Icelandic authorities have introduced a new fee for cruise passengers of around £14 a day in aid of levelling out competition amongst tourism companies and to generate revenue for the government.
The law, approved in June last year, would see an “infrastructure fee” paid by each passenger on board an international cruise ship while the ship is anchored in a port in the country or customs territory.
The fee is around 2,500 ISK (£14.35) for each passenger per 24 hours and came into effect on 1 January 2025.
A spokesperson for the Icelandic Ministry of Finance and Economic Affairs told The Independent: “Operators of cruise ships in international navigation will be required to pay an infrastructure tax for each passenger entering the country's customs territory, starting 1 January 2025.
“This obligation to pay the infrastructure tax applies regardless of when the trip was sold.”
The ministry also added that feedback regarding the infrastructure tax on cruise ships in international navigation was addressed during the drafting of the bill in Parliament.
In the ministry's view, the collection of the infrastructure tax will not lead to an increased administrative burden for the operators of the ships, as operators already pay an accommodation tax, and the procedure for the infrastructure tax will be similar, except that operators will be given more time to pay the infrastructure tax.
The due date for the infrastructure tax will be seven days after the ship leaves the country's customs territory, while the accommodation tax is taken on the same day the ship departs.
The ministry said that the number of cruise ships on international voyages visiting Iceland has increased significantly in recent years, which it said has put domestic tourism companies at a competitive disadvantage, especially as cruise ships only pay “limited taxes” at the moment, such as port and lighthouse fees.
“The goal of the tax is to level the playing field between domestic and foreign tourism companies,” it said.
It added that according to customs authorities, cruise ships on international navigation cruises typically spend just under two days in Icelandic waters per trip, meaning each passenger would pay an infrastructure tax amounting to ISK 5,000 (£28.75).
“On the website of one operator, a 17-day cruise between Norway and Iceland in August/September 2026 is priced from ISK 2.1 million (£12,000) per person. In this case, the infrastructure tax would amount to approximately 0.2 per cent of the total cost of the trip,” the Icelandic ministry wrote.
Therefore, the ministry said it “doubts that an infrastructure tax of this magnitude will lead to widespread cancellations by passengers”.
However, ports in Iceland claim to have seen a drop in bookings. Sigurður Jökull Ólafsson, the chairman of Cruise Iceland, an association of ports, travel and transport companies, told The Independent that some popular ports in the country have had up to 17 per cent fewer bookings, with one smaller port in the Westfjords dropping from 30 visits to 12.
Harbourmasters in Grundarfjörður, Vestmannaeyjar, Akureyri, and Faxaflói ports have all reported cancellations, with the fee cited as a reason, according to RÚV, the independent Icelandic national broadcasting service.
There are ports in the country that have seen no drop in bookings yet, but Mr Ólafsson said that the cancellations mostly come from smaller vessels like expedition ships, which he says is “very regrettable” as they are “extremely important for the rural areas of Iceland”.
MSC Cruises has said it has sailings to Iceland this summer and they are currently proceeding as scheduled. Fred Olsen Cruise Lines also said that it currently does not anticipate making any changes to its sailings across 2025 or 2026.
The infrastructure fee was introduced by the previous Icelandic government, and Cruise Iceland is currently seeking an amendment from the new government, as well as asking for a meeting with the tourism minister.
Mr Ólafsson said: “The previous government's rushed budget proposal introduced this infrastructure fee on international cruise passengers, which poses problems for the cruise ecosystem, including operators, ports, and local businesses because the charge of the fee is levied retroactively on trips that have already been sold.”
Cruise Iceland says that the fee will be applied to trips that have already been sold, which it says could be very difficult to incorporate into the passenger price, meaning that the cruises will have to pay the fee in full, cancel or shorten the cruise.
Mr Ólafsson said that his association is recommending the government that the fee should only apply to cruises sold after 1 January 2025, or reduce the fee to 500 ISK (£2.89) per 24 hours with a five-year gradual increase, to minimise the harm to rural areas.
The Cruise Lines International Association (CLIA) also said that the infrastructure fee is a “cause for concern”.
A CLIA spokesperson said: “This fee is disproportionate compared to similar charges in the travel and tourism sector, while the revenue is not directed towards communities in the rural areas.
"We are calling on the new Government to address these concerns and ensure that decisions regarding port fees enhance the experience for travellers while directly benefiting local communities and supporting sustainable growth.
"By working hand in hand with local authorities, we are committed to fostering a balanced approach that supports both the tourism industry and the communities it serves."
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