Iceland’s New Per Kilometer Road Tax Explained
Icelandic Government is introducing a new mandatory road usage tax based on kilometers driven. This guide explains how the per kilometer tax works and what it means for travelers renting a car in Iceland.
Iceland is moving to a road usage model based on kilometers driven, commonly referred to as the Per Kilometer Tax (Kílómetragjald). As a local rental company, we want to be fully transparent about what this means for your booking and how we handle it at Reykjavik Rent a Car.
This guide explains the tax in simple terms, what you should expect as a customer, and how we ensure clear pricing with no surprises.
What the Per Kilometer Road Tax Is
The per kilometer road tax is a government road usage fee calculated from the vehicle’s odometer readings. It is designed to ensure vehicles contribute to road maintenance and infrastructure based on how much they are driven, regardless of whether they are petrol, diesel, hybrid, or electric.
Official information and background from the Icelandic authorities is available at vegirokkarallra.is.
How Reykjavik Rent a Car Handles the Tax
When you rent with Reykjavik Rent a Car, you do not need to calculate kilometers, report anything to the authorities, or take any extra steps. We handle the administrative side as part of operating legally and transparently in Iceland.
- No separate payment at pickup: You are not asked to pay a special “per kilometer tax fee” at the counter.
- No paperwork for the customer: Reporting and compliance are handled by us, not by the driver.
- Clear pricing: Any mandatory government fees we are responsible for are reflected transparently in your rental agreement.
- No surprise charges: You will not receive unexpected post-rental charges related to this tax.
What You Will See During Pickup and Return
To keep everything clear, we record the vehicle’s odometer reading at the start of the rental and again when the vehicle is returned. This is standard practice for documenting vehicle condition and usage and supports accurate reporting where required.
For customers, this does not change how you drive or how you return the car. You simply return the vehicle at the agreed time and follow the normal return process.
Privacy and Odometer Based Reporting
A common concern is whether this type of tax involves tracking how much you drive. It does not.
The system is based on odometer readings only. It does not track location, routes, or driving behavior.
We still offer unlimited mileage.
At a Glance: What This Means for You
| Topic | What it means when you rent with us |
|---|---|
| Do I pay the tax separately? | No. You do not make a separate payment for this tax at pickup or return. |
| Do I need to report kilometers? | No. We handle reporting and compliance. |
| Will I be charged extra after return? | No. There are no unexpected post-rental charges related to this tax. |
| Does it apply to all car types? | Yes. The tax applies regardless of fuel type. |
| Is my driving tracked? | No. Odometer readings only, no GPS tracking for this purpose. |
Short Reassurance
No hidden fees and no extra steps.
We handle mandatory road tax administration as part of your rental, and you will always see clear pricing in your rental agreement. If you have any questions before or during your trip, our team is happy to help.