Tax changes drive smaller expedition cruise ships from Iceland

Tax and operating changes are driving a sharp decline in smaller expedition cruise ship calls in Iceland, Sigurður Jökull Ólafsson, managing director of Cruise Iceland, told mbl.is.

All cruise ships call at Reykjavík or Hafnarfjörður at some point, he said, but the figures show that visits by smaller vessels are continuing to fall.

“In 2023, 148 expedition ships came here, but in 2028 there will be 80 ship calls,” Sigurður said. Although the total number of cruise ship visits is recovering through increased calls by larger vessels, Iceland is losing the smaller ships.

Sigurður said an infrastructure fee imposed on cruise ships at short notice before the end of 2025 had had a negative impact, particularly on larger vessels.

“It was both introduced too steeply and set too high. These ships book their trips well in advance and carry thousands of passengers, so the fee went directly into their operating costs,” he said.

Revenue supports harbour services

Sigurður said cruise ship activity was fundamentally a harbour matter. Revenue from cruise ship visits helped finance services for coastal fishing, he said, adding that smaller harbours also relied on the income and that it could be essential for municipalities to maintain a harbour employee.

Fees from cruise ship visits had also enabled extensive harbour development around Iceland. The infrastructure benefited cruise ships as well as other activities, since the vessels were present for only part of the year.

He cited the 500 to 600-metre quay in Ísafjörður, a fishing town, as an example, along with a new quay in Akureyri and Reykjavík’s first passenger terminal since the BSÍ building was constructed 60 years ago.

The infrastructure could also support aquaculture, passenger transport and increased visits by naval vessels, he said.

Estimated tax contribution

Sigurður estimated that cruise ships generated a tax contribution of about 40 billion Icelandic krónur in 2023. Adjusted for inflation and increased traffic, he said the figure could be estimated at 50 to 60 billion krónur for 2025.