Article 91 of the Icelandic Income Tax Act No. 90/2003 establishes the rules for determining the tax residency of legal entities in Iceland. Specifically:

• Legal entities are considered tax resident in Iceland if their home is in Iceland according to their statutes, or if their real management is located in Iceland.
• The Director of Internal Revenue makes rulings on what legal entities are to be considered resident in Iceland. These rulings can be appealed to a court of law.
• If a legal entity such as a limited partnership, associate limited company, or general partnership company does not apply for independent tax entity status, they are treated as transparent entities and their income is taxed at the level of the individual owners.

The Income Tax Act No. 90/2003 is the primary law governing corporate and personal income taxation in Iceland. It has been amended numerous times since its original enactment in 1979.