Laugarás Lagoon may reconsider expansion over VAT hike

Laugarás Lagoon will review plans for further investment if a planned increase in value-added tax on bathing lagoons, from 11% to 24%, goes ahead, managing director Bryndís Björnsdóttir told mbl.is.

Björnsdóttir said she was concerned that several tax and fee changes were targeting tourism businesses and their customers at the same time. The increase would be particularly difficult for Laugarás Lagoon, she said, as the company recently made a substantial investment in rural development and has been operating for less than a year.

Kristján Gunnar Ríkharðsson, who is preparing to develop a bathing lagoon and luxury hotel at Skanshöfði in Vestmannaeyjar, said the tax rise would mean higher admission prices and could reduce visitor numbers at bathing lagoons in Iceland.

He plans to begin construction next year, expecting the operating environment to improve by the time the lagoon and hotel open in 2029.