Traveling to Iceland Is About to Cost More—Here’s the Reason

Iceland is renowned for various attractions: the mesmerizing shade of its Blue Lagoon, its volcanic terrain and lava flows, the impressive number of waterfalls and glaciers, and the curious fact that sheep outnumber people by more than double. Over the last decade, the influx of tourists has surged dramatically.

In 2009, Iceland saw 464,000 visitors. By 2019, that figure skyrocketed to over 2 million in a nation with only 360,000 residents, covering an area similar to Ohio. In recent years, certain locations, such as Fjadrárgljúfur canyon, have had to restrict access due to environmental strain from the throngs of tourists.

To safeguard its stunning natural landscapes, Iceland has announced plans to implement a tourism tax. Such taxes can fund a variety of initiatives, from supporting art and culture, as seen in Germany, to enhancing sustainability efforts, akin to Bhutan.

Currently, specifics on how this tax will function are minimal. Prime Minister Katrín Jakobsdóttir informed Bloomberg last week that it would start at a low rate and be enacted as municipal taxes for visitors staying in Iceland. Details regarding its launch or implementation timeline are still forthcoming.

The Nordic country is following a rising trend among various destinations, both nationally and locally, that have recently launched or are considering tourism tax initiatives. In 2023, Manchester in the UK introduced a charge that adds £1 (approximately US$1.21) to a hotel bill for each night a guest stays, while Barcelona, Spain, raised its existing tourism tax from €1 to €0 per night (US$1.05 to $3.67). Similarly, Edinburgh is awaiting approval from the Scottish parliament to implement a £2-per-night tax, and leaders in Hawai‘i nearly passed a law mandating visitors to pay a $50 “green fee.” Next year, Amsterdam will unveil the highest tourism tax in Europe, set at 12.5 percent of the cost of each night’s hotel stay, while Venice will charge day visitors a fee of 5 euros (US$5.38).