ICELAND
Government of Iceland
Kristrún Frostadóttir’s government took office on 21 December 2024. The coalition consists of the Social Democratic Alliance, the Reform Party and the People’s Party. It replaced the Independence Party–Progressive Party–Left-Green coalition described in the previous edition of this report.
The coalition platform prioritises shorter healthcare waiting lists, better access to mental-health services and funding for addiction treatment. It does not announce a general dismantling of Iceland’s alcohol-retail monopoly. During 2026, however, the government and parliament have faced an increasingly prominent dispute over private online alcohol sales.
Iceland’s alcohol-control framework continues to combine a state retail monopoly, a minimum purchase age of 20, high product-specific excise duties, restricted sales hours and a broad advertising ban. The stated purpose of the Alcohol Act is to combat alcohol misuse.
Consumption trends
Recorded alcohol consumption did not continue the upward movement described in the previous report. The revised Statistics Iceland series shows a rise from 6.8 litres of pure alcohol per inhabitant aged 15 or older in 2010 to a peak of 8.5 litres in 2021. It then fell to 8.1 litres in 2022, 7.7 litres in 2023 and 7.6 litres in 2024.
The 2024 level was 1.6% lower than in 2023, although it remained about 12% above the 2010 level. Beer accounted for 4.1 litres of pure alcohol per person in 2024, wine for 2.2 litres and spirits for 1.4 litres. Beer recorded the largest year-on-year decrease.
These figures measure recorded sales rather than all alcohol consumed by Icelandic residents. The official series excludes alcohol imported by airline and ship crews and by tourists, alcohol exports, and sales to Duty Free Iceland at Keflavík Airport. Statistics Iceland also revised the population denominator in 2024, updating the per-capita series from 2011 onwards.
Self-reported drinking patterns can reveal risks that sales averages conceal. A 2022 population survey found harmful alcohol use among 27% of men and 21% of women. More than two-thirds of men aged 18–34 and almost half of women in that age group reported having been intoxicated at least once in the previous month. These remain useful indicators of drinking patterns, but they should be labelled as 2022 survey results rather than presented as current consumption data. Tead more: PopNAD overview
Youth alcohol use and the Icelandic prevention model
Iceland remains internationally known for the sharp decline in youth alcohol use achieved through a long-term community prevention approach. In the 1980s and 1990s, 42% of 15- and 16-year-olds reported having been drunk during the previous 30 days. WHO reported in 2025 that this proportion had fallen to 5%.
The Icelandic Prevention Model works through repeated local data collection, cooperation between parents, schools, researchers, municipalities and leisure organisations, clearer parental boundaries, more time with family and accessible organised activities. Its central idea is to change the social environment around young people rather than rely only on information campaigns or individual behaviour change.
The European Union Drugs Agency describes the model as a community and environmental prevention approach based on local risk and protective factors. It also cautions that further evaluation is needed to isolate the effects of individual components. The positive trend therefore reflects the wider Icelandic prevention and alcohol-policy environment, not one single programme.
Alcohol availability
ÁTVR, operating its shops under the Vínbúðin name, retains the exclusive right to retail alcoholic beverages in Iceland, apart from limited statutory exceptions. The system is intended to place public health and social responsibility ahead of sales promotion.
Key points:
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Alcohol may not be sold, served or delivered to anyone under 20.
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Identification must be requested whenever there is reason to doubt that a customer has reached the age limit.
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Service or delivery may be refused to a person who is visibly intoxicated.
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Vínbúðin prices are uniform nationwide.
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Stores are closed on Sundays and on specified public holidays.
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Opening hours vary by location. In the Reykjavík area, common hours in 2026 are 11:00–18:00 Monday to Thursday, 11:00–19:00 Friday and 11:00–18:00 Saturday. Selected stores are open 10:00–20:00 on weekdays.
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Private imports for personal use are permitted, subject to tax, deposit and VAT requirements.
Sources: Alcohol Act No. 75/1998, Vínbúðin opening hours, Vínbúðin age checks.
Sales at production sites
Since 1 July 2022, small producers have been able to apply for a licence to sell their own products at the place of production. A producer making less than 500,000 litres a year may qualify. If annual production exceeds 100,000 litres, on-site retail is limited to products containing no more than 12% alcohol by volume. The exception was introduced to support small-scale production and regional tourism, but it also became relevant to the later EEA debate about the internal consistency of the monopoly.
Online alcohol sales: the defining policy dispute of 2024–2026
Private online alcohol retail expanded during a period of legal uncertainty. Some companies presented themselves as foreign distance sellers even though products were stocked or delivered from Iceland. Hagkaup’s 2024 online ordering and in-store collection arrangement made the issue especially visible.
The dispute moved from administrative uncertainty to courts, parliament and EEA supervision in 2026:
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On 19 February 2026, a bill was introduced in Alþingi to license private online alcohol retail and home delivery. It would require electronic identification when ordering and age verification on delivery. The bill received its first reading on 5 March and was referred to the Judicial and Education Committee. As of 23 July 2026, it had not become law. Bill 479/2025–2026 · Parliamentary status
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On 8 April 2026, Reykjanes District Court ruled that Smáríkið’s business model constituted unlawful domestic retail rather than lawful cross-border distance selling. The case has been appealed, so the ruling is not yet final. Case overview
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The Ministry of Finance and Economic Affairs stated in June 2026 that current law does not permit private online alcohol sales. Despite the ruling, around 20 online sellers were reported to be continuing to trade in July, leaving enforcement as an unresolved practical issue. RÚV · July 2026 update
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The EFTA Surveillance Authority opened an inquiry after receiving a complaint about whether the present monopoly arrangements are compatible with EEA rules. Its questions concern producer-site sales, the privately operated duty-free shops at Keflavík Airport and online sellers with Icelandic stock and delivery points. This is an inquiry, not a finding that Iceland has breached EEA law. ESA request for information
The immediate policy choice is therefore not simply whether to regulate a new technology. It is whether private home delivery should become a licensed exception to ÁTVR’s exclusive retail right, and what that would mean for age controls, opening-hour restrictions, enforcement and the public-health rationale of the monopoly.
Alcohol taxation
Iceland applies beverage-specific excise duty based on the amount of pure alcohol. The rates in force in 2026 are:
Qualifying small independent beer producers can receive a 50% excise reduction within statutory production and volume limits. Duty-free retail pays 25% of the ordinary alcohol excise. Alcohol is subject to the reduced VAT rate of 11%, not the 24% standard rate stated in one part of the previous report.
Sources: Alcohol Tax Act No. 96/1995 · Iceland Revenue and Customs: VAT
Alcohol advertising
Iceland’s broad advertising ban remains in force. The Alcohol Act prohibits advertising of alcoholic beverages, including representations of consumption and the use of alcohol brands, producer names or logos for promotional purposes.
The principal exceptions cover:
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advertisements in foreign publications imported into Iceland, unless their main purpose is alcohol advertising;
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brief factual announcements in licensed sales premises;
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other narrow forms of product information specifically allowed by law.
Beverages at or below 2.25% alcohol by volume are not classified as alcohol under the Act. The growth of social media, cross-border content and online retail makes enforcement more complex, but no general liberalisation of the statutory advertising ban has been adopted.
Treatment and services
Addiction treatment is part of the current government’s stated health priorities. In December 2025, Iceland Health and SÁÁ signed a new framework agreement on addiction treatment. It consolidates four previous agreements and is intended to improve access, prioritisation and quality.
This agreement is the clearest recent organisational development in treatment policy. It does not replace the need for prevention or population-level alcohol controls, but it provides a more unified basis for publicly funded specialist services.
Recent policy timeline
