Then you pay calculated remuneration (not salary) and everything is on your ID number.  You apply for general benefits and are required to close your wage-payers registry by sending form RSK 5.04 to Iceland Revenue and Customs to skatturinn@skatturinn.is

If you need to cease operations, either partially or fully, you are entitled to apply for unemployment benefits at The Directorate of Labour. When you apply for unemployment benefits, you are required to submit a confirmation of employment period to us.

Then you can apply for regular unemployment benefits. Ársmenn are those who only declare income once a year, usually in their tax return. You must submit to us: a contractor's declaration and  confirmation from Iceland Revenue and Customs regarding the payment of social security contributions and withholding tax. If you are in outside of the Reykjavík Capital Area, the confirmation can be obtained from The District Commissioner’s office (sýslumaðurinn). 

Self-employed persons aged 18-70 are entitled to unemployment benefits provided that they have earned the right to social security and meet the following conditions: 

• They are actively seeking employment 
• They are domiciled and present in Iceland 
• They are permitted to work in Iceland without restriction 

• They have been self-employed during the accrual period 
• They have suspended operations 
• They have submitted a confirmation of suspension of operations with form no. RSK 5.04, and confirmation of employment period and certificate from school where applicable 
• They have paid insurance fees and withholding tax on the calculated remuneration in accordance with the decision of the tax authorities upon suspension of operations 
• They have been seeking employment continuously for three working days since their application for unemployment benefits was received by The Directorate of Labour 

When applying for unemployment benefits from the Directorate of Labor, due to a lack of projects, a self-employed person must fill in this document RSK 5.04 https://www.skatturinn.is/media/rsk05/rsk_0504.is.pdf

When filled out, it should be sent via email to stofnskra@rsk.is 

A self-employed person is anyone who works in his own business or self-employment operations to the extent that they themself is required to pay monthly, or in another regular manner according to the rules of the Minister of Finance, withholding tax on calculated remuneration and social security contributions for his work. 

Owners of self-employment operations who are independent legal entities or have a dominant position due to board membership are considered to be employees but earn the right to benefits in the same manner as self-employed individuals. 

A self-employed person is considered fully insured after having paid monthly withholding tax on calculated remuneration amounting to at least Iceland Revenue and Customs’ reference amount of in the relevant profession and social security contributions continuously for the last twelve months before applying for unemployment benefits. 

• A self-employed person who has paid monthly withholding tax on calculated remuneration amounting to at least Iceland Revenue and Customs’ reference amount of in the relevant profession and social security contributions for less than twelve months but longer than three months in the last twelve months before applying for unemployment benefits is considered proportionally insured in accordance with the number of months he has paid withholding tax. 
• The same applies to a self-employed person who has paid monthly withholding tax on calculated remuneration that is lower than Iceland Revenue and Customs’ reference amount of in the relevant profession and social security contribution in the last twelve months before he applies for unemployment benefits. Therefore, the benefit entitlement is determined by the ratio of the amount of calculated remuneration that has been paid in comparison to the reference amount. 
• A self-employed person who pays monthly withholding tax on calculated remuneration that is lower than 25% of Iceland Revenue and Customs’ reference amount of in the relevant profession in the last twelve months before he applies for unemployment benefits is not considered insured. 

• A self-employed person who has paid the full reference amount for their profession for 12 months has earned a 100% benefit entitlement. 
• A self-employed person who has paid the full reference amount for their profession for 6 months has earned a 100% benefit entitlement. 
• A self-employed person who has paid 50% of the reference amount for their profession for 12 months has earned a 100% benefit entitlement. 
• A self-employed person who has paid 75% of the reference amount for their profession for 6 months has earned a 50% benefit entitlement. 

The self-employed individuals’ entitlement to benefits will never exceed the employment ratio during the period of employment or the employment ratio in which they is willing to be employed. If the employee has not been in the same employment ratio for the entire employment period, the average employment ratio at that time shall be used. 

Studies that the self-employed individual has pursued for at least six months in the last twelve months before they apply for unemployment benefits corresponds to a thirteen-week full-time contribution, provided that they have has verifiably completed their studies and worked for at least three months in the domestic labour market during the accrual period. 

• A certificate from the school in question must accompany the application for unemployment benefits confirming the completion of studies. 
• This authorization can only be used to increase the employee's benefit entitlement once in each benefit period. 

In instances when studies are not considered to be part of the work contribution, it is permissible to take into account work performed while studying when calculating the employee's unemployment benefit entitlement. 

The self-employed individual shall be 16 years of age at the beginning of the accrual period.