Common Hiring Scenarios for Iceland
When hiring talent inIceland, employers typically choose one of three pathways depending on the role, duration, & legal requirements. Below are the most common models.
Use Case 1: Sponsoring a Foreign Employee via Work Permit or Visa
This is the most common route for companies hiring full-time foreign talent in Iceland. To sponsor this visa, an employer (or Playroll as the Employer of Record) must have a registered legal entity in-country and issue a compliant offer of employment.
Key Employer Considerations:
- Sponsorship is required — contractors or freelancers cannot apply under this visa.
- Employees must remain in the approved work location unless authorized to relocate or change employers.
- Processing timelines vary (approximately 8–10 months), depending on the consulate or embassy.
This is best for: Long-term roles with in-office or hybrid presence in Iceland.
Use Case 2: Hiring a Foreign Contractor in Iceland
Independent professionals in Iceland can legally work with international clients without employer sponsorship, but must comply with local tax registration and reporting laws.
With Playroll’s Contractor Management solution, you can:
- Draft fully compliant local contractor agreements.
- Automate contractor invoicing and cross-border payments, in Icelandic Króna (ISK) or USD.
- Mitigate risk of permanent establishment and contractor misclassification.
This is best for: Freelancers, consultants or project-based roles, especially if the worker already lives in Iceland.
Use Case 3: Relocating an Existing Employee to Iceland
Transferring an existing team member to Iceland? You’ll still need to navigate the same visa and payroll setup process. Even if the employee works for you elsewhere, a local employer of record is required to stay compliant.
EOR’s, like Playroll, handle all local steps, including:
- Work permit sponsorship and immigration paperwork,
- Registration with local authorities and payroll systems,
- Enrollment in mandatory benefits and statutory schemes.
This is best for: Internal transfers or remote-first companies looking to expand into Europe, or talent retention offerings for global mobility programs.