tobacco manufacturing, and real estate (with exceptions for townships and construction-development).

For Icelandic investors specifically: India's renewable energy sector and fisheries sector — the two areas of strongest bilateral engagement — both allow 100% FDI under the automatic route. The TEPA further reduces regulatory friction for these sectors through tariff reductions and services market access.

Step-by-Step Registration Process

Here is the actual process, step by step, with realistic timelines for an Icelandic investor.

Document Checklist for Icelandic Investors

For the foreign director or shareholder based in Iceland, you will need:

• Passport (color scan, all pages)
• Address proof — utility bill or bank statement not older than 2 months
• Passport-size photograph
• Board resolution from Icelandic parent company authorizing India investment (if applicable)
• Certificate of Registration from the Icelandic Companies Registry (Fyrirtaekjaskra, apostilled)
• Articles of Association of the Icelandic company (apostilled)
• Bank statement showing source of funds
• Power of attorney (if the Icelandic director is not physically present for filing)

Apostille through Iceland's Ministry of Foreign Affairs is the standard route. All documents in Icelandic must be accompanied by certified English translations — both the original and translation must be apostilled. Budget 3-7 business days for the full process.

Common mistakes: submitting documents only in Icelandic without certified English translations, providing address proof older than 2 months, and failing to apostille the English translation alongside the original document.

DTAA Tax Rates: India-Iceland

India and Iceland have a DTAA that provides favorable and uniform withholding tax rates:

The uniform 10% rate across all income categories makes the India-Iceland DTAA one of the most straightforward treaties to apply. To claim these rates, the Icelandic entity must obtain a Tax Residency Certificate (TRC) from the Icelandic Revenue and Customs (Skatturinn) and provide it to the Indian payer before the payment is made.

Surcharge and health and education cess are not levied on top of treaty rates. Combined with the TEPA's tariff reductions, the DTAA makes India-Iceland investment structuring significantly more tax-efficient than for many other countries.

Realistic Timeline

Total: 7-10 weeks from start to finish. Here is the honest breakdown.

• DSC + DIN: 1-3 days
• Name reservation: 1-4 days
• Document preparation, certified English translation, and apostille in Iceland: 1-3 weeks (Iceland's Ministry of Foreign Affairs processes apostilles efficiently)
• SPICe+ filing to Certificate of Incorporation: 5-15 working days
• Bank account opening: 2-4 weeks (enhanced KYC for foreign-owned entities)
• GST registration (if needed): 1-3 weeks

The time zone difference between Reykjavik (UTC+0) and India (UTC+5:30) is 5.5 hours. This means overlapping business hours exist roughly from 10:00 AM to 1:30 PM IST / 4:30 AM to 8:00 AM GMT — tight, but workable. Email and asynchronous communication will be the primary coordination method.

Post-Registration Compliance

Once your Indian company is incorporated, the compliance calendar starts immediately.

• FC-GPR filing with RBI — within 30 days of share allotment to the foreign investor. Mandatory under FEMA.
• Board meetings — 4 per year for a Private Limited company. First meeting within 30 days of incorporation.
• Annual General Meeting — by September 30 each year.
• AOC-4 filing — financial statements filed with MCA within 30 days of the AGM.
• MGT-7 annual return — filed within 60 days of the AGM.
• Statutory audit — mandatory every year, regardless of turnover.
• Income tax return — due by October 31 for companies requiring transfer pricing audit.
• GST returns — monthly or quarterly if registered.
• Transfer pricing documentation — required for all related-party transactions between the Icelandic parent and Indian subsidiary.

Bank Account Opening

Plan for 2-4 weeks.

Foreign-owned companies face enhanced KYC requirements. You will need FATCA/CRS declarations, verification through an Authorized Dealer (AD) bank, and the AD bank will scrutinize the source of initial capital.

Some banks are more foreigner-friendly than others. HDFC Bank, ICICI Bank, and Yes Bank have dedicated desks for foreign-invested companies. For Icelandic investors, European banking relationships may facilitate the process — ask your AD bank about correspondent banking arrangements with Icelandic banks like Landsbankinn or Islandsbanki.

Iceland has a very high level of financial regulation and CRS compliance, which Indian banks appreciate during KYC verification. This can actually speed up the process compared to investors from jurisdictions with weaker regulatory frameworks.

Profit Repatriation

Getting money back to Iceland is straightforward with the DTAA in place.

Dividends — the most common method. TDS at 10% under DTAA (versus 20% without). Process: declare dividend, deduct TDS at 10%, issue Form 16A, obtain CA certificate (Form 15CB), file Form 15CA with the income tax portal, instruct the AD bank to remit. You need a valid TRC from Skatturinn (Icelandic Revenue and Customs).

Royalties and management fees — 10% WHT under DTAA. For geothermal technology licensing or fisheries know-how transfer, this is a cost-effective route. Requires a proper intercompany agreement and arm's-length pricing documentation.

Share buyback — taxed as additional income in the hands of the company at the applicable corporate tax rate. Can be an exit mechanism.

Iceland's corporate tax rate is 20%. Combined with India's 10% withholding under the DTAA, the total tax burden on repatriated profits is competitive. Verify with an Icelandic tax advisor whether Iceland provides a foreign tax credit for Indian withholding tax paid.

Exit Strategy

If your India venture does not work out, here are your options.

Strike-off under Section 248 of the Companies Act, 2013 — for dormant companies with no assets or liabilities. File STK-2 with MCA. Takes 3-6 months. You need nil tax liabilities and closed bank accounts.

Voluntary liquidation under the Insolvency and Bankruptcy Code, 2016 — for active companies. Requires a special resolution, appointment of a liquidator, and completion within 12 months (extendable).

How Beacon Filing Helps

We handle the complete India entry process for investors based in Iceland. From initial structuring through post-incorporation compliance, here is what we cover:

• Foreign Direct Investment advisory — route selection, sector analysis, TEPA benefit optimization, RBI compliance, and FC-GPR filing
• Resident Director services — appointment of a qualified Indian resident director who meets the 182-day requirement
• Company setup and incorporation — SPICe+ filing, DSC, DIN, name reservation, and Certificate of Incorporation
• Tax and DTAA advisory — treaty benefit structuring, TRC guidance, transfer pricing documentation
• Accounting and statutory audit — bookkeeping, financial statements, ROC filings, and GST returns

Related Country Guides

Setting up from a different country? These guides cover similar territory:

• Register a Company in India from Norway
• Register a Company in India from Sweden
• Register a Company in India from Denmark
• Register a Company in India from Finland
• Register a Company in India from Switzerland
• Register a Company in India from UK

Get in Touch

Setting up an Indian company from Iceland? Talk to us. No commitment, no generic sales pitch. We will walk you through the structure, timeline, and costs specific to your situation.

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