The VR Contingency fund combines rights which were in various funds before, into one fund and offers members the possibility of utilizing the fund with more flexibility than before.
All members who pay membership fee to VR accumulate rights to the fund. A deposit is made to it annually after the general meeting, followed by updating of credit balance. The union’s general meeting is held in spring. If a member leaves the union, he/she can continue to make use of his/her credit rights for a specific period. Two years after the last payment was made, the credit balance begins to reduce, for further details see Art. 4 of the fund regulations (In Icelandic only).
Payments from the VR Contingency fund
A reimbursement from the VR Contingency fund depends on each member’s credit rights.
Payments from the fund are generally taxable and the taxes are deducted from the amount prior to payment. The taxation is taken out of the grant amount from the VR Contingency fund according to tax level 1.
There are three exceptions from this:
- Physical exercise and rehabilitation (physical therapy, massage, acupuncture and chiropractic) are maximum 71.500 IKR pr. year (based on the year 2023).
- Payment for cost of accommodations is maximum 67.000 IKR pr. year. This only applies to accommodations such as vacation houses, hotels or hostels.
- Vocational training, grants from the fund due to vocational studies.
What can I use the fund for?
- Exercise fees e.g. for golf clubs, sports teams, appointments with private trainers, physical exercise courses, jogging- and walking groups, swimming cards and gym cards (tax free to the maximum of 71.500 IKR pr. year).
- Rehabilitation costs, such as treatments by a physical therapist, masseuse and chiropractor as well as acupuncture (tax free to the maximum of 71.500 IKR pr. year).
- Payment of accommodations during vacation (tax free to the maximum of 67.000 IKR pr. year). This only applies to payments for accommodations such as vacation cottages, hotels or hostels.
- Payment due to vocational courses and school fees (tax free, see further information here below).
- Purchasing of support equipment with regards to physical exercise, such as bicycles, golf clubs, running shoes, sports clothing and more.
- Purchasing of support equipment, such as glasses, contact lenses, hearing aids, insoles for shoes and more.
- Dental services.
- Medical services, including medicinal costs, ex-rays, biopsies, laser treatments and more.
- Psychology costs and psychiatrist appointments.
- Decrease in income due to parental leave, unemployment or health problems.
- After the age of 60 years has been reached.
- Vacation services, such as flights, rental cars, package trips.
- Children’s leisure activities and/or purchasing of study materials for members’ children up to the age of 18 years.
- Purchasing of life-, accident- and disease insurance.
Important to keep in mind
Payments from the fund which are used for vocational studies are exempt from taxation. Note that if total withdrawal from the reserve fund and vocational training fund due to vocational studies is a higher amount than the equivalent of the payment receipt for the studies, the difference is taxable.
We then want to point out that job seekers must declare grants from unions to the Directorate of Labor. We also point out to pensioners that payments must be declared to the Social Insurance Administration.