Gift cards at a restaurant in Iceland: the 4-year rule, VAT and your books

Gift cards are one of the nicest things a restaurant sells. Someone pays you in December, and a few months later a guest comes in for a dinner that was a present. This guide covers the rules in Iceland, as of October 2026: how long a card is valid, when VAT is due, and how to track unused balances.

How long a gift card is valid

In Iceland, a gift card is valid for up to four years from the day you issue it, unless you and the buyer agree on something else.¹ No law sets a special term for gift cards. The four years come from the general rule that a claim expires after four years.² A 2018 proposal in Alþingi says the same: if no term is agreed, the card is valid for four years from issue.³

The simplest choice is to give every card four years and print the expiry date on it, so the guest and your staff can both see it.

If you want a shorter term

A shorter term is possible when it is agreed with the buyer.¹ Tell the buyer about the term when they pay, and print it on the card.

Credit notes (inneignarnótur) have their own guidelines. The advisory guidelines from the Ministry of Commerce in 2000 say that a credit note is valid for four years unless the note says otherwise, and never less than one year.⁵ These guidelines are voluntary. Shops and restaurants that follow them do so to give better service, not because a law requires it.⁴ A credit note is what you give a guest instead of a refund, so it is a different thing from a gift card that someone bought.

Neytendastofa, the Consumer Agency, is the authority to contact about gift cards and credit notes.¹

If the restaurant changes owner or closes

When a restaurant changes owner, some gift cards are usually still open. The rules on Ísland.is are:¹

• If a new owner takes over the same business, the gift cards stay valid with the new owner.
• The holder cannot make a claim against a different company.
• If the seller goes bankrupt while a card is still valid, the holder can make a claim against the estate.

If you are buying a restaurant, ask the seller for a list of the gift cards that are still open and the total balance. That amount is money the business has already received for meals it still has to serve.

VAT is due when you sell the card

In Iceland, you pay VAT on a gift card when you sell it, not when the guest uses it. Skatturinn explains that the sale of a gift card is a payment before delivery of goods or services. A payment received before delivery counts as taxable turnover when you receive it.⁶ The VAT act says the same about any payment received before delivery.⁷ So the VAT on a card sold in December goes on your VAT return for November and December.⁷

Skatturinn also says which rate to use. The card or the receipt must describe what the card can be used for, so that the rate is clear. If the card can be used for goods or services at both rates, you count the payment at 24 %.⁶ Food and drink in a restaurant are at 11 %. A card that is for food and drink can therefore be at 11 %. A card that also covers merchandise at 24 %, such as branded mugs, goes at 24 %. Ask your accountant which applies to your cards.

When you sell a gift card, Skatturinn requires a receipt for the payment. The receipt shows that the payment is for a gift card and who the card is for.⁶ The printed gift card itself can replace the receipt if it shows these details:⁶

• the date of issue
• what the card can be used for, so the VAT rate is clear
• the full value of the card
• the VAT, as an amount or as a percentage of the total

When the guest uses the card

When the guest pays with the card, you record the sale in the normal way, at the normal rates for what they ate and drank. At the same time, the VAT you already paid on the card comes off. Skatturinn describes this with two holding accounts in your books: one for the VAT paid in advance on gift cards, and one for the total value of cards that are still open.⁶ Your accountant sets these up in your accounting system, whether that is dk, Regla, Payday or another.

A worked example

Here is one way the numbers can look. The rate is 11 %, so the VAT in a price with VAT is the price × 11 ÷ 111.

The 190.000 kr. is not income yet. It is money the restaurant owes as meals. Know the open balance at all times, and especially before a year-end close.

Unused balances and expired cards

Some cards are never used, and some are used only in part. Keep a list of every card with its number, the date of sale, the value and what is left. Skatturinn asks for a summary like this when the printed card replaces the receipt, with the number, date, amount and VAT rate of each card.⁶

When a card expires with money left on it, the balance stops being a debt to the guest. How you then record that amount, and what happens to the VAT you paid at the sale, is a question for your accountant.

In Resto, each card prints with its “Valid until” date four years after the sale, and the back office shows the open, used and expired cards with their balances.

Selling gift cards online

Gift cards sold on your website are a distance sale. Under the consumer contracts act, a consumer generally has 14 days to withdraw from a distance contract without giving a reason.⁸ The act lists exceptions, and it is not obvious how they apply to a restaurant gift card.⁸ If you sell cards online, write your terms clearly on the page and ask a lawyer or Neytendastofa how the 14 days apply to you.

If your online or QR orders accept gift cards as payment, the same VAT logic applies: the VAT was paid when the card was sold, and the order is recorded at its normal rates.

Before the Christmas rush

• Decide the term. Four years from the date of sale is the simple choice.
• Print the expiry date, the value and what the card covers on each card.
• Ask your accountant which VAT rate fits your cards, 11 % or 24 %.
• Make sure you can see the total of open cards at any time.
• If you sell online, put your terms on the page before the first sale.