Published on
November 11, 2025
The Icelandic Cruise ship industry is suffering due to recent tax regulations, which have put the volume of ship visits at an all-time low. The new tax of lags in disembark taxes at 2500 Ikr ($18.50) is projected to reduce ship visits to Icelandic shores by 17% by 2026 and an estimated 37% by 2027. These debts in ship visits would have dire consequences for the tourism industry in Iceland, especially for rural towns and villages that thrive on the money generated by cruise tourism.
Local tour operators have expressed concern on the new tax claiming that increases in price driven by the tax would in turn encourage cruise companies to shift to Norway and Greenland, which are placed along tax-free routes. These consequences could leave remote cruise tourism-dependent towns in Iceland in an economically fragile state.
The effect on Iceland’s more isolated communities
The introduction of this passenger fee has caused considerable harm to Iceland’s more isolated regions, where cruise tourism helps sustain the economy. The Borgarfjörður Eystri port, a scenic fjord on the eastern shore, once anticipated 28 cruise ship calls in 2027, but projections have plummeted, and only a single ship is now forecasted to dock in the area for the allocated time frame.
Like projections, other ports in Iceland, like Seyðisfjörður and Grundarfjörður, which rely on the cruise business to support the economy, will most likely suffer the same consequences. The cruise passengers have a trickle-down effect on the economy, supporting the reception of small family-run inns and, local fisheries. There will most likely be a direct correlation with a drop in the number of cruise ships and the economy, where the dominant sectors will be: transport, accommodation, retail, and hospitality.
Cruise Market in Iceland: An Analysis of the Tax Implications
Iceland’s cruise industry in the past had been receiving many ships as tourists to the island to view the beautiful sights the for leading edge on behavior of the volcanoes, hot springs, and the picturesque view of the ocean, and other attractive features of the island. However, some cruise operators after the tax, are contemplating the viability of including Iceland in the routes of their cruise ships. An addition tax in Iceland has raised concerns among cruise operators and members of Cruise Iceland as it well indicates that the cruise business in Iceland is in danger of losing many shipments to other neighbouring territories which do not exercise cruise levies.
The fear is that Iceland’s tax policies will drive larger cruise lines to relocate to more profitable areas. Ports within Iceland which are more discreet and rely more heavily on the cruise business are bound to suffer. Therefore, the ease of operations in such areas will make the added expense of disembarkation more pronounced. It is Iceland’s peripheral areas that are most reliant on treaty’s and visitors which are more expensive for cruise lines that lose out on such connections.
Iceland’s Efforts to Boost Tourism Despite the Challenges
Iceland has not lost sight of its goal to attract tourists, even with the new tax in place, and has sought new ways to enrich the tourists’ experience and broaden the tourism scope of the country. Extensions and cruise tax still need to be addressed, and the goal remains the same: to mitigate the tax’s disproportionate negative effects on peripheral areas and find ways to support the cruise industry.
One such initiative is designed to appeal to potential travellers in Icelandic multi-destination tourism, especially in light of potential land-based tours in addition to cruise visits. In order to attract tourists and travelers in general, Icelandic tourism operators like to focus on marketing the country as a year-round eco-tourism destination. For the last couple of decades, Iceland has developed considerably as an international tourism destination, attracting international travelers and tourists with both air and sea travel, as well as by land.
Iceland has also set aside money to support to the construction of some new infrastructure in the loans, as well as in the more peripheral tier to appeal to individual travellers. Tourism is currently being planned to emphasise adventure and include a greater number of new culture-based attractions in the effort to reveal the year-round potential of the country.
The focus of this paper is to discuss the sustainability issues and the future of cruise tourism in Iceland.
The focus of this paper is to discuss the sustainability issues and the future of cruise tourism in Iceland.
Iceland is striving hard to encompass the principles of sustainability while deliberating upon the issues due to introducing the new tax. With the new approaches and tax in place, the tourism industry in Iceland is shifting in context to ‘green tourism’ which is focusing on responsible cruise tourism and the wider impact of cruise tourism on the.
The new tax has been incorporated to stimulate the development of sustainable cruise. The focus incorporates tax incentives to promote longer stays, diversified tourism products and ecologically responsible experiences. Iceland aims to be the #1 cruise destination in the world and is working on achieving that.
Conclusion: The Future of Iceland’s Cruise Industry
Iceland’s cruise tourism remains on shaky ground after the implementation of the passenger discharge fees. The consequences of the tax will most likely result in the decline of cruise arrivals on the small, isolated harbors, but tourism in the country remains positive in introducing new activities to entice travellers. Adoption of a multifaceted approach centred on sustainable tourism, cultural diplomacy, and natural advocacy will enable Iceland to lessen the adverse effects of the tax and bolster its status as a prime tourist destination.
Iceland also needs to explore new opportunities in the field of ICT if it is to remain a dominant player. It also has to asynchronously defend its primary positions by upholding its current attractions and also devising new means to sustain travel to the country. The Icelandic cruise tourism has to readily innovate to withstand the competitive edge of the growing cruise industry.
