We use core level photoelectron spectroscopy and density functional theory (DFT) to investigate the iodine-induced Pd(1 1 1)-I(root 3 x root 3) structure formed at 1/3 NIL coverage. From the calculations we find that iodine adsorbs preferentially in the fcc hollow site. The calculated equilibrium distance is 2.06 angstrom and the adsorption energy is 68 kcal/mol, compared to 2.45 angstrom and 54 kcal/mol in the atop position. The adsorption energy difference between fcc and hcp hollows is 1.7 kcal/mol. Calculated Pd 3d surface core level shift on clean Pd(1 1 1) is 0.30 eV to lower binding energy, in excellent agreement with our experimental findings (0.28-0.29 eV). On the Pd(1 1 1)-I(root 3 x root 3) we find no Pd 3d surface core level shift, neither experimentally nor, theoretically. Calculated charge transfer for the fcc site, determined from the Hirshfeld partitioning method, suggests that the iodine atom remains almost neutral upon adsorption.