5 primary ways to obtain Icelandic citizenship

By naturalisation. This process is designed for foreign nationals who’ve been legal residents for at least 7 years. The foreigner must prove their knowledge of Icelandic, be self-sufficient and of good character.

Some European countries, like Malta and Portugal, offer a faster path to citizenship by naturalisation. A foreigner obtains residency and can get a passport in 1—5 years. The easiest way to get a residence permit is by investment.

How to get a European residence permit by investment

By marriage or cohabitation. A foreigner married to an Icelandic citizen and residing in Iceland for 3 years since marriage can apply for a passport. The foreigner’s spouse must have been an Icelandic citizen for at least 5 years before the application.

Citizenship by cohabitation is obtained if a foreigner cohabits with an Icelandic citizen for at least 5 years since the cohabitation registration. The cohabiting spouse must have been an Icelandic citizen for at least 5 years.

By birth, descent and adoption. A child born to an Icelandic mother is an Icelandic citizen regardless of the place of birth.

Suppose the child’s father is an Icelandic citizen and is married to the mother. In that case, the child is also an Icelandic citizen unless the couple had obtained a legal separation by the time the child was conceived. Legal separation means a couple lives apart while remaining legally married.

A child born in Iceland to an Icelandic father and a foreign mother becomes an Icelandic citizen. Finally, if a child is born abroad to an Icelandic father and an unmarried foreign mother, the father can request Icelandic citizenship for his child from the authorities.

A foreign child obtains citizenship upon adoption if they are under 12.

Foreigners who apply for Icelandic citizenship must:

• be 18 years old or more — younger applicants will need their parents’ help;

• have no criminal record;

• show financial stability with bank statements.

If the aforementioned check out, foreign applicants must meet the following 6 criteria.

1. Live in Iceland continuously for 7 years before applying and possess a permanent residence permit. It is also required to be within Iceland for at most 90 days every 12 months.

2. Pass an Icelandic language test. The test checks that the applicant can cope with everyday situations. It includes speaking, listening, writing and reading skills.

Specific categories of people are exempt from passing the test:

• applicants of 65 or over if they have had legal residence in Iceland for the last 7 years before the application;

• applicants that study in an Icelandic primary school or under primary school age;

• applicants with severe physical or mental conditions that don’t allow them to pass the test;

• applicants who can confirm their language proficiency as attested by an Icelandic school.

3. Prove the identity by submitting a copy of a passport or an ID card issued by the country of the applicant’s origin.

4. Not be in arrears. Applicants can’t obtain Icelandic citizenship if:

• their property has been seized in the past three years;

• their real estate has been accepted for liquidation;

• they default on taxes.

5. Be self-sufficient during application and for the past 3 years. The single applicant is expected to earn at least ISK 217,799, or $1,600 per month, and a married couple to have at least ISK 348,476, or around $2,555.

Documents that can be used to prove financial solvency are an employment contract or self-employment income, payslips, disposable funds, information about payments for services rendered as an individual entrepreneur, or guaranteed regular payments such as rental income.

Students between 18 and 20 years old confirm an income of ISK 108,898 per month, or $800+. Documents proving scholarships, grants and loans for studying at a university are accepted.

6. Not be subjected to fines or imprisonment or have an open case in the criminal justice system.

A foreigner’s child can become an Icelandic citizen alongside their parent if the child is younger than 18 years old, unmarried, domiciled in Iceland and in the custody of the parent applying for Icelandic citizenship.

The basic list of the required documents includes:

• an application form;

• a passport from your country of origin;

• a no criminal record certificate;

• proof of financial means;

• health insurance;

• a receipt of a paid government fee;

• passport-size photos.

Additional documents for a residence permit depend on the grounds you’re applying under. For instance, students must present a letter of admission to a university, and employees must have a work contract with an Icelandic employer.

Applicants for permanent residency and citizenship must provide an Icelandic language test certificate and a certificate of legal registration history.

If you apply for your minor child, you must submit a copy of the child’s passport and a birth certificate.

Foreigners pay government fees on each step leading to citizenship, including payments for obtaining and renewing a residence permit, becoming a permanent resident, and issuing a passport.

The standard fees are the following:

• ISK 16,000, or around $117 — a temporary residence permit processing fee;

• ISK 16,000, or around $117 — renewal of a residence permit;

• ISK 16,000, or around $117 — a permanent residence processing fee;

• ISK 27,000, or $198 — a citizenship processing fee;

• ISK 14,000, or $102 — a standard fee for issuing a passport for people aged 18 to 66;

• ISK 6,000, or $44 — a standard fee for issuing a passport for people under 18 or over 66.

