Iceland Airbnb & Short-Term Rental Regulations 2026
LawfulStay tracks short-term rental (STR / Airbnb / Vrbo / holiday let / vacation rental) regulations for 3 cities and regions in Iceland. Select a location below for current permit requirements, tax obligations, and compliance details.
Iceland at a glance
- Places tracked
- 3 places: 3 restricted
- Licence or registration
- Required in all 2 places
- Tax on stays
- Applies in all 2 places
- National law
- Governed by Act No. 85/2007 on Restaurants, Accommodation and Entertainment; the '90/2M rule'. National rules ›
Iceland short-term rental questions
Are short-term rentals legal in Iceland?
In all 3 places we track in Iceland, short-term rentals are allowed, all with permit conditions or limits.
Do I need a licence for a short-term rental in Iceland?
All 2 places we track in Iceland require a licence, permit or registration. Check your city's page for its rules.
Is there a national short-term rental law in Iceland?
Governed by Act No. 85/2007 on Restaurants, Accommodation and Entertainment; the '90/2M rule'.
Which places in Iceland have the strictest rules?
On our records: Reykjavík (Capital Region), Reykjavik.
Iceland Airbnb & Vacation Rental Regulation Overview
The short-term rental regulatory landscape in Iceland encompasses 3 tracked jurisdictions: 3 with restrictions. Hosts operating on platforms like Airbnb, VRBO, and Booking.com should verify local requirements before listing, as rules vary significantly between cities and regions.
All 3 tracked jurisdictions in Iceland require some form of permit, license, or registration for short-term rental operations. Requirements range from simple online registration to comprehensive permit applications with inspections.
Tax obligations apply in 3 of 3 jurisdictions. Common taxes include occupancy taxes, tourist levies, and sales taxes. Many jurisdictions require hosts to register for tax collection, and some platforms like Airbnb collect and remit taxes automatically in select locations.
Cities with significant restrictions on vacation rentals include Iceland (nationwide), Reykjavík (Capital Region), Reykjavik. These jurisdictions typically impose permit caps, zoning limitations, or primary residence requirements.
LawfulStay monitors Iceland STR regulations daily and updates this page as rules change. Each city page includes detailed permit requirements, fee schedules, tax rates, zoning rules, and penalty information sourced from official government websites.