The Role of Umbrella Companies in Iceland's Business Landscape

Foreign investment by large multinationals is of interest to almost every country in the world, as it is crucial for job creation and is seen as an important driver of economic growth. However, large companies have their own dynamics that prevent them from directly hiring all their employees in a new country where they invest. This is where umbrella companies come into play. They act on behalf of their client companies by approaching local recruitment agencies and offering contract recruitment, payroll and compliance services.

There are many umbrella companies in Iceland that offer their services to prospective clients. They are commonly referred to as international umbrella companies, a term that is widely used in many European countries. In the USA and other countries, companies offering similar services are often referred to as 'Professional Employment Organisations' (PEOs).

How does it work ?

The umbrella company in Iceland usually helps with recruitment, payroll and compliance. For example, when a foreign investor builds a new factory in Iceland, many workers are needed to complete the construction process. Once the plant is up and running, their services may no longer be required. The umbrella company in Iceland hires these workers on a contractual basis and ensures compliance with local laws. These workers are referred to as independent contractors. As each country has different regulations for salary payments and tax deductions, the umbrella company in Iceland is better placed to manage this complexity in the Icelandic context.

Benefits of Umbrella Companies In Iceland

Cost Efficiency

With the help of umbrella companies, many large organizations may prefer not to set up a local subsidiary or branch, which helps to save costs in terms of office space, administration and ongoing running costs.

WorkForce Management

Companies have the flexibility to expand or reduce their workforce in Iceland depending on project requirements without committing to  long-term permanent positions.

Better Legal Compliance

Umbrella companies in Iceland can help large companies avoid costly fines and penalties by ensuring compliance with Icelandic labour and tax laws. They can also manage legal and HR-related issues in the Icelandic context, reducing legal complexity for the client company.

Conclusion

Umbrella companies offer a range of services to help large multinationals and contractors manage the complexities of the Icelandic market in terms of recruitment, HR and compliance. They enable smoother and less stressful operations, allowing large organizations to focus on their core business objectives, while providing simplified administration and professional support.

If you are planning to invest in Iceland and need local support with payroll, local recruitment and regulatory compliance, contact Swapp Agency today.