Work permits and visas in Iceland: An employer’s guide

If you are hiring a new employee or relocating a team member to Iceland, you need to make sure they have the proper work permit under local immigration laws. Your company also needs to stay on top of labor and tax laws for compliant HR.

Known for its stunning landscapes and strong economy, Iceland remains a popular work destination for top talent. In this article, Remote walks you through right-to-work checks, work permit types, and visa requirements for your employee to work in Iceland.

See also: The complete employer's guide to hiring in Iceland

Right-to-work checks in Iceland

Icelandic employers must verify that a foreign national holds the correct permission to live and work in Iceland. Nationals from the European Economic Area (EEA), European Free Trade Association (EFTA), and the Faroe Islands can generally work in Iceland without a work permit, but they must still register their residence if staying beyond three months. Other foreign nationals need both a residence permit based on work, and an employer-specific work permit.

Do non-citizens need a work visa or work permit in Iceland?

Yes. Foreign nationals from outside the EEA/EFTA must obtain a residence permit based on work, and a work permit tied to the employer and the individual. The employee cannot start work until the permit is granted. If the employee changes employers, they must obtain a new work permit.

Nationals of the EEA/EFTA can work in Iceland without a work permit. If they stay longer than three months (or up to six months while job-seeking), they must register their right of residence with Registers Iceland. 

How is the Schengen visa applicable?

Schengen rules allow short stays of up to 90 days in any 180-day period for visits. A C-type Schengen visa or a visa exemption status does not authorize taking up employment in Iceland. Anyone who plans to work must apply for both a residence permit and a work permit through the Icelandic authorities.

Types of work permits in Iceland

A visa (or, for longer stays, a residence permit) gives a foreign national permission to come to Iceland and live there legally. For example, a Schengen visa allows a short visit of up to 90 days, while a residence permit based on work allows a longer stay tied to employment.

A work permit is what authorizes the individual to take up paid employment in Iceland. Work permits are issued by the Directorate of Labour, always tied to a specific employer and role, and they must align with Icelandic labor laws and collective agreements.

Temporary work permits

A temporary work permit is tied to one employer and one role. The Directorate of Labour issues temporary work permits for shortage of labour, expert knowledge, athletes, and specific special circumstances. For shortage of labour, the employer may need to advertise the role as part of a labour-market check.

Residence permits based on work

Non-EEA and non-EFTA nationals with a job offer apply for a residence permit based on work through one of four tracks: expert knowledge, shortage of labour, athletes, or work based on a collaboration or a service contract. Applications are submitted to the Directorate of Immigration, then the Directorate of Labour makes a decision on work permits.

Use the collaboration or service contract route when work will be carried out in Iceland under a foreign employer that has no entity in Iceland. The service contract still needs to meet Icelandic collective agreements (pay, hours, benefits) and match the role on the application.

How to get a work visa in Iceland

For non-EEA/EFTA hires, the employer and the employee file a single application bundle: the residence-permit application (employee) with the work-permit paperwork (employer).

Supporting documentation

Follow the official checklist for your specific track (expert knowledge, shortage of labour, athletes, or collaboration/service contract). Expect to provide:

• A signed employment contract that meets Icelandic collective-agreement standards. In many cases, the application must also include the opinion of the relevant trade union.
  
• Completed forms for the residence and work permit, and supporting documents such as proof of qualifications.

Where and how to submit the application 

Submit the application for residence and work to the Directorate of Immigration. Immigration reviews the residence-permit conditions and then sends the work permit application to the Directorate of Labour for a decision.

After arrival: ID number, tax, and health insurance

Residents are registered with Registers Iceland and receive a ten-digit kennitala (ID number) needed for employment and services. Employers withhold taxes under Iceland Revenue and Customs rules. New residents become eligible for Icelandic Health Insurance after a waiting period, typically six months.

Processing times and fees for work visa in Iceland

Timelines vary with volume and permit type. First-time residence permits commonly take several months. The Directorate of Immigration publishes estimates of waiting times, and Directorate of Labour posts timeframes for a work permit application. Applicants can refer to the latest fee schedule for processing fees.

Digital nomad visa in Iceland

Iceland offers a long-term visa for remote work, often called the digital nomad visa. This visa lets eligible people live in Iceland temporarily while they keep working remotely for an employer abroad or as self-employed. It is designed for short stays and does not place workers in Iceland’s labor market.

Workers can apply for a digital nomad visa if they are from outside the EEA/EFTA, are visa-exempt for entry to Schengen, have not received an Icelandic long-term visa in the last 12 months, and purpose is to work remotely from Iceland for a foreign employer or as self-employed.

Candidates need to fill out the L-802 applicant form with the following documents:

• Payment receipt for the processing fee

• Passport photo (35×45 mm) and passport copies (passport valid at least 90 days beyond the visa’s validity)

• Proof of purpose (e.g., employer confirmation permitting remote work from Iceland, or proof of self-employment)

• Proof of income: at least ISK 1,000,000 per month (or ISK 1,300,000 per month if a spouse/partner also applies)

• Health and accident insurance covering the stay
  
  

Applications are paper-based and filed with the Directorate of Immigration (by mail, drop-box, or in person). The processing fee is paid by bank transfer and the receipt is included with the application.

How Remote can help with work visas in Iceland

To hire or relocate employees to Iceland, need to navigate immigration laws, and handle payroll and benefits according to local tax laws. 

That's why Remote’s Employer of Record service is invaluable. We act as the legal employer in Iceland on your company’s behalf. Remote helps you stay compliant with local labor and tax laws, so you can onboard your employees in a matter of days to save time and resources. 

Remote can also help with international employee relocation with case-by-case immigration assessments, and guidance on Icelandic work permit applications. 

To learn more about the processes involved in relocating international employees, download Remote's Relocation Guide, or contact our Relocation team today.