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  1. Taxes
  2. Tax Breaks

One of The Hottest European Travel Destinations Is Looking for New Ways to Tax Tourists

By:
Brad Tuttle
3 min read
Skógá River, Iceland. - Barcroft Media—Barcroft Media via Getty Images
Skógá River, Iceland. Barcroft Media—Barcroft Media via Getty Images

Flights to Iceland are incredibly cheap. A new sale from Icelandair offers round trips to Reykjavik for as little as $279 (from Boston) in April and May, and that fare remarkably includes all taxes and fees.

Upstart discount airlines WOW Air and Norwegian Air use Reykjavik as a hub for flights as well, and the result of all the competition is that airfare from the U.S. to Iceland is often less expensive than many trips within our own country.

But those ultra-low prices have meant a surge in tourists. Bloomberg reports that Iceland’s tourism industry has quadrupled in less than a decade—from 490,000 visitors in 2010 to an estimated 2.3 million this year—and now government officials are considering new taxes on tourists to help safeguard natural treasures and improve infrastructure.

Low-fare airlines aren't the only reason Iceland's tourism is booming. There's also been a sharp increase in global exposure in the country due to the immensely popular HBO show "Game of Thrones." Much of the series has been filmed in Iceland, and "Game of Thrones" tours visiting the show's epic filming locations throughout the country have been drawing tourists for five years.

New taxes could be passed along to tourists in a variety of ways. Among other options being considered, the country might start requiring that bus and tour operators pay for special licenses, or there could simply be an increase on already-existing hotel taxes.

Tourists may quickly find that their "cheap" trip to Iceland is actually quite expensive. While airfare seems like a steal, visiting the country can cost a fortune even before tourist taxes have been hiked or added. The cost of living in Iceland is estimated to be roughly 60% more expensive than the U.S. A taxi from the airport to downtown Reykjavik runs about $150, a combo meal at McDonald's in Iceland costs the equivalent of $15, and a pint of domestic beer goes for $10.

All in all, the only way a trip to Iceland would be truly cheap is if you fly in—and quickly leave.

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