Iceland data centers to benefit from VAT changes on services and equipment

Data center services in Iceland are due to benefit from the recent amendments made to the Value-Added Tax Act. The amendments, approved by the Icelandic parliament, will put Iceland’s data storage industry on the same footing as its European competitors regarding VAT on exported services and equipment owned by clients.

Iceland’s Minister of Industry, Energy and Tourism, Katrin Juliusdottir, described this as an important development, and said when the bill was passed that it marked the beginning of a promising new green industry for Iceland, based on know-how, skills and sustainable energy.

Isaac Kato, Executive Vice President of Verne Global commented “Verne believes the approval of the VAT reform legislation by the Icelandic Parliament was an essential step in establishing Iceland as a mainstream Data Center hub in Europe. Without the Act, Data Centers located in Iceland would not have been competitive with providers in other countries in the EU. Iceland’s tremendous natural resources offer major cost savings and carbon reduction opportunities for Data Center users, and we look forward to helping companies in the U.S. and Europe enjoy these benefits that are so important to CIOs today.”

It has been emphasised that this does not constitute as state aid in the sense of Article 61 of the EEA Agreement, due to the fact that the Iceland data storage industry has only been set on the same competitive footing as its competitors in other countries.

Additionally, in order to avoid infringement of the procedural rules of the EFTA Surveillance Authority (ESA), and also to give the Government time to inform ESA of the changes and receive its confirmation, the amendments will not take effect until 1 May 2011.

Additional information about the data center industry in Iceland and investment opportunities can be found at www.invest.is