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

If you want to hire or relocate an employee to Iceland, you have to make sure you secure the right work permit among the several visas and work permits available. As an employer, you are responsible for ensuring all international employment is done compliantly, and you will need to honor all relevant tax and labor laws when you have employees living in Iceland. An easy way to hire workers abroad is to use an employer of record (EOR) service like Remote. 

This guide will help you understand key aspects of hiring and relocating employees in Iceland, including:

• Hiring remote candidates living in Iceland without a local legal entity 

• Hiring any non-citizen residents of Iceland

• Making sure that digital nomads can legally work in Iceland

• Relocating employees to Iceland

Continue reading to learn about what visas and permits are required when hiring employees in Iceland. 

The importance of immigration compliance in Iceland

When your company hires employees in foreign countries or relocates individuals to these countries, you’ll have to be mindful to follow all the relevant tax and labor laws. 

In Iceland, the Immigration Office is responsible for overseeing country visas, and the Directorate of Labour is responsible for overseeing work permits. Your employees will need to obtain all the necessary permits from these two departments. Any failure to do so can result in significant penalties and fines for your company.

Although many digital nomads believe they can work on a tourist visa, you should keep in mind that most countries do not allow this. In fact, due to the rise of remote working post-COVID-19, many countries have begun regulating these visas more strictly.

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Which workers need a right-to-work check in Iceland?

You will need to perform all necessary right-to-work assessments when your employees relocate to Iceland to ensure they possess all necessary documentation. If your employees do not obtain the correct resident visas or employment permits, your company could be held legally and financially responsible.

If you're employing a citizen of Iceland, you likely won't need to conduct a check but will have to do so for all foreign nationals. Consider how you will manage this process for the following groups:

• Permanent residents. If an employee is a permanent resident in Iceland, they will have to possess a resident visa. In most instances, this visa entitles them to work in Iceland without any additional work permits.

• Temporary residents. Temporary residents of Iceland will need to obtain not only a visa to enter and stay in Iceland but additional visas as well. The type of visa and work permit they need depends on various factors, including their country of origin and position within your company. 

When you use an EOR, we ensure that your employee's hiring is compliant, and we make the process affordable, quick, and frictionless. By using these services, you allow us to employ your employee on your behalf using our local entity in Iceland, which absolves you of any associated risk. 

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

Barring a few exceptions, non-citizens planning to live or work in Iceland will need to obtain the appropriate visas and work permits whenever entering the country to conduct business. 

How is the Schengen visa applicable?

Iceland is one of the 26 countries that issues the Schengen visa. With a Schengen Visa, an individual can stay in a Schengen country for up to 90 days out of every 180 days. This means visa holders can spend up to roughly half the year in Iceland, non-consecutively. 

While this can be a valuable option for employees who sometimes need to visit Iceland for business, the visa has limitations. The Schengen Business Visa is more appropriate for non-citizens entering the country for specific events or meetings. However, it is unsuitable for short-term stays where the individual plans to work remotely. 

What are the eligibility requirements for a work visa in Iceland?

To obtain a work visa in Iceland, employees will need to fulfill the following requirements:

• Fill out the necessary visa application, including being forthcoming with any information that may affect their eligibility (e.g., salary or criminal background)

• Fill out a payment receipt and pay any necessary visa application fees

• Apply for a residence permit from Iceland's Immigration Office

• Provide a 35 mm by 45 mm passport photo that complies with Iceland's passport photo requirements

• Provide a photocopy of every single page of their passport, and ensure that the passport will not expire within three months of the ending of their permit 

• Provide proof of health insurance from either an Icelandic health insurance company or a foreign health insurance company that can legally provide health coverage in Iceland

• Provide a legal, signed employment contract from an Icelandic employer

• Fill out the necessary relevant work permit application 

• Provide proof of the minimum salary requirements to be eligible for the visa.

What are the long-stay visa types in Iceland?

If an employee wants to work in Iceland, they can apply for a residence permit for work. Employees may apply for this permit if they have a job offer in Iceland and any of the following conditions apply: 

• For work requiring expert knowledge

• For work due to a labor shortage

• For work based on a service contract or collaboration 

• For athletes. 

Citizens from the following countries don’t need an Icelandic Residence permit to live in Iceland, but instead have to register upon their arrival:

• Individuals from countries that belong to the European Union (EU)

• Individuals from Norway

• Individuals from Liechtenstein

• Individuals from Switzerland

Note: Iceland does not issue EU Blue Cards, so EU Blue Card holders will not experience the same benefits they do when traveling to other EU Blue Card countries.

How do you get a work visa for Iceland?

Employees originating from the following regions are entitled to work in Iceland without a temporary work permit:

• European Free Trade Agreement (EFTA) countries

• European Economic Area countries (EEA)

• The Faroe Islands

All other non-Icelandic employees will need to apply for a work visa if they want to legally work while living in Iceland. 

Employers who want to hire a foreign national outside the above countries must apply for a work permit on behalf of the employee through Iceland's Directorate of Labour. The processing time for obtaining a work visa can take 90 days, but employees can get up-to-date information about their processing window on the Directorate of Labour's website.

To apply for a work permit in Iceland, employers will have to submit the following documentation:

• Work permit application

• A signed employment contract must include the following information: 

  • The job type and location

  • Pension fund information

  • Job description 

  • Employment terms

• Copy of relevant diplomas or degrees (when applicable)

• Copy of relevant licenses (when applicable)

• Previous employment verification

Applying for work permits in Iceland can be extremely complicated, and both the employer and employee are responsible for ensuring the employee is legally entitled to work in Iceland before employment begins. 

What are the visa requirements for digital nomads in Iceland?

In 2020, Iceland developed the digital nomad visa, or the long-term remote visa to bring more temporary employees to the country. With this visa, individuals who work for companies based outside Iceland can live and work in the country for up to six months. 

The long-term remote visa is unique because it only applies to individuals who are self-employed or who work for an employer that doesn't have a legal entity in Iceland. In other words, visa holders must work for foreign entities (including themselves). 

To obtain Iceland's digital nomad visa, employees will need to meet the following eligibility requirements:

• They cannot be a citizen of any EEA countries, EU countries, or EFTA countries.

• They will need to prove that they plan to work remotely during their stay.

• They will need to prove an intent to leave Iceland after the visa expires.

• They cannot have obtained an Icelandic digital nomad visa within the previous year.

• Their country of origin and Iceland will need to have an established visa-free travel agreement.

• They will need to prove an income of at least ISK 1,000,000 per month.

How Remote makes compliance in Iceland so much easier

Hiring or relocating employees to any new country can be a time-consuming, expensive, and complicated process. This is especially true when employers attempt to move through this process independently without a local expert's guidance. 

By utilizing Remote's EOR services in Iceland, you can make the process of international hiring quick and easy. Remote can help you navigate every challenging aspect associated with international hiring, including topics like compliance, managing international payroll and benefits, immigration, and more. 

Download Remote's Relocation Guide for more information about what you can expect when relocating employees and how you can minimize risks associated with employee relocation. You can also contact our Mobility specialists for advice on how Remote can help you can hire or relocate an employee to a foreign country.

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