In Icelandic restaurants, no tip is expected. Menu prices shown to consumers must already be final prices, and the reduced VAT rate that applies to catering and the sale of food is 11 percent. Restaurant staff pay is set through collective wage agreements, not a tipped minimum wage or tip-credit system.
Do you need to tip at a restaurant in Iceland
No tip is expected at restaurants in Iceland.
What is already built into the menu price
Under Icelandic price-marking rules, the price stated to a consumer must be correct and final. Value added tax, commission, booking fee, freight, or any other kind of payment regardless of its title must already be included in that price.
Service businesses in Iceland must also keep a clear price list or sign showing the price of the services they provide, with price information at the cash desk or another prominent place where the service is given.
The VAT rate on food and drink you are charged
Iceland's reduced value added tax rate is 11 percent. It applies to categories including catering and the sale of food.
Iceland also has a standard value added tax rate of 24 percent, applied to most other goods and services.
Why staff pay does not depend on what you leave
Minimum pay and other employment terms for Icelandic workers, including restaurant staff, are set by collective wage agreements negotiated between unions and employer groups. The system is not based on a tipped minimum wage or a tip-credit system.
Under Icelandic law, employers and employees may not agree to lower wages or worse employment terms than those set out in the applicable collective wage agreement.
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