Iceland's rules for tax-free employee gifts mix two very different approaches. One is a genuine fixed number: employer-funded staff events and treats are exempt up to 192,000 ISK per employee a year, and only the amount above that is taxed. The other is a deliberately open standard: milestone gifts for decade work anniversaries and decade birthdays have no fixed ISK figure at all, just a "reasonable and customary" test. Confusing the two, or assuming a number exists where it doesn't, is where most employers get this wrong. Here's how both actually work, plus 12 gift ideas priced in ISK and the separate rules for client gifts.
The 192,000 ISK annual events threshold
Under the Reglur um skattmat vegna tekna manna (rules on the tax valuation of individuals' income) for tekjuárið 2026, §2.1, employer-funded staff events and similar treats made generally available to all employees are exempt from tax up to 192,000 ISK per employee per year. This covers things like:
- The company's annual party (árshátíð).
- Staff trips (starfsmannaferðir).
- The Christmas party (jólahlaðborð) or similar seasonal event.
- Other treats and perks offered generally to all staff, not singled out for one individual.
Two things make this threshold more forgiving than it first looks:
- Only the excess is taxed, not the whole benefit. If the combined value of these events and treats for an employee comes to 220,000 ISK in a year, only the 28,000 ISK above the 192,000 ISK threshold becomes taxable, not the full amount. The exempt portion stays exempt regardless.
- It's a combined annual figure. The 192,000 ISK ceiling applies across all the qualifying events and treats an employee receives over the year, added together, rather than resetting per event.
The figure itself isn't fixed forever: it's set fresh each tax year and has been rising over time. Always confirm the current year's figure before relying on it, rather than assuming last year's number still applies.
Milestone gifts: no fixed number, just "customary"
Iceland has a separate category for milestone gifts, known as tækifærisgjafir (occasional or milestone gifts). This covers gifts marking whole-decade work anniversaries (10, 20, 30 years of service) and whole-decade milestone birthdays. It's a genuinely different kind of rule from the 192,000 ISK events threshold above, and it's worth being honest about how it works: there is no fixed ISK figure for tækifærisgjafir at all.
Instead, a milestone gift is exempt only if its value is "not higher than what is generally customary" for that kind of occasion. That's a reasonable-and-customary standard, not a number you can look up and plan against precisely. It means the right gift value depends on norms and context rather than a line in a table.
This also comes with a mechanic that's stricter than the events threshold, not more lenient. Under the 192,000 ISK events rule, only the excess above the threshold is taxed. With tækifærisgjafir, once a gift exceeds what's considered customary, the entire gift is likely to become taxable, not just the portion above some notional line. There's no excess-only cushion here, so erring on the side of a modest, clearly customary gift matters more than it would under the events threshold.
12 gift ideas
Because both the 192,000 ISK events threshold and the tækifærisgjafir "customary" standard are generous relative to typical branded merchandise, most individual gifts sit comfortably within either one on their own. The 12 products below range from roughly 580 ISK to 5,813 ISK per unit.
1. Hoodie – The Rex: the flagship piece
A heavyweight 280 gsm organic cotton hoodie that employees actually wear, and one of the most popular gifting items in the catalogue, comfortably inside Iceland's 192,000 ISK annual events threshold even as the priciest single item on this list.
- Material: 90% organic cotton, 10% polyester.
- Branding: embroidery, print, or patches.
- Order: MOQ 100 · from 5,813 ISK/unit.
2. Sports Socks: the safe favourite
Sunday's most-ordered item, a small, unexpected gift that always lands well and leaves almost the entire 192,000 ISK annual pool untouched.
- Material: 80% cotton, 17% polyamide, 3% elastane.
- Branding: knitted-in logo zones.
- Order: MOQ 100 · from 580 ISK/unit.
3. Recycled Steel Bottle: everyday hydration
Vacuum insulation in recycled stainless steel, a gift that gets used and seen every day, and barely dents the annual threshold.
- Material: recycled stainless steel.
- Branding: laser engraving or print.
- Order: MOQ 50 · from 1,595 ISK/unit.
View the Recycled Steel Bottle →
4. A5 Notebook: FSC-certified paper
An A5 hardcover with elastic closure and ribbon marker, practical with a traceable material story, and one of the lowest-cost items on this list.
- Material: FSC-certified paper, PU cover.
- Branding: debossing or print on the cover.
- Order: MOQ 100 · from 664 ISK/unit.
5. Premium Tote Bag: the lightweight carry
A heavyweight cotton tote with a premium feel, everyday enough to actually get used, and comfortably under the annual threshold.
