Taxable payments - ex
Taxable payments to individuals
Monthly taxable payments contain two types of monthly data. Firstly, information on taxable wages (total wage sums), both by economic activity and by municipalities, along with the number of employers that pay wages and employees that receive wages. Secondly, taxable payments (total sums) which consists of most taxable payments, including wages that employees earn from their employment, parental leave payments, unemployment benefits, pension payments and other taxable benefits and payments. The total sums of payments is published by municipalities and is divided into wages, unemployment benefits and other payments. Self-employed, who receive payments through their own social identity number and pay themselves calculated remuneration, are excluded from the data. For comparison, sums of individual annual earnings by municipalities is published which includes calculated remuneration and capital gains, based on annual tax reports of individuals from 2008 to 2019.
The statistical data is preliminary and spans the term from January 2008. Users should note that the data might be subject to some changes due to late returns of pay as you earn data from some payers. Specifically the latest months of the data, as the timeliness of the publication is quite short, the data being published around two months after the reference period.
The statistical data is based on information from the pay as you earn data and population data from Statistics Iceland. Timely indication on total sum of individual payments (income) has not been published until now, with the publication of Taxable payments (total sum). Statistics Iceland publishes annually statistics on average income based on individual’s tax returns and also annual information about the sum of taxable wages on the Icelandic labour market in the publication of Structural business (business sector/exchange economy) and in Production approach of National accounts on Compensation of employees by kind of activity (entire economy).
The purpose of this publication is to give an indication of changes in total sum of payments paid to individuals in Iceland. The Icelandic community has undergone tremendous changes in the last months, particularly due to the Covid-19 pandemic. As a result, there is a significant need for timely information on the development of the labour market and total payments. Statistics Iceland plans to publish this timely indicator of taxable payments as a regular publication, therefore all feedback and suggestions by users are greatly appreciated. For feedback and suggestions please contact firstname.lastname@example.org
Proportion of unemployment benefits varies by municipalities
Updated: 8 December 2020
From the beginning of 2008 until October 2020 the share of wage payments as part of total taxable payments averaged around 80%. Two periods stand out, 2008 and 2020 from April.
At the beginning of 2008, wage payments accounted for a slightly larger share of total payments, or around 86% on average. At the same time, unemployment benefits were an insignificant part of total payments and other payments were around 14%. Other payments include all taxable income payments except wages and unemployment benefits, including payments for maternity leave, social security benefits, pension payments (both old-age pension payments and individuals’ withdrawals of private pension savings) as well as various social security payments. Following the financial crisis at the end of 2008, unemployment rose and other payments increased, which is partly explained by a jump in payments from pension funds.
Last April, unemployment rose sharply, which can partly be explained by partial unemployment due to Covid-19. At the same time, the proportion of wage payments decreased and other payments increased slightly.
It should be noted that salaries of self-employed persons are not included in this statistics and data might be subject to some changes due to late returns of pay as you earn data - especially for the latest months.
The proportion of unemployment benefits of total payments has changed considerably this year. The proportion increased sharply in March and April but decreased temporarily in May. These shifts vary greatly between municipalities mainly due to the composition of economic industries in each region.
For example in Reykjanesbær, where employement related to the flight and tourist industry are most prominent, the share of unemployment benefits was around 15% last April, dropped to 7% in July and is now increasing again. As a contrast the proportion of unemployment payments was around 2% in Fjarðabyggð last April, where the fishing industry and heavy industry are the main source of employment.
Individuals’ income includes payments such as wages, benefits, pension and capital gains. Most of these payments are taxable, with a few exceptions (such as child benefits). Statistics Iceland publishes annually statistics on average income based on individuals’ tax returns. However, timely information on individuals’ income base is available in monthly pay as you earn data. The data is based on declarations from employers to The Icelandic Revenue and Customs for taxes and duties. All those who are considered an employer according to the Act on the Withholding of Public Levies at Source no. 45/1987 must turn in a specification of wages to The Icelandic Revenue and Customs for all individuals who receive a taxable payment. Statistics Iceland then enhances the data with information from other data sources, to make it more suitable for statistical publication.
Users should note that the data may be subject to changes due to possible late transfers of some payers’ specification of payments to The Icelandic Revenue and Customs. Those changes usually result in a slight increase in the total sum of payments by months, if and once they are turned in. The data can also change if enterprise primary economic activity is reclassified in the Icelandic business register or if an individual changes its residence in the National register. Those changes can in some cases be retroactive.
Taxable payments (total sums) are preliminary data presented in Icelandic krona (ISK) in current price for each month and based on the pay as you earn data. The total pay as your earn taxable payments are published by municipalities and kind of payments. One of those is taxable wages, which includes the most part of wages employers pays on monthly basis to employees. Taxable wage payments include any kind of remuneration/compensation for employment, such as wages and salaries, vehicle, travel and housing subsidies and other subsidies, per-diem allowance, lump sum payments, vacation benefits and other payments that are legally documented according to the pertinent regulation. Unemployment benefits are payments from the Directorate of Labour for partial or full time unemployment. Other payments include all other taxable payments besides wages and unemployment benefits, such as parental leave payments, disability benefits, pension payments, retirement plan payments and many other payments and benefits. Excluded are payments that are non-taxable (pay as you earn monthly tax) according to regulations as well as taxable payments from self-employed, who receive payments on their own social identity and pay themselves calculated remuneration and payments related to capital gains.
Sum of individual’s annual income according to tax returns is published to show a more in-depth look into individual income regardless of whether their income is taxable or not. The data includes all annual income of those who have tax residency in Iceland and have turned in tax reports for the time period 2008 to 2019, in current price. Data include all those that have estimated and hand calculated income statements. The totals are published by municipalities and divided into the categories of income from work, income from self-employed calculated remuneration, income from capital gains and other income. The data is based on tax returns status in June each year, before any changes, complaints or revisions. Note that the definition of residency is not quite the same in statistical data on individuals’ income according to tax return as in taxable payments.
Municipalities is based on each individuals’ residence according to population data from Statistics Iceland. The data is based on the National Registers of Persons and include individuals with legal residency in a municipality during the same month as they receive taxable payments. The total sums (all individuals regardless of residency) measures all taxable payments individuals receive, including those who live in a foreign country or have no registered residency. Definition of residency in statistical data on individuals’ income according to tax return is however based on estimated residency linked to municipal tax.
Economic activity is based on the primary economic activity of the employers according to Statistics Icelands’ Business Registry which is classified according the Icelandic standard industrial classification ÍSAT2008 (compatible with the NACE Rev. 2 classification). Information on employers is published by business sections, divisions and groups of sections, some divisions will include employers that are registered with more than one economic activities. See note on those divisions in the sheet “About NACE” in the statistical data about taxable wages. Note that the published groups of economic activities can overlap, therefore if all economic activity groups are summed up it will not match the published sums of totals.
Number of employers paying taxable wages are all those who turn in specification of wages and salaries to The Icelandic Revenue and Customs for at least one person. The count of employers is based on the identity of the legal entity, which is based on the entities’ identification number. Therefore, each identification number counts as one employer. Note that the published groups of economic activities can overlap, therefore if all economic activity groups are summed up it will not match the published sums of totals. In total each employers is only counted once.
Number of employees receiving taxable wages is a tally of all those who receive taxable wages from an employer. There is no distinction made based on whether employees are employed full-time or part-time. There is no set minimum payment for wages in the data which means that in some cases the payment an employee receives can be substantially minimal. Note that the published groups of economic activities can overlap, therefore if all economic activity groups are summed up it will not match the published sums of totals. The total sum of employees will however only count each individual once.
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