Tax free shopping
Basically, the way tax-free shopping works is that whenever you buy goods for more than 4000 Krónur in one shop, you are entitled (as a visitor to the country) to a tax refund. When you buy the products in the shop you pay the full price, but you should ask for a "tax-free" cheque. This amounts to about 15% of what you just paid and it can be refunded at the airport when you leave. This is accomplished at the Bank of Iceland teller in the Leifur Eriksson Airport.
If the amount you will be refunded is in excess of 5000 ISK, you must have the cheque stamped by the Customs Authority Office at the airport. You may be asked to present the articles you bought, so be prepared to do so when visiting the customs office. This, however, is unnecessary for woollen products.
Rather than cashing the cheque in for money, you can also spend it at the Islandica store. If that doesn't suit you, you can also cash the tax-free cheque in for coupons in other foreign currencies.
Iceland Refund ehf 
Adalstraeti 2
101 Reykjavík - IS
Phone: +354 564 6400
Fax: +354 564 3600
Email: taxfree@icelandrefund.com
Website: www.icelandrefund.com