Retirement benefits and pensions for fund members abroad
If LSR retirees or pensioners are domiciled abroad, they must submit a certificate of life to the fund every year. The certificate must be confirmed by an official body in the country concerned.
The fund sends a reminder to pensioners in the first quarter, so it is important that LSR has their email address on file so that the reminder can be delivered. You can enter an email address on LSR’s My Pages.
The annual reminder states when the submission deadline is and which documents must be submitted. In addition to a certificate of residence, the following is also required:
- Spouse pensioners must send the fund a marriage certificate from their country of residence with information on their current marital status
- Disability pensioners must send the fund a copy of their last tax return
Please note that pension payments will stop if documents are not received by LSR within the specified time.
Pension payments that are stopped are paid retroactively for a maximum of 4 years in accordance with the statute of limitations, provided that the fund member submits sufficient data confirming the right to continued payments.
The certificate can be sent to the fund by regular mail to the fund's address or by email to the email address lifeyrir@lsr.is.
Certificate of life
- Must be submitted annually
- Certification by an official body in the respective country is required
- Spouse pensioners must submit a certificate of life together with their marital status
Taxation of pension income
The Income Tax Act states that, in general, those who have residency abroad and have income from Iceland must pay tax on that income in Iceland.
Double taxation agreements
An exception to that rule may exist if the pensioner resides in a country with which Iceland has concluded a double taxation agreement. In some double taxation agreements, there are provisions that pensioners pay tax on Icelandic pension payments in the country of residence and not in Iceland. In those cases, you can apply for an exemption from Iceland Revenue. Iceland Revenue sends confirmation of exemption to LSR if the application is approved. The pensioner will then be registered as exempt from tax from the time the confirmation is received. LSR does not refund tax that has been paid before the exemption is received. It is reimbursed by Iceland Revenue in the next tax assessment.
Please note that Iceland Revenue only grants an exemption for the current year. The pensioner must therefore renew the exemption at the beginning of each year. Iceland Revenue accepts applications for renewal from 1 December each year.
Please note that:
- According to the law, confirmation of exemption must be sent to LSR from Iceland Revenue.
- LSR is not permitted to apply for an exemption on behalf of pensioners.
- The exemption ceases to apply when the pensioner moves to Iceland and it is the pensioners responsibility to notify LSR of this in order to prevent collection of underpaid tax in Iceland Revenue’s next assessment.
Who can apply for exemption?
LSR advises pensioners to contact Iceland Revenue to find out about their right to an exemption, as double taxation agreements are different and the nature of the pension income and whether the pensioner is an Icelandic or a foreign citizen must be considered.
According to information from Iceland Revenue in October 2024, pensioners living in the Nordic countries cannot apply for an exemption from withholding tax for pension payments.
You can find the application form at Iceland Revenue here: