Investing in Iceland: 50 questions foreign investors ask

Iceland combines a small, open, high-income economy with strong institutions, an A-range sovereign rating and a tourism industry that brings in about a third of the country's export revenue. The opportunities are concentrated in tourism, energy-intensive industry, aquaculture and food. The trade-offs are a small market, a volatile currency and high interest rates. Real assets with permits already in place, such as Riftún, avoid the slowest part of investing here: planning.

Riftún: land with an approved lagoon plan

About 2.27 million foreign visitors left through Keflavík Airport in 2025, close to the 2018 record, and they stayed over 10 million nights. Tourism accounted for 8.8% of GDP in 2025 according to Statistics Iceland, and tourism export revenue of about ISK 628 billion (about USD 5.1 billion) was roughly a third of all exports of goods and services. The largest source markets are the United States and the United Kingdom, and visitors from China grew by a third in 2025.

S&P rates Iceland A+ with a positive outlook (affirmed September 2026) and Moody's rates it A1 with a stable outlook (affirmed September 2026). Fitch upgraded Iceland to A+ in February 2026 and then withdrew its ratings.

Iceland uses the Icelandic króna (ISK). In early October 2026 one euro was about ISK 137 and one US dollar about ISK 122. Capital controls were fully lifted in 2017 and the Foreign Exchange Act of 2021 guarantees free movement of capital, so a foreign investor can bring in and repatriate funds without approval, although banks report cross-border flows.

The Central Bank of Iceland raised its policy rate to 8.0% in August 2026, with inflation at about 5.9%. High domestic rates make local borrowing expensive, which favours equity-funded buyers and gives investors with foreign capital an advantage in acquiring land and permits.

Yes. Iceland has ranked first in the Global Peace Index for 19 years in a row, including 2026. It is a parliamentary democracy, a NATO member and part of the European Economic Area, so most EU business law applies, but it is not an EU member and keeps its own currency.

Keflavík International Airport served 28 airlines and about 100 destinations in 2025, with around 8 million passengers. Flights take about 3 hours to London or Copenhagen and 5.5 to 6.5 hours to Boston or New York. Air China starts scheduled flights from Beijing via Copenhagen on 26 October 2026, the first scheduled service between China and Iceland.

Growth has slowed after a strong post-pandemic recovery: GDP grew 1.3% in 2025 and 1.3% in the first half of 2026, with a weaker second quarter. Long-term drivers remain tourism, aquaculture, renewable energy and data centres, and First Water's land-based salmon farm in Ölfus alone is estimated at about ISK 120 billion (about USD 1 billion).

Yes, with conditions that depend on nationality and residence. Icelandic citizens and anyone with registered domicile in Iceland can buy freely. Citizens and companies of the EEA and Switzerland buy on the same terms after signing a short EEA declaration. Everyone else needs a permit from the Ministry of Justice for each property, under Act 19/1966.

Yes. EU, EEA and EFTA citizens and companies can buy homes, holiday homes and land without a permit, using the EEA declaration filed with the deed. The Land Act thresholds that apply to everyone still apply: buying farmland when the buyer already owns large holdings (1,500 hectares in total, or five farms over 50 hectares) needs ministerial approval. A buyer of Riftún from the EEA would buy on the same terms as an Icelander.

Riftún: land with an approved lagoon plan

Only with a permit from the Ministry of Justice. A permit covers one specific property of up to 3.5 hectares, or up to 25 hectares if the land is needed for direct use in the applicant's own business, and the applicant may not already own other property in Iceland. Ordinary homes and holiday homes are routinely approved; larger land is possible only for genuine business use, such as a lagoon or tourism operation.

Act 19/1966 caps a permit at 3.5 hectares, but a company or individual that needs more land for direct use in its own business can be permitted up to 25 hectares. For example, the 9.3-hectare lagoon and greenhouse parcel at Riftún falls within this limit, while the 81-hectare estate as a whole does not.

