Cost of Living in Iceland
A new home in the capital city of Reykjavik may be purchased for 300,000 to 350,000 ISK per square metre while properties in suburbs cost 200,000 ISK per square metre or less. Expats holding a residence permit may purchase an apartment in Iceland through banks or the Housing Finance Fund. Rental fees, exclusive of utilities, can cost more than half the average salary. However, those renting a flat under a six-month lease contract may apply for rent subsidies through municipalities across the country.
Travelling within the country is not cheap as gasoline costs a fortune. Expats, however, may opt for the local transport system. A single-bus fare costs 350 ISK while a one-day pass may be bought for 700 ISK. A set of 11 tickets is also available for 3,000 ISK. Many locals and foreigners ride bicycles on the Ring Road to safely travel around.
Groceries can cost a lot as prices continue to rise each month. A family of four spends an average of 20,000 ISK to 30,000 ISK per week on food essentials. For a couple, a weekly grocery costs 10,000 ISK to 15,000 ISK. Food essentials include milk, bread, butter and cheese. Icelander Júlíana Björnsdóttir, a traveller and writer, commented: “It’s a daunting reality that nowadays it’s even possible to buy a return flight to London or Copenhagen for the same price a family of four pays for the weekly grocery shopping.”
Subscription to private television stations is worth 30,000 ISK per month while the state broadcaster charges 18,000 ISK per person per year.
Despite the high cost of living in Iceland, the country has a relatively high annual wage. The European state ranked 3rd in a Bloomberg list of Best for Workers countries. Workers earn an average monthly salary of 293,460 ISK, net of taxes. The country imposes a progressive tax system where higher income-earners pay a higher tax rate. As of 2013, those earning 241,475 ISK or less are charged a 37.32% income tax while those earning 241,476 ISK to 739,510 ISK pay a tax rate of 40.22%. Income-earners receiving a monthly wage of more than 739,510 ISK are taxed 46.22%.
There is no minimum wage level in Iceland as unions and employers’ federations freely bargain salary rates and workers’ benefits.
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