Expedited passport issuance costs more: ISK 28,000 (≈ $205) for applicants 18—66 years old and ISK 12,000 (≈ $88) for minors, elderly and disabled applicants.

There are no fees for minor children covered by the application.

1. Strong passport. An Icelandic passport allows visa-free or visa-on-arrival access to 169 countries. The list includes all the Schengen states, the US, the UK, Australia, and Japan.

2. High quality of life. Iceland ranks 3rd in Numbeo’s Quality of Life Index, which estimates the overall quality of life in a given country based on parameters like purchasing power, pollution levels, cost of living, safety, and healthcare.

Iceland is the 2nd cleanest country in the world after Finland. For example, the pollution level in Iceland is extremely low: the air quality index is 87 points out of 100, and the drinking water quality gains 97 points.

The Icelandic economy is stable and grows every year. The volume of GDP per capita indices in the country is higher than on average in the EU: 126 against 100 in 2022.

3. Safety and stability. Iceland is known for its low crime rate and political stability. Since 2008, the country has topped the Global Peace Index for 15 consecutive years.

4. Healthcare system. All legal residents in Iceland have access to the universal healthcare system. Iceland’s healthcare quality is high, with well-trained medical staff and modern medical facilities. Iceland ranks 3rd in the Health Care Index 2023 by CEOWORLD magazine.

5. Freedom of movement in the EU and EEA. Icelandic citizens can live, work, and study in any European Union or EEA country without a special visa. Apart from that, holding an Icelandic passport lets you vote during elections at the local level right up to the European Parliament.

6. Environmental sustainability. Iceland is one of the world leaders in renewable energy and environmental sustainability. Nearly 100% of its electricity and heating comes from renewable sources, primarily geothermal and hydroelectric power. Iceland also aims to become carbon neutral by 2040.

7. Cultural richness and natural beauty. Iceland boasts a rich cultural heritage, including literature, music, arts, and unique traditions and festivals. It is a country of stunning landscapes, geysers, waterfalls, and volcanoes.

Iceland allows dual citizenship. So, even after acquiring Icelandic nationality, you can retain your original one — provided your home country also allows dual nationalities.

Icelandic citizens who obtain another passport can keep their Icelandic one. However, a person may have to renounce citizenship if another country doesn’t allow having dual nationalities. For example, Spain prohibits having two or more passports.

It is possible to lose Icelandic citizenship, although such instances are relatively rare.

Voluntary renunciation. An individual can voluntarily renounce their Icelandic citizenship. It is usually done when a person acquires citizenship in another country that does not allow dual citizenship.

To renounce Icelandic citizenship, the individual must generally demonstrate that they have acquired or are in the process of acquiring another nationality, as Iceland does not permit its citizens to render themselves stateless.

Deprivation due to fraud or false information. Icelandic authorities can revoke citizenship if it was obtained through fraud, false representation, or the concealment of relevant facts. It might include providing false information in the citizenship application or failing to disclose crucial information that would have affected the decision to grant citizenship.

Criminal convictions or acts against the state. In rare and extreme cases, Icelandic authorities might consider revoking citizenship. However, such instances would be exceptional and subject to legal scrutiny to ensure compliance with international laws and human rights standards.

Absence in Iceland. Icelandic citizens born outside Iceland may lose their passport when they reach 22 years old if they have never legally resided in Iceland for any purpose that may indicate that they wish to be Icelandic citizens. They can apply for retaining citizenship after they turn 18 and before they turn 22.

Individuals who have previously held Icelandic citizenship and lost it can apply to have their Icelandic citizenship reinstated.

The application to regain citizenship must be submitted to the Icelandic Ministry of Justice. The process involves filling out relevant forms and providing necessary documentation, including proof of previous Icelandic citizenship, current citizenship status, reasons for losing Icelandic citizenship, and reasons for wanting to regain it.

The Icelandic authorities consider several factors when reviewing applications for reinstatement of citizenship. These can include connections to Iceland, length of previous residence in Iceland, family ties, and the applicant’s reason for regaining citizenship.

Housing. Finding accommodation can be challenging, especially in Reykjavik. Start looking for housing early and be prepared for high rental costs in the capital. On average, the monthly rent of an apartment in Reykjavik is $1,500 to $2,500. Some websites for finding housing in Iceland are myigloo.is, asteignir.visir.is, mbl.is.

Icelandic ID number: Register with the National Registry to obtain your Icelandic ID number, known as kennitala in Icelandic. It is essential for accessing services, healthcare, banking, and employment.