Riftún: land with an approved lagoon plan

A company domiciled in an EEA country and doing real business there can buy under the EEA rules regardless of its shareholders, but a letter-box company will fail. A company owned from outside the EEA can apply for the business-use permit in its own name, disclosing its beneficial owners. An Icelandic company counts as Icelandic only if at least 80% of capital and a majority of votes are held by Icelanders and its directors meet residence rules.

No, and we do not recommend it. The legal test is 80% Icelandic ownership plus a voting majority and a qualifying board, not 51%. A later transfer of shares to a foreign party triggers a statutory procedure that can end in a forced sale, and changes in beneficial ownership must be registered within two weeks. Lawful routes exist and should be used instead.

Act 84/2026 on the screening of foreign investment for national security and public order takes effect on 1 January 2027. It requires notification when a foreign investor acquires 25% or more of, or control over, a business in sensitive sectors such as energy, district heating, water, transport, telecoms and critical supplies. Real estate is not screened as such, but land that is part of a sensitive operation can be.

Yes, but a non-resident gets a system ID number (kerfiskennitala) free of charge on presentation of a passport, usually within a few days. It is requested through a public body such as the district commissioner or the tax authority, and the agent arranges it as part of the transaction.

No. Owning property gives no right to live in Iceland. EEA citizens can register residence freely. Visitors from the USA, UK, Canada and Australia may stay 90 days in any 180 without a visa. A residence permit, for example through work or family, is a separate process, and once a person has legal domicile in Iceland they no longer need a permit to buy property.

The direction is tighter. In June 2026 the Icelandic parliament adopted a resolution asking the government to prepare stricter rules on land purchases by foreign parties, and the screening law takes effect in 2027. Investors who want land with permits in place may be better served acting under the current rules.

The Icelandic Competition Authority counted 18 commercial lagoons in 2025, up from 14 in 2021. The best known are the Blue Lagoon, Sky Lagoon near Reykjavík, Mývatn Nature Baths, Vök, GeoSea, Forest Lagoon, Hvammsvík, Krauma, the Secret Lagoon, Fontana and the Highland Baths. More are planned, but very few sites combine an approved plan, hot water and proximity to Reykjavík.

Iceland's lagoon business: revenue, profit and prices

The leading operators have been highly profitable. The Blue Lagoon reported revenue of about USD 157 million (EUR 140 million) and EBITDA of USD 44 million in 2023, before eruptions on the Reykjanes peninsula closed it for 71 days in 2024 and caused a net loss. In 2025 Sky Lagoon near Reykjavík had revenue of about USD 54 million and net profit of USD 12.8 million, and established lagoons earned EBITDA margins of 28 to 46%. The Blue Lagoon is preparing a stock market listing and has bought stakes in other lagoons, a sign of confidence in the sector.

Iceland's lagoon business: revenue, profit and prices

Sky Lagoon opened near Reykjavík in 2021, Forest Lagoon in Akureyri and Hvammsvík in Hvalfjörður in 2022, the Highland Baths in Kerlingarfjöll in 2023, Laugarás Lagoon in October 2025, and Reykjaböð in Hveragerði in September 2026. Mývatn Nature Baths is being rebuilt as Earth Lagoon Mývatn. Demand from visitors has absorbed new capacity so far.

Four things: land zoned for it in the municipal master plan; an approved detailed plan; enough hot water with research and utilisation permits; and enough cold water or a cooling design. Bathing facilities must also meet Regulation 814/2010. The planning steps alone often take several years. At Riftún the master plan amendment and the detailed plan are already in force, so a buyer starts at the resource and design stage.

Riftún: land with an approved lagoon plan

Usually years rather than months. A master plan amendment and a detailed plan each require public consultation, comments from several state agencies and publication in the Official Gazette. At Riftún the process ran from the first request to the municipality in 2016 to the detailed plan coming into force in June 2022.

