Iceland (IS)
Iceland is a North Atlantic volcanic island nation of extraordinary natural beauty — home to geysers, glaciers, lava fields, midnight sun, the Northern Lights, and some of the world's most active volcanoes.
Driving in Iceland
Licence exchange, road rules, fines, buying a car, and cycling.
Driving in Iceland is essential for anyone living outside central Reykjavik. There is no railway system and public transport outside the capital is extremely limited. The Ring Road (Hringvegur, Route 1) circumnavigates the entire island and is the main paved highway. Iceland has some of the most dramatic and challenging driving conditions in Europe: sudden blizzards, single-lane bridges, river crossings, F-roads requiring 4WD, volcanic ash and sand storms (sandblástur), wandering sheep in summer, and roads that can close without notice due to weather or volcanic activity. Driving standards are generally good but road knowledge is essential. Iceland drives on the RIGHT.
Driving Licence Exchange
EEA driving licences are valid in Iceland and do not need to be exchanged during the licence validity period. When your EEA licence expires, renew it with Samgöngustofa (the Transport Authority — samgongustofa.is). Non-EEA licences must be exchanged for an Icelandic licence once you establish legal residence. Some countries have bilateral exchange agreements with Iceland allowing direct exchange without a driving test.
EEA licences are fully recognised in Iceland. No exchange needed until expiry. When expired, apply for Icelandic licence at Samgöngustofa without retaking the test.
Carry your original EEA licence. If your home country issues licences for limited categories (e.g., licence issued when you were 18 that has since expired), sort out renewal before moving.
USA, Canada, Australia, New Zealand, Japan, South Korea, Switzerland, UK
Citizens from countries with exchange agreements with Iceland can exchange their licence directly at Samgöngustofa without a driving test. Bring: original foreign licence, valid photo ID, passport, kennitala, and the application form.
Check the current list of exchange agreement countries at samgongustofa.is — the list can be updated. The UK is included post-Brexit under a bilateral agreement.
Nationals from countries without an exchange agreement must take the full Icelandic driving test (both theory and practical). Theory test (þekkingarpróf) is available in several languages including English. Practical test (aksturspróf) must be taken in Iceland.
Theory test can be taken at Samgöngustofa offices. Practical test requires prior instruction from a registered Icelandic driving school (akstursskóli). This process typically takes 1–3 months.
Road Rules
50 km/h in urban areas; 80 km/h on gravel roads (malarbein) — note many Icelandic roads outside populated areas are gravel; 90 km/h on paved highways. Speed limits are strictly enforced with automatic speed cameras (hraðamyndavélar) on major routes. Fines are very high.
Iceland has no motorways (hraðbrautir). The Ring Road and other highways have 90 km/h maximum.
0.2 g/L blood alcohol (20 mg/100 mL) — among the lowest limits in Europe. Drunk driving is treated very seriously in Iceland and enforcement is strict.
Handheld mobile use while driving is prohibited. Hands-free is permitted. Fines for handheld use: ISK 50,000+.
Mandatory for all occupants in all seats.
Mandatory for children based on weight and height requirements. Up to 36 kg or approximately 135 cm: appropriate child restraint required. Rear-facing for infants up to 13 kg.
No formal low emission zones as of 2026. Reykjavik has promoted electric vehicles and reduced emissions but no mandatory zone restrictions.
Traffic Fines (Bußgeldkatalog)
Traffic fines (sektir) in Iceland are among the highest in Europe relative to the offences. Speeding, drink-driving, and phone use are particularly heavily penalised. Points system: Iceland uses a demerit points system — accumulation can lead to licence suspension.
