Government plans nine changes to Iceland’s mileage charge

Iceland’s Ministry of Finance and Economic Affairs is planning nine changes to the mileage charge system, including allowing charges to be reduced when they were clearly imposed on incorrect grounds, mbl.is reports.

The proposed legislation would also exempt certain vehicles that are not used on the public road network and clarify the exemption for rescue teams.

Under the plans, the Director of Internal Revenue would receive specific authority to reduce a mileage charge when it is clear that the assessment was based on incorrect information and is higher than the correct amount should be.

Drivers would also be allowed to register a new odometer reading even if 30 days had not passed since the previous registration. A previous owner’s unpaid mileage charge would no longer prevent a new owner from taking a vehicle for its regular inspection.

The ministry also intends to exempt vehicles used exclusively outside the public road network. The proposal specifically mentions mining vehicles and tracked vehicles used only off-road or in closed work areas, as well as vehicles used exclusively in restricted airport areas.

The exemption for rescue teams would be clarified, and the possible exemption of light motorcycles is also being considered.

The mileage charge would be clearly defined as an operating expense under income tax legislation. The amendments would also state that the charge does not form part of the basis for value-added tax.

The proposed changes are scheduled to take effect on January 1, 2027. The ministry expects them to have an insignificant financial impact on state revenue.