Riftún: land with an approved lagoon plan

Yes. The Global Wellness Institute valued the global wellness economy at USD 6.8 trillion in 2024, forecast to reach USD 9.8 trillion by 2029. Wellness tourism grew 13.8% in 2024, and the thermal and mineral springs segment grew 11.1%, with about 10% annual growth forecast to 2029.

It may. The government's 2027 budget proposal, published in September 2026, would move lagoon and steam-bath admission from the reduced 11% VAT rate to the standard 24% rate. The tourism industry opposes it and it is not yet law. A lagoon business plan should test both rates.

Accommodation pays a per-night accommodation tax (ISK 800 per night for hotels in 2026), and accommodation, tours and food are taxed at the reduced 11% VAT rate. A new nature and infrastructure fee for non-residents visiting major sites is in public consultation and would take effect in May 2027 if passed.

Most visitors stay in or near Reykjavík, so sites within about an hour's drive of the capital and on the Golden Circle and South Coast routes reach the largest market all year round. Riftún in Ölfus is about 30 minutes from the Reykjavík capital area and an hour from Keflavík Airport, close to Hveragerði and the main route east, and is outside the Reykjanes eruption zone.

Riftún: land with an approved lagoon plan

Increasingly, yes. Winter brings northern-lights tourism and short city breaks, and lagoons are among the most popular winter activities because bathing outdoors in hot water in the cold is the attraction. Summer remains the peak, so a lagoon close to Reykjavík benefits from both seasons.

Geothermal energy heats over 90% of Icelandic homes, supplies about 65% of primary energy and generates about 30% of electricity, with nearly all the rest from hydropower. Hot water is also used for swimming pools and lagoons, greenhouses, fish farming, snow melting and industry.

On private land, the landowner owns the geothermal resources underneath, under Act 57/1998 on the survey and utilisation of ground resources. Using them needs research and utilisation permits, and Article 27 regulates resources that extend under several properties. On public land, the state owns the resources.

A development permit from the municipality for the drilling, a research permit and then a utilisation permit from the Environment and Energy Agency (Umhverfis- og orkustofnun), which took over from Orkustofnun on 1 January 2025. A landowner may use up to 3.5 MW of thermal power for own household and business use without a utilisation permit, but a commercial lagoon will typically need more.

It depends on depth, well diameter, casing, the rig and ground conditions; a drilling pad, access road, testing and a pump come on top. A low-temperature well of around 1,000 m is a significant but manageable part of a lagoon budget, while deep high-temperature wells cost far more. Because the well is the largest uncertainty in a lagoon project, drilling-conditional purchase agreements are useful; at Riftún the seller offers one.

Riftún: land with an approved lagoon plan

High-temperature areas, in the volcanic zones, have temperatures above 200 °C at 1 km depth and are used for power. Low-temperature areas, outside the active volcanic zone, have water below about 150 °C and are used for district heating, bathing and greenhouses. Riftún lies in the Bakki, Riftún and Þóroddsstaðir low-temperature system, where nearby wells reach about 120 to 125 °C.

Riftún: land with an approved lagoon plan

Yes, within the permit system. Producing hot water for sale needs a utilisation permit, and running a public district heating network needs a separate licence, but supply agreements with neighbouring businesses, such as greenhouses or fish farms, are common in Iceland. In Ölfus the land-based salmon farms are large users of both hot and cold water.

Practically all electricity in Iceland comes from hydropower and geothermal, making it among the cleanest in the world. Prices are low by European standards for large industry, but greenhouse growers have seen electricity prices rise sharply since 2023, which makes geothermal heat on site more valuable.

Yes. Iceland has about 18 hectares of greenhouses, mostly heated with geothermal water, producing tomatoes, cucumbers, peppers, berries and flowers, centred on Hveragerði and the South. Heat is cheap where geothermal water is available; lighting electricity is the main cost. Riftún's plan allows about 17,100 m² of greenhouse or commercial buildings next to the lagoon.