| Offence | Fine | Points |
|---|---|---|
| Speeding 10–19 km/h over limit | ISK 25,000–45,000 | — |
| Speeding 20–29 km/h over limit | ISK 50,000–80,000 | — |
| Speeding 30+ km/h over limit | ISK 100,000+ and possible suspension | — |
| Drink driving (BAC above 0.2 g/L) | ISK 80,000–200,000+ plus demerit points + possible licence suspension | — |
| Handheld mobile phone while driving | ISK 50,000–70,000 | — |
| No seatbelt | ISK 15,000–25,000 per person | — |
| Running a red light | ISK 40,000–60,000 | — |
| Crossing a river without checking depth (off designated ford) | Rescue costs charged to driver (can be ISK 500,000–2,000,000+) | — |
| Driving on closed F-road or off marked roads | ISK 50,000+ and potential rescue costs | — |
Buying a Car
Buying a car in Iceland is a practical necessity for most residents outside central Reykjavik. The used car market is active. New cars are expensive (high import duties). Electric vehicles (EVs) are very popular due to cheap renewable electricity and government incentives — Iceland has one of the world's highest EV adoption rates per capita. 4WD (4x4) vehicles are strongly recommended for anyone who plans to drive outside the Ring Road, especially for F-roads.
- 1.Search on Bílamarkaður.is, Olx.is, or Bland.is for used vehicles
- 2.Check vehicle history at Samgöngustofa (samgongustofa.is) using the vehicle registration number — view past owners, accidents, and technical inspection history
- 3.Request an independent mechanical inspection (bílamat) from an authorised garage before purchase
- 4.Negotiate price — car prices are negotiable in Iceland
- 5.Complete the ownership transfer (eigendaskipti) online at samgongustofa.is using Rafræn skilríki — both buyer and seller must complete this step
- 6.Arrange compulsory third-party insurance immediately
- 7.Pay vehicle excise duty (þungaskattur) — annual road tax
- •Valid technical inspection certificate (tæknilegt eftirlit) from Samgöngustofa — check expiry date
- •Compulsory insurance (lögboðin trygging) must be arranged before driving
- •Verify no outstanding debt (veðbókarvottorð) on the vehicle
- •Confirm registration in seller's name at Samgöngustofa before payment
Purchase price varies widely: economy car ISK 1,500,000–4,000,000+; used 4WD ISK 3,000,000–8,000,000+; new compact car ISK 4,000,000–6,000,000+. Annual road tax (þungaskattur): ISK 30,000–100,000+ depending on weight. Insurance: ISK 80,000–200,000+/year.
Registration, Insurance & Tax
All vehicles must be registered with Samgöngustofa (the Transport Authority). Registration is done online at samgongustofa.is. When buying a used car, the ownership transfer (eigendaskipti) must be completed by both buyer and seller within a short period. New vehicles imported from abroad require import customs processing.
Third-party liability insurance (lögboðin ökutækjatrygging) is mandatory for all vehicles on public roads. Without it, driving is illegal. Most insurers also offer comprehensive cover (kasko) — strongly recommended for Iceland's challenging driving conditions. IMPORTANT: many car insurance policies do NOT cover F-road driving, river crossings, or sandstorm damage — verify your policy explicitly covers these Iceland-specific risks before any highland driving.
Annual vehicle road tax (þungaskattur) calculated based on vehicle weight. Typically ISK 30,000–100,000+/year for private cars. Electric vehicles may have reduced or waived þungaskattur.
All registered vehicles must pass a periodic technical inspection (tæknilegt eftirlit) at Samgöngustofa-approved inspection stations. Frequency: every 2 years for newer vehicles; annually for older vehicles. The inspection certificate must be valid for the vehicle to be legally on the road. Costs: ISK 8,000–15,000 per inspection.
Cycling
Cycling infrastructure in Reykjavik has been expanding but remains less comprehensive than in Scandinavian capitals. The main challenge is Iceland's persistent wind — gusts of 20–30 m/s are common and can make cycling unpleasant or impossible. Summer months offer the best conditions. Electric bikes (rafhjólar) are growing rapidly in popularity and help with hills and headwinds.
- •Lights mandatory at night and in low visibility
- •Helmets recommended (not legally mandatory for adults, mandatory for children under 15)
- •Cyclists can use both cycle paths (hjólreiðastígar) and roads
- •On shared pedestrian-cycle paths, yield to pedestrians
- •Ride on the right side of cycle paths
- •Check weather forecast before cycling — 25+ m/s winds make cycling dangerous
- •Rear pannier bags are better than front bags in windy conditions (better stability)
- •Lock your bicycle with a quality U-lock — bike theft occurs in Reykjavik
- •The Reykjavik cycling map is available at Reykjavík.is
- •Electric bikes make Iceland's hills and winds much more manageable