Alcohol tax in Iceland
A visual guide to alcohol pricing in Iceland. You might get double the quality of wine by paying just 500 ISK (~$4 USD) more. See the breakdown of alcohol tax, VAT, and the rest of the price in the examples below to understand.
Last updated: 2026-04-26. The examples use official 2026 alcohol-tax rates and fixed example prices. Actual product prices can differ.
Total tax
Spirits
69,9%
Wine
44,4%
Beer
38,9%
Each example shows the final shelf price a consumer sees. The colored parts are the estimated alcohol tax, VAT, and remaining non-tax price.
700 ml bottle, 40% ABV
Total tax
28,0 cl pure alcohol
6.292 kr. 69,9%
Alcohol tax
5.400 kr. 60,0%
VAT
892 kr. 9,9%
Remainder
2.707 kr. 30,1%
750 ml bottle, 13,5% ABV
Total tax
10,1 cl pure alcohol
1.548 kr. 44,4%
Alcohol tax
1.202 kr. 34,5%
VAT
346 kr. 9,9%
Remainder
1.942 kr. 55,6%
330 ml can, 5% ABV
Total tax
1,7 cl pure alcohol
191 kr. 38,9%
Alcohol tax
142 kr. 29,0%
VAT
49 kr. 9,9%
Remainder
299 kr. 61,1%
These two Vínbúðin red wines are both 750 ml and 13.5% ABV. Their fixed tax load is the same, and they are both cheap wines about 500 ISK apart. Let's calculate their tax, VAT, and margin, then estimate how much of the remaining bucket goes towards the wine itself.
Portugal, 750 ml, 13,5% ABV
Estimated wine in the bottle
175 kr.
Estimated range: 100-250 ISK
Shelf price
2.198 kr.
Alcohol tax
1.202 kr.
VAT
218 kr.
ÁTVR margin, official rule
302 kr.
Recycling / container fee
36 kr.
Wine, bottle, freight, and importer
(estimate)
440 kr.
Spain, 750 ml, 13,5% ABV
Estimated wine in the bottle
375 kr.
Estimated range: 250-500 ISK
Shelf price
2.699 kr.
Alcohol tax
1.202 kr.
VAT
267 kr.
ÁTVR margin, official rule
371 kr.
Recycling / container fee
36 kr.
Wine, bottle, freight, and importer
(estimate)
823 kr.
A small price increase of 500 ISK (~$4 USD) might get you double the quality. This is because once the fixed taxes are covered, any price increase can in large part go towards the actual liquid. Some amounts in the breakdown are guesstimates. But the story is useful: for 500 ISK more, the estimated amount towards the wine itself moves from about 175 ISK to about 375 ISK.
Casa Santos Lima Red Blend appears on Vínfinnur at 1,399 ISK from Hagkaup / Veigar. After public alcohol tax, VAT, and the glass fee, only about 76 ISK remains before wine, bottle, importing, and operations enter the picture. This is an extreme example and in our opinion is probably a loss-leader.ery likely points to loss-l
Casa Santos Lima Red BlendShelf price
1.399 kr.
Alcohol tax
1.149 kr.
VAT
139 kr.
Recycling / container fee
36 kr.
Room after taxes
76 kr.
This very likely points to loss-leader pricing as the wine, bottle, freight, and retail costs probably does not fit inside 76 ISK.
Alcohol tax
A fixed tax based on pure alcohol volume. Beer and wine get a 2.25% exemption in these examples, spirits do not.
VAT
11% VAT is already included in the shelf price. Here it is extracted with final price * 11 / 111.
Remainder
This is not pure profit. It includes product cost, importing, distribution, recycling fees, operations, and margin.
Taxes explain a large part of the price, but not all of it. Store prices, discounts, bottle sizes, ABV, and quality still vary across the market.
These are simple consumer-facing examples, not an exact breakdown of a named product or store.
01
Alcohol tax is based on pure alcohol volume.
02
Beer and wine are taxed above 2.25% alcohol by volume, while spirits are taxed from 0%.
03
VAT is 11% and is part of the final consumer price.
Beer: 156.45 ISK per centilitre of alcohol above 2.25% ABV.
Wine: 142.50 ISK per centilitre of alcohol above 2.25% ABV.
Other alcohol: 192.85 ISK per centilitre of alcohol above 0% ABV.
The deep-dive wine prices were checked on 26 April 2026.
The ÁTVR margin is not guessed. It is calculated from ÁTVR's official 18% margin rule for products up to and including 22% ABV.
The actual-liquid estimate is a guesstimate: after alcohol tax, VAT, ÁTVR margin, and glass fee, the remaining bucket is roughly split between wine, bottle, freight, and importer costs.
VAT is calculated from the final price with the formula final price * 11 / 111.
The remainder is not profit. It includes supplier cost, importing, distribution, retail margin, recycling fees, and other costs.
Example prices are fixed, not live offers. Recycling fees are not separated as their own visual segment.
Alcohol tax
taxable alcohol cl * public rate
VAT
final price * 11 / 111
Remainder
final price - alcohol tax - VAT
Is this the exact breakdown for every bottle?
No. These are examples using public tax rates and realistic consumer prices. Actual prices also include supplier cost, importing, retail margin, recycling fees, logistics, and other costs.
Why do spirits carry so much tax?
The alcohol tax follows pure alcohol volume. A bottle of spirits contains much more pure alcohol than a beer can or a wine bottle.
Does price comparison still matter?
Yes. Fixed taxes explain part of the price, but stores, discounts, bottle sizes, ABV, and quality still vary. Comparing prices can still change what is the best buy.