- Material: 270gsm cotton.
- Branding: print or custom straps.
- Order: MOQ 100 · from 934 ISK/unit.
6. Knitted Scarf: the cosy extra
A high perceived-value item for a winter or year-end gift, priced well inside the 192,000 ISK annual ceiling even alongside another gift earlier in the year.
- Material: 80% viscose, 20% polyester.
- Branding: woven label.
- Order: MOQ 100 · from 1,111 ISK/unit.
7. Baseball Cap: the everyday accessory
An affordable, highly visible accessory that works all year round and stacks easily with other small gifts within the same annual threshold.
- Material: 100% cotton.
- Branding: embroidery.
- Order: MOQ 100 · from 1,209 ISK/unit.
8. Espresso Mug: the desk essential
A proper espresso cup for the coffee obsessives on the team, a small gift that still gets used daily and barely touches the annual pool.
- Material: ceramic.
- Branding: debossed or printed logo.
- Order: MOQ 108 · from 1,224 ISK/unit.
9. Bamboo Tea Bottle: the natural choice
A bamboo exterior over a durable stainless steel interior, a warmer-looking alternative to an all-metal bottle, priced well inside the annual exemption.
- Material: stainless steel, bamboo.
- Branding: laser engraving or print.
- Order: MOQ 50 · from 2,712 ISK/unit.
10. RollTop Backpack: the everyday bag
A water-resistant backpack with a laptop compartment that quickly becomes someone's everyday bag, and pairs easily with a smaller gift later in the year without pushing past the annual threshold.
- Material: GRS-certified recycled PU, water-resistant.
- Branding: print or embroidery.
- Order: MOQ 25 · from 3,563 ISK/unit.
11. Noise-Cancelling Headphones: the premium pick
A genuine step up in perceived value, still leaving plenty of room in the annual 192,000 ISK pool if you're gifting more than once a year.
- Material: recycled ABS, ANC + ENC, foldable.
- Branding: digital print or doming.
- Order: MOQ 50 · from 3,547 ISK/unit.
12. Wireless Powerbank: useful everyday tech
A magnetic wireless powerbank in recycled ABS plastic, genuinely useful for any commute or business trip, and easy to combine with a second gift across the year.
- Material: recycled ABS plastic.
- Branding: pad print or digital print.
- Order: MOQ 50 · from 2,667 ISK/unit.
Client gifts: also a reasonableness standard
Gifts to clients and business partners, known as risna, follow their own separate test, entirely apart from the employee-gift rules above. A client gift is deductible as a business expense if its cost is "reasonable relative to the occasion", and if it's directed at outside parties, actual clients, prospects, or business partners, rather than at the company's own board members or shareholders. As with tækifærisgjafir, there's no fixed ISK threshold here either: it's a qualitative reasonableness-and-custom standard, not a number.
VAT works on its own separate logic again. Input VAT on client gifts and entertainment is generally NOT deductible. The one notable exception is low-value promotional items that are clearly for advertising use: things like pens, notepads, calendars, or keychains branded with the company's name or logo. Once again, there's no fixed numeric threshold defining "low-value" here either; it's a qualitative standard based on the item genuinely functioning as a promotional giveaway rather than a personal gift.
Common mistakes
- Assuming a fixed ISK figure exists for milestone gifts. Unlike the 192,000 ISK events threshold, tækifærisgjafir has no number to plan against, only a reasonable-and-customary standard. Treating it like a numeric cap is the single most common error.
- Using a cash-convertible gift card and assuming it qualifies. Cash and gift cards that are freely convertible to cash are always fully taxable, no matter how small the amount or which category you're trying to fit it into. Only closed-loop, merchant-specific gift cards that can't be redeemed for cash can qualify as an ordinary gift under these rules.
- Assuming client-gift deductibility works like the 192,000 ISK employee-events threshold. Risna runs on its own separate qualitative test: reasonable relative to the occasion, directed at outside parties, with its own distinct VAT rule for branded promotional items. It isn't a fixed-number threshold at all, let alone the same one that applies to staff events.
Note: this article is a general explainer, not tax advice. Thresholds and standards can change, and how they apply can depend on your business's specific circumstances, so confirm the details with your accountant or payroll provider before relying on them.
Order gifts for your team
Every product above is fully customisable with your branding and available in business order quantities. Browse the full range in the Sunday catalogue to put together a gifting programme that fits comfortably within Iceland's 192,000 ISK events threshold and the tækifærisgjafir customary standard.
