Insolvencies and activity of companies - ex
Insolvencies and activity of companies
Statistics Iceland publishes data on insolvencies for registered companies on a monthly basis. Each publication is approximately 30 days after the end of each month, at which point most of the insolvency petitions have been registered by the Directorate of Internal Revenue. Some registered companies that go insolvent have had little prior activity. To better capture the effects of insolvency on the labour market and the economy, information about the average number of employees and turnover according to VAT reports in the last full financial year before the insolvency is presented.
Insolvencies enter the business register of the Directorate of Internal Revenue following the publication of an insolvency petition. Since some insolvencies are for companies that have not been active for some years, or even not at all, the number of insolvencies of registered companies may not necessarily capture the effects on the labour market and the economy in a meaningful way. Therefore, the number of insolvencies of registered companies according to The Directorate of Internal Revenue is compiled with the timeliest operational information on the average number of employees and turnover according to VAT reports for the last full year before insolvency.
It is our hope that information on the recent activity of insolvent companies will provide a more reliable initial indication of the effects of insolvencies on the labour market and the economy than can be obtained from the number of insolvencies of registered companies.
Decrease in insolvencies of active companies in October, increase in tourism
Updated: 25 November 2020
There were 41 corporate insolvencies registered in October 2020. Thereof, 31 were for companies that were active in the previous year, i.e. they either had registered employees according to the official PAYE tax registry or turnover according to VAT reports. Thereof, 8 insolvencies were in construction, 3 were in wholesale and retail trade and repair of motor vehicles and motorcycles, 12 were in tourism industries and 8 in other industries.
Companies that were registered for insolvencies in October 2020 had about 233 employees on average in 2019, about half of which were in tourism industries or 116. This is more than triple the number of previous employees for insolvencies in tourism industries in October 2019 when they were 38. On the other hand, the average number of employees in the previous year for insolvencies in all other industries combined decreased by 46% when compared with October 2019. There is considerable variation between months for the number of insolvencies. When looking at the last three months (August-October), the average number of employees in the previous year for insolvencies in the tourism industries increased by 20%, but decreased by 34% for other industries combined. A similar pattern can be observed when looking at numbers for value added tax in the previous year for companies that declared insolvency in October.
For information on insolvencies of registered companies, refer to: Insolvencies of enterprises by field of activity 2008-2020