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It has the specific requirement of _not_ being an EU citizen.

If I'm not mistaken EU/EEA citizens wouldn't need this visa https://english.hi.is/university/entry_conditions_for_icelan...

British people are allowed!

> Maybe this is my American ignorance shining through here, but I didn't realize Iceland was not a member of the EU

Yep, only the European Economic area, like Norway. As with them, a big reason is stuff around fishing.

The webpage specifies that it is _not_ available to citizens of EU/EFTA countries. In fact they can already work remotely from Iceland without any visa requirement, thanks to Freedom of Movement agreements.

It is, however, part of Schengen. An understandable mistake.

https://en.wikipedia.org/wiki/Iceland%E2%80%93European_Union...

Schengen is inconsequential, they just don't check your documents. They are in EEA, with agreement for free movement of goods, people, services and capital which is much more important.