Do You Tip in Iceland? The Complete Money and Payment Guide
The short answer is no, you do not tip in Iceland. Service charges are included in the price of everything, from restaurants to taxis to guided tours. For the essential words to use when ordering, see our Icelandic phrases guide. Leaving extra money on the table is not expected, not customary, and will not offend anyone if you skip it. That said, there is more to handling money in Iceland than just the tipping question.
Iceland Runs on Cards
Iceland is one of the most cashless societies on earth. Credit and debit cards are accepted virtually everywhere, from Reykjavik restaurants to remote petrol stations to food trucks in the middle of nowhere. Visa and Mastercard are universally accepted. Amex works at many larger establishments but not everywhere.
Contactless payments and Apple Pay work at most terminals. Many Icelanders have not carried cash in years. Keep this in mind when planning your budget.
Do You Need Icelandic Krona?
For most visitors, no. You can travel the entire country without touching a single banknote. The only situations where cash might be useful are unmanned roadside stalls selling local produce (though many now have card readers) and very occasional older parking meters.
ATMs are available in Reykjavik, Akureyri, and most larger towns. Withdrawal fees vary by your home bank. If you do withdraw cash, take small amounts. You will struggle to spend it.
Exchange Rates and Currency
The Icelandic krona (ISK) fluctuates significantly against major currencies. As of early 2026, rough rates are:
- 1 GBP = approximately 175 ISK
- 1 EUR = approximately 150 ISK
- 1 USD = approximately 140 ISK
Never exchange money at the airport or hotel. If you need cash, use an ATM with your bank card for the best rate. Currency exchange desks in town centres take significant margins.
PIN Requirements
This catches some visitors off guard. Self-service petrol stations, parking machines, and some unmanned facilities require a four-digit PIN. If your card uses a six-digit PIN or no PIN at all, you may have trouble at automated stations. This is especially important if you are renting a car and need to refuel at unmanned stations along the Ring Road. Contact your bank before travelling to ensure your card will work at unmanned terminals.
Carry a backup card from a different provider, just in case.
Tipping Culture Explained
Icelanders earn living wages. Service industry workers are paid fairly, with benefits, holiday pay, and strong union protections. The price you see on the menu is the price you pay, and it already accounts for fair compensation.
If you receive truly exceptional service and want to show appreciation, a verbal thank-you means more than cash. Some tourists round up taxi fares or leave small amounts at restaurants, and while staff will accept it graciously, it is genuinely not expected.
Sales Tax and Refunds
Iceland has a 24 per cent VAT on most goods. Non-EU visitors can claim a partial refund (up to 15 per cent) on purchases over 12,000 ISK at participating shops. Look for the "Tax Free Shopping" sign and keep your receipts. Claims are processed at Keflavik Airport before departure. For more on managing costs, see our complete budget guide and packing tips to avoid buying overpriced gear on arrival.