The European Economic Area (EEA) Agreement, which has been in force since 1994, allows Iceland, along with Norway and Liechtenstein, to participate in the EU’s Single Market and provides a solid framework for relations with the EU and its Member States. The EEA is not a customs union and the three EEA EFTA States are free to manage their own trade policies.
Frequently asked questions on EFTA, the EEA, EFTA membership and Brexit are available on the website of the EFTA Secretariat.
Iceland and the United Kingdom (UK) enjoy a close relationship which is today based primarily on the EEA Agreement. Upon exiting the EU, the UK will no longer be a party to this Agreement. The UK’s withdrawal from the EU will therefore have a direct impact on all participants in the EEA, including Iceland.
The Withdrawal Agreement negotiated by the UK and the EU provides for a transition or implementation period in which EU rules and international agreements, including the EEA, will continue to apply to the UK after the UK’s departure from the EU and until the end of 2020 with a possibility for extension. Iceland underlines the importance of the continued application of EEA rules between the EEA EFTA States (Iceland, Liechtenstein and Norway) and the UK during such a period.
In addition, arrangements will be agreed between the EEA EFTA States and the UK concerning withdrawal issues which fall under the EEA (e.g. citizens’ rights). These arrangements will mirror those contained in the Withdrawal Agreement between the UK and the EU and become applicable at the same time as the Withdrawal Agreement. In the event of a no deal situation, Iceland has prepared precautionary measures to protect core interests primarily in relation to citizens‘ rights, trade in goods and aviation.
In the long term, Iceland’s aim is to ensure a robust future relationship with the UK which includes trade as well as close cooperation in key areas of mutual interest such as transport, research and development, fisheries management, police cooperation, security and defence, climate change and gender equality. In general, Iceland is an export driven economy and strong supporter of global free trade. The benefits of trading freely are clearly visible in Europe. Therefore, Iceland’s view is that new barriers to trade should not arise as a result of Brexit. Rather, the shifting environment should be used as an opening to explore new ways of ensuring seamless trade flows.
Structure of our work
The Icelandic government is committed to safeguarding Iceland’s interests and to exploring fully any potential opportunities to strengthen bilateral relations with the United Kingdom. To this end ministers and officials have had productive meetings with their counterparts in the UK while at the same time working closely with EFTA partners and with the EU and its Member States.
Soon after the UK voted to leave the EU in June 2016 a Ministerial Committee was established with an overall responsibility for Iceland’s approach towards Brexit. A Steering Committee led by the Ministry for Foreign Affairs has also been set up and is supported by five working groups responsible for designated topics:
- Working Group I: market access particularly for fisheries, agricultural and industrial products.
- Working Group II: technical barriers to trade, food law, energy, intellectual property, procurement, competition and state aid.
- Working Group III: services, establishment, free movement of capital and investment, financial services, transport, telecommunications, company law, data protection and audiovisual services.
- Working Group IV: free movement of persons, citizens’ rights, social security, recognition of professional qualifications, consumer affairs, environment, research and development, education and culture, equal treatment and labour law.
- Working Group V: areas falling outside the scope of the EEA Agreement such as security and defense, fisheries management and justice and home affairs.
The working groups are responsible for assessing Iceland’s interests and defining potential objectives in each of the areas falling under their respective mandates in preparation for discussions on a future relationship with the UK. As such they follow closely any developments in negotiations between the EU and the UK in their fields and are in contact with relevant officials in the UK, the EU and the other EFTA States. The working groups also consult closely with interest groups at national level and Althingi, the Icelandic Parliament.
Further information from the Financial Supervisory Authority of Iceland is available here.
Status of UK nationals living in Iceland and Icelandic nationals in the UK
The rights of UK nationals to reside in Iceland (and vice versa), as enumerated by the EEA Agreement, will continue to apply until the UK exits the EU. Citizens´ residence rights have been secured regardless of the outcome of the negotiations between the EU and the UK.
What happens if the UK exits the EU with a withdrawal agreement?
The Withdrawal Agreement between the United Kingdom and the European Union foresees a transition/implementation period during which EU rules, including international agreements such as the EEA, will continue to apply to the UK until the end of 2020. Free movement of persons between Iceland and the UK will therefore continue for the duration of this period as long as the Withdrawal Agreement enters into force. At the end of the year 2018, an agreement was reached on citizens‘ rights and other separation issues, which will be signed in the event that the UK leaves the EU with a withdrawal agreement. This means that UK citizens registered as residents in Iceland before the end of the transition period will be able to keep broadly the same rights as they have now.
What happens if there is a no deal?
An agreement on citizens' rights has been reached between the EEA EFTA States, Iceland, Liechtenstein and Norway, and the United Kingdom should the UK leave the EU without a withdrawal agreement. The agreement protects the rights of EEA EFTA citizens living in the UK and British citizens living in the EEA EFTA States, providing certainty that they can continue to do so in the event of a no-deal Brexit. This means that UK nationals registered as residents in Iceland before exit day will be able to keep broadly the same rights as they have now. The government of the UK has issued a statement on the agreement as well as an agreement explainer.
It is important that all UK citizens living in Iceland have registered their domicile with Registers Iceland which confirms their right to stay in Iceland. For further information, see the website of the Directorate of Immigration.
Information on registration requirements and the right of Icelandic citizens to reside in the UK can be found here (in Icelandic).
See further guidance for drivers with UK licences here.
On 25 November 2017 the Icelandic Ministry for Foreign Affairs published a report which explores the potential implications of the United Kingdom's departure from the European Economic Area for Iceland. The following contains a brief introduction and a summary of the report's key findings in English.
For further information contact Jóhanna Jónsdóttir at the Icelandic MFA.