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. For goods to qualify for tariff-free treatment under the EEA Agreement, they must meet rules of origin — you have to demonstrate that they are genuinely produced within the area. For a small business assembling a product from inputs sourced far and wide, that alone can be a fair amount of paperwork. Even when the goods themselves carry no tariff, the documents, customs processing fees, and border delays are a real obstacle.

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.

On the other hand, in the customs union we would adopt the EU's common external tariffs. Iceland today levies almost no tariffs on industrial goods, so imports directly from countries outside the union — China, for example — could carry a tariff they don't carry now. One example is the tariff on Chinese cars, which is subject to special provisions and covered on another card.

How much does this weigh? Less than the debate would suggest. The EU's external tariffs on the product categories that manufacturing and technology businesses chiefly import — electronic components, machinery, and machine parts — are generally low, in the 0–5% range. On computers, telecommunications equipment, and most electronic components the tariff is 0% under the international Information Technology Agreement (ITA), to which the EU is a party. On top of that, a good share of Chinese inputs reaches us through European suppliers, having then already passed inside the tariff wall. Claims that losing the free trade agreement with China would hamper Icelandic business therefore hold up poorly to scrutiny.

E-commerce to Europe: VAT in one filing (One-Stop Shop)

Today, selling to consumers in EU countries is awkward for Icelandic online stores. Either the shipment goes through an import process on the buyer's end — with the buyer paying VAT plus a carrier handling fee before the package is released, an experience that kills repeat business — or the store registers in the EU's IOSS system to collect the tax right at the online checkout. The catch is that businesses outside the EU must appoint an intermediary established within the union to use the system, at a cost. The only exemption is Norway, which has concluded a special cooperation agreement with the EU on VAT.

Inside the EU, the picture reverses. We would simply collect the destination country's VAT directly at the online checkout and remit it in a single quarterly return at home, through the One-Stop Shop (OSS) system — with no intermediary of any kind. The package 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 payment and commerce platforms treat every country outside the EU as a separate business case: its own currency, its own regulatory framework, its own tax filings. For a market of 400,000 people with the króna, the conclusion is almost always the same — not worth it.

• Stripe — the world's most popular payment platform for online stores — supports all 27 EU member states, including the smallest, Malta and Cyprus. Iceland is not on the list and never has been; an Icelandic business has to set up a subsidiary abroad to use the service.
• Shopify Payments — the built-in, low-cost payment solution in the world's largest e-commerce platform — added support in spring 2025 for nearly all the smaller EU states: Estonia, Latvia, Lithuania, Malta, Croatia, Slovenia, Cyprus, and more. Iceland was left behind.

EU membership admittedly obliges no provider to come here — Norway, for instance, eventually got support from both, outside the EU but with a market fourteen times the size of ours. But the pattern is clear: when these companies open up for Europe, they reach every member state, however small, because the regulatory framework, the VAT system, and the currency are the same. With membership and the euro, we stop being a special case requiring a separate decision and are simply included when the whole continent is switched on.

Lower cost of capital with the euro

Interest rates on business loans in Iceland have for decades been far above euro-area levels, and the króna adds exchange-rate risk on top of any operation that buys or sells across borders. With the euro replacing the króna, the cost of capital drops considerably, exchange-rate risk against our largest trading area disappears, and transaction fees and currency-conversion margins become a thing of the past. Our prices appear to European customers in their own currency — and when the euro could arrive is a story we tell on another card.

In short: EU membership would eliminate customs paperwork in our European trade, make cross-border e-commerce as simple as domestic sales, and open the door to payment and commerce platforms that bypass Iceland today. In return, the EU's external tariffs would apply to imports from third countries. For small businesses trading with Europe, the gains weigh heavier: less paperwork, lower costs, and the same access to tools that their competitors have.

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 rules of origin to qualify for tariff-free treatment.
• The World Trade Organization explains the Information Technology Agreement (ITA), to which the EU is a party; under it, tariffs on computers, telecommunications equipment, and most electronic components are bound at 0%. The EU's other external tariffs can be looked up in the TARIC customs database.
• 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.
• The OSS/IOSS registration page at the European Commission states that businesses outside the EU must appoint an intermediary established in the union to use the IOSS system — the only exemption is Norway, on the basis of a VAT cooperation agreement.
• Stripe's website lists its supported countries (Stripe Global). All 27 EU member states are on the list, along with Norway and Liechtenstein among others — but Iceland is not, and never has been.
• Shopify's official list of supported countries for their payment gateway shows that nearly all the smaller EU member states were added in spring 2025, while Icelandic stores must still rely on more expensive solutions from the few third-party providers that support Iceland.