Cruise Iceland, the organization promoting cruise tourism in the country, has warned that the new government-imposed per-passenger tax is discouraging cruise lines and threatening the entire sector.
According to the organization, the number of cruise bookings to Icelandic ports has already declined in 2026 and will continue to fall in 2027 unless the government reconsiders its position.
In recent years, Iceland has enjoyed remarkable growth in tourism: in 2024, the country welcomed 2.3 million visitors, and cruise calls reached a record 1,248 port visits. However, this success is now at risk.
Starting in 2025, the government introduced a per-passenger tax of about USD 20 per day, charged for every passenger — including children — for each day a cruise ship stays in Icelandic waters, even if passengers do not disembark. Cruise companies have passed this cost directly onto travelers.
“Bookings for the coming years have already fallen dramatically — it’s close to a collapse,” Cruise Iceland stated.
“Cruise operators are now actively avoiding Iceland,” the group added, noting a lack of interest at recent international trade fairs.
Cruise Iceland points out that cruise itineraries are typically planned two to four years in advance, meaning the full impact of the new tax will not be felt until 2027. Based on current bookings, the organization forecasts:
-
A 17% drop in port calls in 2026 and a 37% decline in 2027 compared to the 2024 record;
-
A 12% and 23% reduction in total gross tonnage for those years;
-
Particularly steep declines in small regional ports — for example, Borgarfjörður Eystri is expected to receive just one ship in 2027, down from 28 in 2024.
Analysts warn that a 30% fall in cruise traffic could cost the government around USD 14 million in lost income, with the most severe impact on small coastal communities that depend heavily on summer cruise tourism.
Under growing public pressure, the government agreed in spring 2026 to reduce the per-passenger tax to about USD 16.50, yet Cruise Iceland emphasizes that the rate remains significantly higher than Iceland’s hotel accommodation tax.
The organization has presented its findings to the Parliamentary Committee on Economic Affairs and Trade, urging policymakers to re-evaluate the tax policy to preserve Iceland’s reputation as a desirable cruise destination and to prevent a downturn in one of the nation’s most vital tourism sectors.
