Iceland not only offers stunning natural beauty and high living standards but also provides a wide range of social benefitsto support its residents—including foreign workers with permanent residency. If you’re planning to live and work in Iceland, here’s a detailed guide on the key allowances and support programs you might be eligible for.

Family Allowance for Children

One of the most important social benefits in Iceland is the family allowance, which helps parents cover the cost of raising children. The amount of the benefit depends on several factors, including:

• Annual income of the parent(s)

• Age of the child

• Family status (married couple, single parent, etc.)

This allowance is granted until the child turns 18. To qualify, the parent must hold permanent residency in Iceland, and the child must either live in Iceland or in another EU country, provided the parent is working and taxed in Iceland.

Current Annual Allowance Rates (as of 2022):

How to Apply for Family Allowance

To apply, submit the RSK 3.20 or E-411 form to the Icelandic Tax Office (Ríkisskattstjóri). You'll need to provide:

• Full name and address (in Iceland and home country)

• Spouse’s details (if applicable)

• Children’s names and birth dates

• Information on any allowances received in your home country

• Income statements from both the applicant and spouse

Allowances for immigrants are calculated individually based on income and family benefits received abroad.

Unemployment Benefits

Residents aged 16 to 70 with permanent residence status can apply for unemployment allowance after a qualifying period of employment. The benefit can be received for up to 2.5 years, provided the applicant:

• Registers with the Icelandic Employment Office (Vinnumálastofnun)

• Actively seeks work

• Is ready and able to accept employment

If you're an EU citizen, you can transfer unemployment benefits from your home country to Iceland for up to 3 months, provided:

• You’ve been registered for at least 4 weeks as unemployed in your country

• You obtain the U2 form

• You register in Iceland as a job seeker within 7 days of arrival

Note: Students and entrepreneurs in Iceland are not eligible for unemployment benefits.

Allowance Amount Based on Previous Working Hours:

For more details, visit the Icelandic Employment Office.

Other Social Support in Iceland

Apart from family and unemployment benefits, the Icelandic welfare system offers additional assistance in various areas of life:

1. Emergency and Financial Aid

• Provided by municipalities to those in hardship.

• Includes advice, financial grants, and basic services.

• The Icelandic Red Cross also offers food and material aid.

• Families in need may receive food parcels and essential goods.

2. Housing Allowance

• Helps cover part of your rent, though it does not apply to employee accommodations such as hotels or hostels.

• More info: Ministry of Welfare – Housing

3. Rehabilitation Benefits

• Aimed at people aged 18 to 67 who are unable to work due to illness or injury.

• Helps restore physical or mental fitness through treatment and support so the person can return to the labor market.

Iceland offers a comprehensive system of social benefits for its residents, including immigrants with the proper residency status. From child allowances and unemployment benefits to emergency assistance and housing support, the country provides meaningful help to those in need—ensuring a more secure and dignified life for everyone living on the island.