Riftún: land with an approved lagoon plan

Friðheimar in South Iceland shows how: a working tomato greenhouse with a restaurant inside grew from about 900 visitors in 2008 to over 150,000 a year by 2017. Greenhouse dining, farm-to-table food and greenhouse tours fit naturally beside a geothermal lagoon, and the greenhouse can use the heat before the water cools in the lagoon.

Ölfus has abundant spring water, geothermal heat, a port at Þorlákshöfn with regular cargo ferries to Rotterdam, and space. Large land-based salmon farms are under construction there, including First Water and GeoSalmo, and the municipality supports projects that create jobs. Riftún lies in Ölfus, between Hveragerði and Þorlákshöfn.

Riftún: land with an approved lagoon plan

Yes. Icelandic spring water is already bottled and exported, including from Hlíðarendi in Ölfus. Bottling requires water testing, food-safety licensing and the right to the water source; the landowner holds the rights to water within the land, subject to law and permits.

Corporate income tax is 20% for limited companies (hf. and ehf.) in 2026. Dividends and capital gains received by individuals are taxed at 22%, and dividends paid to non-residents are subject to 20% withholding, usually reduced under tax treaties.

The standard VAT rate is 24% and the reduced rate is 11%. The reduced rate applies to accommodation, food, books and, at present, admission to lagoons and baths; the 2027 budget proposal would move lagoon admission to 24%.

Stamp duty is 0.8% of the official valuation for individuals and 1.6% for companies, plus a registration fee of ISK 3,800 per document. The seller usually pays the agent's commission. Budget for legal advice, technical due diligence and translation where needed. For Riftún, stamp duty would be about ISK 0.46 million for an individual or 0.92 million for a company.

Riftún: land with an approved lagoon plan

Municipalities charge annual property tax as a percentage of the official valuation, at different rates for residential and commercial property, plus water and sewage charges. Land with a low official valuation carries low annual costs. Buildings must carry compulsory fire and natural catastrophe insurance.

Yes, around 40, including with the USA, UK, Canada, Germany, the Nordic countries, China and Australia. Iceland taxes income from Icelandic property, and the investor's home country usually gives a credit. Get advice in both countries before choosing a holding structure.

A licensed real estate agent must handle the sale. The buyer makes a written offer that is binding once accepted, then signs a purchase agreement and pays the first instalment, and the deed is issued and registered on full payment. A normal sale takes one to three months; land with a permit, resource testing or a conditional agreement takes longer.

Yes. Documents can be signed abroad with witnesses or through a power of attorney to an Icelandic lawyer or agent, notarised and apostilled. Most investors still visit the site before signing, and for land such as Riftún a meeting with the municipality is recommended.

The Ministry of Justice publishes no fixed processing time or fee; practitioners report weeks to a few months once the application is complete. The purchase agreement is signed first, conditional on the permit, and the deed is registered only after approval. For a land and lagoon project the permit can run in parallel with the inspection and drilling period.

Rarely. Icelandic banks lend mainly to residents with Icelandic income, and loan-to-value limits apply. Non-resident investors usually buy with equity and finance the operating business later, once permits and the resource are confirmed.

Check the registry certificate for title, mortgages and easements; the master plan and detailed plan and their publication in the Official Gazette; water, geothermal and access rights; natural hazards; archaeological sites; utility connections; and, for non-EEA buyers, the ownership permit route. For Riftún, the plans, studies and register extracts are available on request.

Riftún: land with an approved lagoon plan

Baldur Jezorski is a licensed real estate agent in Iceland who advises foreign buyers on property and land, including the permit and company routes for buyers from outside the EEA, and is the contact for Riftún. Business Iceland (Íslandsstofa) promotes foreign investment, and Icelandic law firms advise on structures and permits.

Riftún: land with an approved lagoon plan