Iceland rental car road tax, explained

The two government rates

• Kilometre fee: 6.95 ISK per km driven Verified.
• Daily fee: 1,390 ISK per rental day, for rental contracts of up to 30 days Verified.
• The two cross at 200 km a day. Drive less and the kilometre fee is cheaper; drive more and the daily fee is.

What rental firms charge

The common company rate is 1,550 ISK a day (Blue Car Rental, Cars Iceland, Lotus, RV Iceland). Per-kilometre firms charge 8.69 (Hertz, Thrifty) to 8.81 (Höldur) per km. A few pass the government rate through with nothing added: Lava Car Rental, MyCar and Budget on the daily fee, Budget for cars and Black Sheep Campers for campervans on the kilometre fee.

The government fee itself carries no VAT when a firm lists it as its own line; anything a firm adds on top carries 24% VAT.

A week on the South Coast (7 days, 464 km)

At about 66 km a day, a kilometre-fee firm charging the government rate saves about 7,600 ISK against the common rate.

Before you book

• Ask which scheme the car is on and what they charge, in writing. It is rarely on the booking page.
• Per-kilometre firms bill after drop-off, so the charge is not in your quoted total.

Compare every firm for your own mileage with the road tax calculator.