Foreign investment in air transport companies is limited to 49% of capital stock. Persons and legal entities resident in other EEA states or in the Faroe Islands are exempted.
While the Aviation Act No. 80/2022, which entered into force on 28 June 2022, repealed the 49% foreign equity cap previously set out in the Act on Investment by Non-residents in Business Enterprises, Article 85, paragraph 1, point e of the new Act maintains a sector-specific restriction: companies seeking an air transport operating license must be at least 51% owned by Icelandic nationals. This requirement is aligned with Article 4(f) of Regulation (EC) No 1008/2008, which has been incorporated into the EEA Agreement and remains in force in Iceland.
"Article 1 Objective.
The objective of this Act is to promote and ensure safe, convenient and efficient air transport, taking into account consumer protection, environmental considerations and international legal obligations.
Article 2 Scope.
This Act applies to Icelandic territory, i.e. Icelandic land, internal waters, territorial sea and airspace, and to:
a. aircraft registered in Iceland, and everything on board them, wherever they are located, unless agreements with other states or the laws of the state through which the aircraft is passing provide otherwise,
b. unregistered aircraft, including unmanned aircraft, flying to and from and within Icelandic territory,
c. aircraft registered in a third country, flying to and from and within Icelandic territory,
d. objects and devices that can travel through the air but are not aircraft, moving to and from and within Icelandic territory,
e. those individuals and legal entities, with their main address or headquarters in Iceland or outside Icelandic territory, who are subject to supervision under this Act
[...]
Article 85 Conditions of an air operating permit.
The conditions for issuing an air operating permit are as follows:
a. that the applicant's company headquarters are in Iceland,
b. that the applicant is the holder of a valid Air Operator's Certificate issued by the Icelandic Transport Authority, the competent national authority of a state with which Iceland has an agreement in this regard, or by the European Union Aviation Safety Agency, [...]
e. that the Icelandic state and/or Icelandic citizens own 51% or more of the company and effectively control it, whether directly or indirectly, through one or more parties. [...]
Foreign states that have waived a similar requirement by agreement with Iceland and their citizens are exempt from the requirement for Icelandic citizenship pursuant to paragraph 1(e).
[...]
Article 260 Amendment to the Act on Investment by Foreign Parties in Business Enterprises, No. 34/1991.
Point 3 of the first paragraph of Article 4 of the Act is deleted. [...]" (Aviation Act No. 80/2022, effective 28 June 2022, Articles, 1, 2, 85 and 260 [google translation])
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"Article 4
Conditions for granting an operating licence
An undertaking shall be granted an operating licence by the competent licensing authority of a Member State provided that: [...]
(f) Member States and/or nationals of Member States own more than 50 % of the undertaking and effectively control it, whether directly or indirectly through one or more intermediate undertakings, except as provided for in an agreement with a third country to which the Community is a party;[...]" (Regulation (EC) No 1008/2008, 24 October 2008)
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"Article 4:
Investment by non-residents in business operations in Iceland is subject to the following restrictions: [...]
3.The combined holdings of non-residents in an Icelandic commercial company engaged in aviation operations in this country may not at any time exceed 49%. [Persons residing in another Member State of the Agreement on the European Economic Area or the Faroe Islands and legal entities resident in another Member State of the Agreement on the European Economic Area or the Faroe Islands shall, however, be exempt from the provisions of this paragraph. [...]
For the purposes of this Article, an Icelandic person refers to the state treasury and municipalities, as well as institutions, companies and funds in this country wholly owned by them, Icelandic citizens who are domiciled in this country and legal entities that are domiciled in this country and are wholly owned by owned by public entities in this country, Icelandic citizens who are domiciled in this country or other legal entities that are domiciled in this country and are wholly owned by Icelandic citizens who are domiciled in this country. For the purposes of this Article, an Icelandic legal entity refers to a legal entity domiciled in this country, regardless of the form of operation or ownership. A legal entity is considered to have a domicile in this country if it is registered in this country, if it considers its domicile in this country according to its articles of association or if its actual executive board is in this country.[...]" (Act on Investment by Non-residents in Business Enterprises (34/1991), last amended 24 December 2019, Article 4 [google translation])
Aviation Act No. 80/2022, effective 28 June 2022, Articles, 1, 2, 85, and 260
Regulation (EC) No 1008/2008, 24 October 2008, Article 4
Act on Investment by Non-residents in Business Enterprises (34/1991), last amended 24 December 2019, Article 4
[<a href="https://www.althingi.is/altext/stjt/2022.080.html">Act</a>],[<a href="https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02008R1008-20201218">Reg</a>],[<a href="https://www.althingi.is/lagas/nuna/1991034.html">Act</a>]