Iceland has transferred work permit processing from the Directorate of Labour to the Directorate of Immigration, one of several changes that took effect on 8 July under amendments to the Icelandic Act on Foreign Nationals and the Foreign Nationals' Right to Work Act. Parliament passed the amendments on 18 June. Additional amendments to the Regulation on Foreign Nationals have also entered into force in recent weeks, covering short-term residence permits and the prioritisation of applications through risk assessments.

Work permit processing moves agency

From now on, the Directorate of Immigration processes all work permit applications and issues the permits. For the time being, guidance for applicants and employers remains available on the island.is pages "Residence permits based on work" and "Apply for a work permit". Those pages will be consolidated and updated over the coming weeks.

Students must prove academic progress at every renewal

Holders of student residence permits must now demonstrate satisfactory academic progress each time they renew their permit, not only at the first renewal. Satisfactory progress means completing at least 75% of a full-time course load during the academic year.

Students may work in Iceland without a work permit for up to 60% of full-time employment while studying. The 60% cap applies to total employment across all employers; a student working for more than one employer may not exceed 60% combined.

Students may work more than 60% in three situations: during scheduled breaks between academic terms in line with the institution's academic calendar; if they have completed a university degree in Iceland and are seeking employment based on their specialist qualifications; or if the work forms part of a formal workplace training or internship programme.

When renewing a student residence permit, applicants must provide information about their employment to confirm they have not exceeded the permitted hours. The Directorate of Immigration may also request employment information during the permit's validity period and may obtain relevant information from other public authorities and employers. If the employment does not comply with the legal requirements, the Directorate may review or revoke the individual's right to work.

Shorter post-graduation job-search window

Foreign nationals who complete a university degree in Iceland may now renew their student residence permit for up to 18 months after graduation to seek employment based on their qualifications. Previously, this was possible for up to three years. The change affects graduates of Bachelor's, Master's and Doctoral degrees at Icelandic universities.

Foreign nationals who have completed a doctoral degree in Iceland may renew a specialist residence permit for up to 12 months to seek employment based on their specialist expertise. A work permit is not required to obtain this residence permit.

Family reunification narrowed for students

Student permit holders may now bring spouses and children to Iceland only if they are undertaking full-time university studies leading to a Bachelor's, Master's or Doctoral degree. Students enrolled in diploma programmes are no longer eligible for family reunification. The right to family reunification with parents has been removed entirely.

Prioritisation and risk assessment

New provisions in the Regulation on Foreign Nationals give the Directorate of Immigration clearer authority to prioritise residence permit applications. Complete applications based on employment may now be processed ahead of other applications. The Directorate may also temporarily prioritise complete applications where specific deadlines apply, such as new student residence permit applications before the start of the academic year, and residence permit applications for athletes during official transfer windows.

The regulation also introduces provisions on document reliability and risk assessment. It explicitly states that the Directorate may not base a decision to grant a residence permit on documentation where there are reasonable grounds to doubt its authenticity or the credibility of its origin or content.

New short-term residence permit category

A new chapter in the Regulation on Foreign Nationals establishes the legal basis and conditions for short-term residence permits. These permits target foreign nationals who wish to stay in Iceland for more than 90 days but no longer than 180 days, either to visit a close family member or to visit Iceland as an artist, scientist or athlete.

The full text of the amending act is available on the Alþingi website, and the regulatory amendments are published in the Iceland Official Journal on island.is. Applicants and employers should consult the official island.is pages on work-based permits for current procedures while the information pages are consolidated.