TL;DR
As a self-employed contractor you must calculate a salary for yourself (reiknað endurgjald) based on reference amounts set by Skatturinn. This "salary" is the base for your income tax, pension, and social security payments. FreelancePay calculates this automatically.
1) What is Reiknað Endurgjald?
When you work as a self-employed contractor you are both employer and employee. Skatturinn requires you to "pay yourself" minimum wages based on your job category — this is reiknað endurgjald.
Reiknað endurgjald is not your "salary" in the traditional sense — you do not necessarily transfer this amount to your bank account. It is an accounting concept that forms the basis of your tax payments.
💡 Example: If you are a designer (category C) and the reference amount is 450,000 ISK/month, you must calculate income tax, pension, and social security on this amount — even if you received no payment that month.
2) Reference Amounts by Job Category (2026)
⚠️ These figures are approximate reference amounts for educational purposes. Skatturinn publishes exact figures annually — always check the latest at skatturinn.is.
| Cat. | Job Category | Examples | ISK/month | ISK/year |
|---|---|---|---|---|
| A | Highest professional services | Doctors, dentists, lawyers | 670,000+ | 8,040,000+ |
| B | Professional services | Accountants, engineers, architects | 530,000+ | 6,360,000+ |
| C | Professional services II | Photographers, designers, psychologists | 450,000+ | 5,400,000+ |
| D | Trade/technical services | Technicians, electricians, plumbers | 430,000+ | 5,160,000+ |
| E | General services | Service providers, sales agents | 380,000+ | 4,560,000+ |
| F | General services II | Cleaning and maintenance services | 350,000+ | 4,200,000+ |
| G | Commerce | Retail staff, drivers | 330,000+ | 3,960,000+ |
| H | Other activities | Various other services | 290,000+ | 3,480,000+ |
3) When Can You Reduce It?
- If you have another job that pays you more than 50% of the reference amount
- Never below 25% of the reference amount
- You need to demonstrate the other income stream
- Skatturinn can request proof of the other employment
4) How to Report and Pay
- Monthly at skatturinn.is — deadline is the 15th of each month
- Select "Staðgreiðsla launagreiðanda" and enter your reiknað endurgjald
- System calculates income tax + social security automatically
- Pension contribution is paid separately to the pension fund
- FreelancePay does this automatically — no manual entry needed
5) What Happens If You Get It Wrong?
Reclassification by Skatturinn
If Skatturinn considers your reiknað endurgjald too low it can reassess and move you to a higher category.
Back taxes
The difference between taxes paid and taxes due, plus late interest.
Penalties
Surcharge on underpaid taxes.
Reduced pension rights
If reiknað endurgjald is too low, fewer pension rights accumulate.
FreelancePay Calculates This Automatically
FreelancePay knows the reference amounts and automatically calculates reiknað endurgjald, income tax, social security, and pension contributions every time you send an invoice.