Iceland’s online alcohol fight reaches court and parliament

Siv Friðleifsdóttir

03.03.2026 - A long-running dispute over online alcohol sales in Iceland is now moving on two tracks at once. In a new opinion article published on 3 March, Siv Friðleifsdóttir writes that the main hearing in the criminal case against the online seller Smáríkið is scheduled to begin on Thursday, 5 March, in Reykjanes District Court. The case will test whether the way some private companies have sold alcohol online under the current law is legal at all.

At the center of the prosecution’s case is a blunt argument. Police say Smáríkið’s structure crossed the line from lawful cross-border ordering into illegal domestic retail. In earlier coverage referenced in the new opinion piece, Vísir summarized the indictment as alleging that Kjútís ehf. bought alcohol from an Icelandic wholesaler, stored it in Reykjavík, and then sold and delivered it without a retail license. Prosecutors say that if the alcohol is physically in Iceland when the consumer places the order, the sale cannot be treated as ordinary foreign distance selling.

That matters because Iceland’s current legal framework still gives ÁTVR, the state alcohol retailer, the retail monopoly. The proposed bill now sitting in Alþingi, Áfengislög (vefverslun með áfengi), Bill No. 479/2025-2026, would change that. The bill would explicitly allow online alcohol retail to consumers under defined legal conditions, altering the existing monopoly model.

For now, however, Parliament has not yet moved the bill onto the agenda. That means the political process is active, but not yet at the stage where it can settle the legal question now landing before the court. In plain terms, the judges are being asked what the law means today, while lawmakers are still arguing about what the law should become tomorrow.

The case has unfolded inside a political climate that has often pulled in the opposite direction from strict enforcement. In her opinion article, Siv Friðleifsdóttir notes that the original police complaint dates back to 16 June 2020, yet charges were only filed last autumn after years of delay. During that period, leading ministers repeatedly signaled support for looser rules. Former finance minister Bjarni Benediktsson publicly welcomed online alcohol sales, while former finance minister Þórdís Kolbrún Reykfjörð Gylfadóttir argued that ÁTVR should be broken up. Former justice minister Jón Gunnarsson also stated that he could not reach any conclusion other than that online alcohol retail was lawful.

That leaves Iceland with a legal and political collision that has been building for years. If the court sides with prosecutors, it would strengthen the case that current law still bars domestic online retail and raise the pressure on Alþingi to decide whether to legalize it openly. If the defense prevails, supporters of Bill 479 will likely argue that Parliament should move quickly to regulate a trade the courts have effectively allowed. Either way, the “loophole” argument is about to be tested in a courtroom rather than debated in abstract.