Banking and finances. Set up a local bank account and get an Icelandic debit card. Understand that the cost of living in Iceland is relatively high, so plan your finances accordingly. One person requires at least $1,300 without monthly rent to live in Iceland; a family of four would need around $4,500.

Tax registration. Register with the Icelandic tax authorities (Ríkisskattstjóri) and understand your tax obligations, especially if you plan to work in Iceland.

Driving and transportation. If you plan to drive, check if your driver’s licenсe is valid in Iceland or if you need an International Driving Permit. Familiarise yourself with local transportation options.

Emergency services. In Iceland, the emergency phone number is 112.

Other important numbers are the following:

• 444‑1000 — police station;

• 570‑5900 — search and rescue;

• 1770 — healthcare services.

Local community connections. Building a local network can be invaluable for support and advice. Join local expat groups, community centres, or social clubs. Learn about Icelandic culture, customs, and social norms. Engaging with the local community and participating in cultural activities can help integrate.

Language. While many Icelanders speak English, learning Icelandic benefits integration, social connections, and employment opportunities. Consider enrolling in language courses. Knowing Icelandic is also a must for obtaining permanent residency and citizenship.

Tax residency. To become a tax resident in Iceland, you must stay there for 183 days or more during a twelve-month period. It means that your global income becomes taxable in the country.

Double taxation agreements exist between Iceland and many other states to ensure you will only get taxed once on the same income.

The income tax in Iceland has a progressive nature. As your earnings per month rise, so does the percentage of your taxable amount. The rates are:

• 31,48% — under ISK 446,136, or $3,252;

• 37,98% — ISK 446,137—1,252,501, or from $3,253 to 9,130;

• 46,28% — above ISK 1,252,501, or $9,130.

The corporate tax is 20% while partnerships and cooperative societies are taxed at 36%. Self-employed individuals pay from 36,94% to 46,24%.

The value-added tax has a standard rate of 24% and a reduced rate of 11% and applies to most goods and services purchased within the country.

Some goods and services are exempt from taxation, for example:

• health and social services;

• functioning of schools and various types of education;

• sports and cultural activities;

• passenger and postal services;

• funeral services and any services provided by priests.

In some European countries, the process of acquiring a passport is faster than in Iceland.

In Malta, a foreign national can acquire a passport within 1 to 3 years through citizenship for exceptional services by direct investment. Initially, the individual is granted a residence permit.

To qualify, a foreigner must fulfil all three conditions:

• make a contribution of €600,000 or €750,000 to the National Development and Social Fund. The former makes one eligible for a Maltese passport within three years, the latter — within one;

• either rent real estate for at least €16,000 annually for five years or purchase property worth over €700,000;

• make a charitable donation exceeding €10,000.

After meeting these criteria and residing in Malta for 1 to 3 years, eligibility for Malta citizenship is established. Investors can sell purchased real estate five years later and gain a profit as prices on properties in Malta rise every year.

Maltese passport holders benefit from living in an English-speaking country with a pleasant climate and access to a warm Mediterranean Sea. Foreigners are not required to pass a language, culture or history test when applying for Malta citizenship by naturalisation for exceptional services by direct investment.

A spouse, children under 29, parents and grandparents over 55 can be added to the application.

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Portugal offers citizenship after five years of holding a residence permit.

Acquiring a residency can be achieved through various programs:

• investing a minimum of €250,000 in the Portuguese economy under the Portuguese Golden Visa program;

• demonstrating a passive income of at least €820 monthly for the D7 Visa;

• proving a monthly income of at least €3,040 and securing housing for the Digital Nomad Visa.

To obtain Portuguese citizenship, a foreigner must be over 18, hold a residence status for 5+ years, have no criminal record, prove the knowledge of the Portuguese language at an A2 level, and not be a threat to Portugal. In contrast to Iceland, applicants for a Portugal passport are not required to live in the country to become its resident.

Compared to Iceland, Portugal can be more attractive because of its lower tax rates and cost of living and a more convenient location.

Individual cost calculation for residence by investment in Portugal

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1. Iceland grants its citizenship by naturalisation, marriage, or descent. Children can also get a passport by birth or adoption.

2. To become an Icelandic citizen, a foreigner obtains a residence permit and then permanent residency. A passport is issued based on a permanent residence permit.

3. The benefits of having an Icelandic passport are no need to extend the status, visa-free access to 169 countries, including all EU states, high quality of life, safety and stability.

4. To obtain Icelandic citizenship by naturalisation, one must live in Iceland for at least 7 years.

5. It is possible to obtain European citizenship faster in Portugal or Malta.