Tariffs on Fabrics: Textile Import Duty in Iceland

scenic view of a snow covered mountain

Iceland is one of the nations based in Europe that is not part of the EU. This means that the nation has its own customs tariffs that apply to all goods, including textiles, entering the country. 

However, although Iceland is not part of the EU, it has other agreements with the union that affect imports and exports with the member states. An example is the European Economic Area (EEA) Agreement, which is vital to the country’s foreign policy. You should therefore understand how such agreements might affect how you trade in Iceland. 

The Textile Industry of Iceland  

Weaving and knitting are key traditions for the people of Iceland, where they have spun and woven wool for centuries. Icelanders make textile products for both the local and global markets. According to Textile Infomedia, the U.S., Germany, and the U.K are the leading export markets for fabrics from Iceland. 

Thus, it’s evident that the textile industry is a crucial part of the country’s lifestyle and economy. This creates import opportunities in Iceland for fabric from other countries to meet the lifestyle and economic needs. 

That is why Iceland is a huge importer of fabrics from Europe, Asia, and Africa. However, the country where Icelanders import textile products the most is China, which accounts for about 24.5% of the total import share

Fabric Import Duty in Iceland

Iceland charges zero import duty on textile and textile articles entering the country. This is according to the customs tariff rates, which you can find on Iceland’s Customs and Revenue website

Here are some of the categories of fabric that you can expect to pay 0% customs duty when importing into Iceland:

  • Silk goods
  • Wool, fine or coarse animal hair products
  • Cotton products
  • Goods derived from Vegetable textile fibers 
  • Textile materials of man-made filaments materials
  • Man-made staple fibers

But why does Iceland impose a 0% import duty for fabrics? The decision can be attributed to two main factors. 

First, the country is a small island with about 380,000 people. Thus, it might not be in a position to produce and process textile raw materials in large quantities due to a shortage of labor and industries. This then forces the residents to source fabric from outside.  

Second, the textile industry plays a crucial part in the country’s economy. Thus, it is only reasonable for the government to make the country attractive for fabric imports to help increase the supply of raw materials used to manufacture textile products for export.   

Benefits of the Zero Import Duty for Manufacturers 

The zero import duty makes Iceland the perfect destination for importing fabrics from China and other countries. This is because of the following benefits you enjoy when trading with this European country. 

Increased Profits 

The exemption of fabrics from import duty reduces the cost of importing goods into Iceland. The reduced cost means you will end up making more profit. This is because you are not required to pay any percentage as customs duty based on the value of your textile goods. 

Furthermore, the 0% import duty makes fabrics more affordable for local consumers and industries. This results in an increase or steady demand, which guarantees a profit. 

Ease of Trading 

The 0% customs tariff reduces the time the relevant authorities take to determine the category of your textile goods and the applicable tariff rate. This smooths up the trading process since products are cleared at the border within a short time. 

You can then make timely deliveries to your clients, thereby improving your business relationship. 

The Takeaway 

Iceland’s Customs and Revenue agency exempts all textile goods from import duty. The policy makes the country a suitable place to trade fabric derived from both natural and artificial materials.   


Author's Bio:
Sherry Lin

Sherry Lin

Sales Director of fabricstrades.com, a GRS-certified manufacturer of sustainable stretch fabrics. She love sharing fabrics procurement insights.

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