VR’s proposal for a traditional grant system assumes that grants will be offered in seven categories with a specific annual maximum for each category. Within some categories, grants are available for more than one item. The categorization differs from the traditional grant systems of unions in that VR offers grants for holiday services, which is generally not available through unions. Furthermore, not all unions offer a birth grant.
Below is the categorization.
| Body and Mind Treatment Psychological services, physiotherapy, therapeutic massage, chiropractic care, massage outside of TR, and stay at Health Institute |
Maximum of ISK 80.000 / 60% of invoice. |
| Fitness | Maximum ISK 25,000 / 50% of invoice. |
| Hearing aids and glasses (every 3 years) | Maximum ISK 70,000 / 50% of invoice. |
| IVF and artificial insemination | Maximum ISK 70,000 / 100% of invoice. |
| Risk Assessment Cancer screening and cardiac examinations |
Maximum ISK 20,000 / 85% of invoice. |
| Holiday Services Subsidy for airfare or reimbursement of holiday accommodation |
Maximum ISK 25,000 / 70% of invoice. |
| Birth Grant Not included in the ISK 120,000 annual maximum for total grants |
ISK 100,000 in total, paid once per child. |
Annual Maximum
A maximum will apply to total payments to each individual member, ISK 120,000 per year across all categories, excluding the birth grant which is not counted towards the maximum.
Eligibility for Grants
To receive a grant, membership fees must have been paid to VR for six of the last twelve months, including at least one of the last three months. To receive the birth grant, membership fees must have been paid for twelve months. VR members with wages below the minimum wage according to the collective agreement between VR and SA (The Confederation of Icelandic Enterprise) will receive a proportional grant, based on the ratio of their wages to the defined minimum wage at the time.
Members in summer jobs or temporary positions who do not meet these requirements are not eligible for grants.
Grant Eligibility Follows the Calendar Year
Eligibility for grants is 12 months and based on the calendar year. If a grant is not applied for within the calendar year, or only part of the maximum grant is used, the right to the grant lapses and does not carry over to the following year. A new application period thus begins at the start of the next year. Please note the right to grants expires three months after the last membership fee payment.
Grants involve reimbursement of incurred costs. An application must be submitted and an invoice provided. Generally, a set percentage of the invoice is reimbursed. This percentage is a minimum of 50%, except in the case of grants for IVF or artificial insemination, where the invoice is reimbursed in full, up to a maximum of ISK 70,000.
Changes to Other Grants and Subsidies
If the outcome of the vote is to adopt the traditional grant system, changes will be made to other grants and the union’s subsidies (see also the discussion on the VR Contingency Fund).
The sale of Icelandair gift certificates will be discontinued, but it will be possible to apply for a grant to pay for the cost of flights and holiday accommodation.
It will not be possible to apply for a grant under the traditional grant system to pay for the rental of VR holiday homes as is currently possible using credit from the VR Contingency Fund.
The grant from the VR Sick Pay Fund for IVF and artificial insemination will be transferred to the traditional grant system, while the travel cost grant for specialist doctors will be discontinued.
Effective Date
If the result of the vote is to adopt the new grant system, it will take effect the day after the 2026 Annual General Meeting, or on March 26 of that year. On that day, the sale of Icelandair gift certificates will also cease and other changes will come into effect, e.g., regarding the birth grant, IVF grants from the VR Sick Pay Fund, and travel costs for specialist doctors. Members who have credit in the VR Contingency Fund will have two years from that date to use their entire credit, otherwise the remaining balance will expire in full as of March 26, 2028.
Taxation of Grants – Important to Keep in Mind
No income tax is paid on grants for vacation accommodation or fitness (including rehabilitation comparable to sports activity) up to a certain limit. Grants for job-related education are exempt from withholding tax, but the cost must be reported as a deductible expense against the grant on the tax return. Other grants are taxed similarly to wages; income tax at rate level 1, or 31.49%, is deducted from the total grant amount and VR remits that amount to the tax authority.
Comparison – VR Contingency Fund vs. Traditional Grant System
| VR Contingency Fund | Traditional Grant System | |
| How do you get reimbursed / a grant? | Your personal fund, income-based | Apply for grants, with limits per grant |
| Can you accumulate between years? | Yes | No |
| Number of grant/payment options? | Very flexible, about 40 options | 7 categories with about 12 grant options |
| Maximum amount? | No fixed limit – up to available balance | ISK 120,000 per year total (plus parental grant) |
| Flexibility? | High | Limited to categories |
| Parental grant | No, but can apply for loss of income during leave | Yes, ISK 100,000 paid once per child |
| Icelandair gift certificates? | Yes | No, but can apply for vacation grant |
| Grant for renting VR vacation homes? | Yes | No |
The total annual cost to the union is estimated to be the same, regardless of which option is selected. In 2024, VR contributed ISK 1.050 billion to the VR Contingency Fund. The total amount paid from the fund, plus grants from the VR Sick Pay Fund and the Icelandair gift certificate subsidy, was about ISK 980 million in 2024.