Self-employed individuals are able to utilise the Act’s recourse, providing that they have notified the tax authorities of operational cessation (form RSK 5.02). Applications for unemployment benefits are submitted to The Directorate of Labour and the notifications to Iceland Revenue and Customs (Skatturinn) via email to rsk@rsk.is

If you are self-employed with operations registered to your own ID number(kennitala) and report monthly income: if

You are paid calculated remuneration (not wages) and everything is registered to your ID number. You apply for standard benefits and are required to submit form RSK 5.02 to Iceland Revenue and Customs (Skatturinn) and the form ‘Contractor’s statement’ (verktakayfirlýsing) to The Directorate of Labour.

If you are a business owner with operations on a separate ID number (usually ehf.):

You may apply for reduced employment ratio and apply in the same manner as others. You may also completely cease your operations and apply for standard benefits. When you apply for benefits, you are required to submit a confirmation of employment period (staðfesting á starfstímabil) to the directorate.

If you are self-employed with operations registered to your own ID number(kennitala) and report annual income (Ársmaður):

You are able to apply for standard unemployment benefits. Self-employed individuals who report income annually, usually via their personal tax report are required to submit the form ‘Contractor’s statement’ (verktakayfirlýsing) and a confirmation of payment of income tax and social insurance tax from Iceland Revenue and Customs (Skatturinn). Please note that if you are outside of the Reykjavík Capital Region, then the information is obtained from your local District Commissioner (Sýslumaður)

 

Further information regarding self-employment

Self-employed individuals aged from 18 to 70 years of age are entitled to unemployment benefits, providing that they have acquired insurance entitlements and fulfil the following conditions:

  • are actively seeking employment
  • are legally domiciled and residing in Iceland
  • are permitted to engage in employment without restriction
  • has been a self-employed individual during the acquisition period.
  • has ceased operations
  • has submitted a confirmation of cessation of business operations (form RSK 5.02), and if applicable, confirmation of employment period (staðfesting á starfstímabili) and confirmation of study,.
  • have paid social security tax and tax deductions at source on calculated remuneration, in accordance with the decision of the tax authorities, when business operations were ceased
  • have been seeking employment for three continuous days from the time when their application for unemployment benefits are received by The Directorate of Labour.

Contractors please note:

When applying for unemployment benefits at The Directorate of Labour due to project shortage, self-employed individuals are required to fill out form RSK 5.02 https://www.rsk.is/media/rsk05/rsk_0502.en.pdf

When completed, the document must be sent to rsk@rsk.is, along with a request that the tax authorities send a confirmation of deregistration to The Directorate of Labour’s payment office (Greiðslustofa).

 

A self-employed individual is any person who works at their own business or independent activity to the extent that they are obliged to pay tax deductions at source in respect of calculated wages and social insurance tax in respect of their work, either every month or in another regular manner according to rules set by the Minister of Finance on calculated remuneration.

 

Owner of own business operations who is an independent legal entity or who has a controlling position as a board member are considered to be wage earners but acquire a benefit entitlement in the same manner as a self-employed individual.

 

A self-employed individual shall be regarded as fully insured after having paid monthly payments of tax deductions at source on their calculated remuneration equivalent at least to the reference sum as determined by the tax authorities as calculated remuneration for work for the relevant occupation and social insurance tax, for the last twelve months before applying for unemployment benefits.

  • Self-employed individuals who have paid monthly payments of tax deductions at source on their on their calculated remuneration that is equivalent at least to the reference sum as determined by the tax authorities as calculated remuneration that is equivalent at least to as calculated remuneration for work in the relevant occupation, and social insurance tax, for less than twelve months but more than three months during the last twelve months before applying for unemployment benefits shall be regarded as insured proportionally according to the number of months during which they have paid tax deductions at source.

 

  • The same shall apply to self-employed individuals who have paid monthly payments of tax deductions at source on calculated remuneration that is lower than the reference sum as determined by the tax authorities as calculated remuneration for work in the relevant occupation and social insurance tax during the last twelve months before applying for unemployment benefits; in this case, the insurance proportion shall be determined by the proportion of the calculated remuneration, on which payments have been made in relation to the reference sum.

 

  • Self-employed individuals who have made monthly payments of tax deductions at source on calculated remuneration that is lower than 25% of the reference sum as determined by the tax authorities for the relevant occupation during the last twelve months before applying for unemployment benefit shall not be regarded as being insured.

 

In order to calculate the insurance proportion of self-employed individuals who pay tax deductions at source on their calculated remuneration and social insurance tax once a year, the average monthly income in the form of calculated remuneration over the year before applying for unemployment benefit shall be determined.

 

A self-employed individual shall be regarded as fully insured after having paid tax deductions at source on their of average monthly income during the past income year, that is at least equivalent to the reference sum as determined by the tax authorities as calculated remuneration for work for the relevant occupation, and social insurance tax.

 

  • If paid tax deductions at source on average monthly income during the same period that is lower than the reference sum as determined by the tax authorities for the relevant occupation, then their insurance proportion shall be determined by the proportion which their calculated remuneration, on which payments have been made in relation to the reference sum.

 

  • Self-employed individuals who have made monthly payments of tax deductions at source on calculated remuneration that is lower than 25% of the reference sum as determined by the tax authorities for the relevant occupation during the last twelve months before they apply to the Directorate of Labour for unemployment benefit shall not be regarded as being insured.

 

Examples of benefit entitlement calculation:

  • A self-employed individual who has paid the full reference amount of his work for 12 months will acquire a 100% benefit entitlement.
  • A self-employed individual who has paid the full reference amount of his work for 6 months will acquire a 50% benefit entitlement.
  • A self-employed individual who has paid 50% of reference amount of his work for 12 months will acquire a 50% benefit entitlement.
  • A self-employed individual who has paid 75% of the reference amount of his work for 6 months will acquire a 50% benefit entitlement.

 

A self-employed individual’s benefit entitlement can never be higher than the employment ratio that he is prepared to be engaged in.

 

Studies pursued by self-employed individuals for at least six months during the twelve months before applying for unemployment benefit shall be equivalent to thirteen weeks full employment, providing that they have demonstrably completed the course of studies and worked for at least three months on the domestic labour market during the entitlement acquisition period.

 

  • A certificate from the relevant educational institution shall be submitted with the application for unemployment benefits, stating that the self-employed individual has pursued and completed the course of studies.
  • This authorisation may only raise the self-employed individual’s insurance proportion once during each period under Article 29. of Act No. 54/2006 on Unemployment Insurance.

The self-employed individual shall have reached 16 years in full before the commencement of the entitlement acquisition.

 

Information about which documents must accompany the application is available here

 

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