Iceland boasts some of the most striking landscapes on earth, is equidistant from the US East Coast and continental Europe and offers extreme daylight in summer and extreme darkness in winter. Locations range from Reykjavik's trendy bars to active volcanoes, geothermal hot springs and Europe's largest glacier.

More than 30 international co-productions have shot in the region over the years, including Die Another Day and Batman Begins. Yet even with the 14% tax break, the country's reputation for being expensive persists.

Einar Hansen Tomasson, film commissioner at Invest In Iceland, notes that filming in the country is not as costly as it might seem. "Iceland doesn't have film unions, so instead of a 400-person crew in the US you could use 200-250 in Iceland," he notes. The tax credit is also easy to access. "There's minimum red tape, and everybody knows everybody so things can happen very fast."

Icelandic productions can also qualify for the Nordic Film & TV Fund, Eurimages and Media funding.

Clint Eastwood spent five weeks in Iceland shooting Flags Of Our Fathers in 2005, with its black sand beaches substituting for Iwo Jima. "I could see Iceland had the rugged and unusual look we needed," Eastwood said at the time. "I soon learned Iceland also has friendly, hard-working people with a refreshing can-do spirit."

Matthew Vaughn's fantasy epic Stardust shot in Iceland for two days. The production wanted to shoot there for about a month to take advantage of the otherworldly scenery, but a complication over importing horses made that impossible. Still, Stardust associate producer Tarquin Pack was impressed by the experience. "From our viewpoint, it could not have been easier," he says. "The local production company was great, the location was mind-blowing and everything went extremely smoothly - but it was very cold!"

Leifur B Dagfinnsson, executive producer at Truenorth, has been a service provider for larger productions (for films including Flags and Stardust) as well as production for local films.

"The awareness of Iceland is definitely increasing," says Dagfinnsson. Successful main unit shoots for major productions have given producers increased confidence in Iceland. "They know what kind of service to expect and that we deliver on time and on budget.

"The cost of a dinner out might be expensive, but crew costs are comparable," continues Dagfinnsson. One downside is the lack of a laboratory, meaning film has to be flown out for processing. There are hopes that will change soon.

Dagfinnsson will serve as one of the producers (with US-based Steven Haft) of Bille August's The Journey Home, an adaptation of Olaf Olafsson's Icelandic novel that is being lined up to shoot in Iceland and the UK.

Another film that could soon hit Iceland's shores is Ridley Scott's untitled project about the 1986 summit between Ronald Reagan and Mikhail Gorbachev, famously held in Reykjavik.

There is already a high-tech TV studio used by hit international children's show Lazytown, and Dagfinnsson is bullish about the facilities that will be offered by the planned Atlantic Studios near Keflavik: "That's an important factor to bring in other productions; you can do longer shoots and have weather cover."