The parliament of Iceland (Althingi) passed a Bill amending legislation no. 85/2007 regarding tourist accommodation licensing (Icelandic: Lög um veitingastaði, gististaði og skemmtanahald) on May 31st, 2016. The new legislation will take effect on January 1st, 2017.
The aim of the new legislation is to acknowledge and welcome the sharing economy and establish home sharing as a part of the tourism sector, while at the same time guaranteeing that such accommodation adheres to the legislation in a fair manner. It also aims to balance the need for short-term rental accommodation and the need for an active long-term rental market in Iceland. The new legislation will furthermore lead to a better overview of the accommodation market with improved registration and surveillance and reduced tax evasion in the sector.
This legislation refers to accommodation at the legal residence of an individual and/or one other property owned by that same individual, intended for personal use. The property can be rented for up to 90 days per year, combined if two properties are rented out, or until 2 million ISK in gross rental income for the accommodation is reached.
Individuals must register with the District Commissioner (DC) and pay a small registration fee of 8,000 ISK. They will be obliged to provide the DC with an overview of the number of days rented and rental income. They will also receive a registration number that must be used in all promotion and displayed at the property.
The new legislation furthermore proposes a simplification of the licensing process for other accommodation categories and restaurant categories. Licenses will be unlimited in timescale and no licenses will be required for restaurants not serving alcohol.