Billions lost in Reykjavik accommodation black market

Photo: Iceland Monitor/Golli

Iceland is losing out on an estimated ISK 21.5 billion (€180 million) a year because of undeclared black-market accommodation rentals in Reykjavik, it has been claimed.

Kristófer Oliversson, CEO of Center Hotels, runs six hotels in central Reykjavik and says that unregistered accommodation destroys the level playing field and offers tough competition.

He estimates that some 3,000 apartments in central Reykjavik are being rented out as holiday accommodation. Given current utilisation rates, this could work out at an annual total turnover of ISK 21.5 billion.

Black-market conditions mean that only a fraction of the taxes that should go into the national coffers – VAT, income tax, insurance premiums, property tax – actually finds it way there.

“This has become a large-scale underground economy which is raking in money,” says Oliversson. “Something needs to be done to get a grip on unregistered business.”

Securing this tax income would be a preferable way of funding the necessary development of basic services in Iceland rather than the “dubious idea” of massively increasing the overnight stay tax for tourists.

One of Reykajvik's Center Hotels.

One of Reykajvik's Center Hotels.

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