I run a small business. What would change with membership?

Four important factors would transform the operating environment for small businesses in Iceland if we take the full step into the EU:

The customs union: No customs documents or certificates of origin

Iceland is already part of the internal market through the EEA Agreement, but we remain outside the EU customs union. Because of this, Icelandic businesses still need to prepare customs declarations, export filings, and certificates of origin when sending goods to Europe or receiving goods from there. Even when the goods themselves carry no tariff under the EEA Agreement, this paperwork, customs processing fees, and border delays are a real obstacle for small businesses.

Inside the EU, all such requirements are abolished, processing fees disappear, and there are no customs borders. Goods flow between Reykjavík and Paris exactly as they do between Reykjavík and Akureyri — without documents, without fees, and without delays.

Simpler VAT (One-Stop Shop)

EU member states use a harmonised value-added tax system that makes cross-border trade far simpler than what we are used to. Businesses can use the so-called One-Stop Shop (OSS) system: they simply collect the appropriate European VAT directly at the online checkout when the item is purchased, and then remit it in a single payment at home as part of their regular VAT return. The package then goes straight to the buyer's door in Europe as if it were a domestic shipment. The same applies in the other direction, for imports to Iceland.

Payment and commerce platforms

International service providers have a strong tendency to bypass Iceland. The reason is the small size of the króna and the complexity of servicing a country outside the EU.

• Stripe — the world's most popular payment platform for online stores — is not available in Iceland unless a business goes through the complex process of setting up a subsidiary in the United States or Europe.
• Shopify Payments — the built-in, low-cost payment solution in the world's largest e-commerce platform — recently added support for nearly all smaller EU member states (Estonia, Latvia, Lithuania, Malta, Croatia, and others) but, of course, not Iceland.

With EU membership and euro adoption, these barriers disappear. Icelandic small businesses and startups would finally have automatic access to the same tools at the same prices as their European competitors.

Lower cost of capital with the euro

With the euro replacing the króna, the cost of capital for businesses would drop considerably. At the same time, transaction fees and costs arising from bid-ask spreads in foreign exchange would be expected to disappear.

In short: EU membership would eliminate extensive customs paperwork, make cross-border e-commerce as easy as domestic trade, and open the door to international payment and commerce platforms from which small Icelandic businesses are shut out today.

Sources and further reading:

• Information on rules of origin and customs under the EEA is available on the Government of Iceland website. It makes clear that the EEA is a free trade area, not a customs union, and goods must therefore meet strict rules of origin to qualify for tariff-free treatment.
• The European Commission's official website explains the OSS system (One-Stop Shop), fully implemented in 2021 to simplify VAT returns and boost cross-border e-commerce within the EU.
• Stripe's website lists the 46 countries with full support (Stripe Global). Iceland is not on the list and never has been, despite all the Nordic countries and a large share of EU member states being included.
• Shopify's official list of supported countries for their payment gateway shows that all smaller EU member states now have support, while Icelandic stores must rely on more expensive solutions from the few third-party providers that support Iceland.