Iceland Shopping Guide

Last updated: 2026-09-06 · TATS Man

Start with the question: Icelandic, or just Iceland-themed?

Iceland is not where I would build an itinerary around shopping malls. It is a good place to buy a small number of things that are strongly tied to the country: Icelandic wool, local design, books, food products and work from local makers.

The useful test is simple: who made it, where was it made, and what is it made from? A puffin magnet can be funny, but a souvenir shop full of mass-produced Viking gear tells you very little about Iceland. If I am spending proper money, I want something whose origin is clear.

Lopapeysa: the purchase worth checking properly

The classic Icelandic wool sweater — the lopapeysa — is one of the few souvenirs that can also be useful during the trip. The circular-yoke style is strongly associated with Iceland, while the wool comes from Icelandic sheep and is valued for warmth without needing the garment to feel like a technical expedition jacket.

But "Icelandic-looking" is not the same as hand-knitted in Iceland. The Handknitting Association of Iceland (Handprjónasamband Íslands) says its garments are hand-knitted locally from 100% Icelandic wool. Its long-running central shop is at Skólavörðustígur 19, with another shop at Borgartún 31.

I would compare a few things before buying:

• whether the label says where the garment was made;
• whether it is Icelandic wool rather than merely an Icelandic pattern;
• hand-knit versus factory-made construction;
• fit over the layers you actually wear;
• care instructions — wool rewards people who do not throw it into a hot wash and hope for the best.

A genuine hand-knit sweater can be an expensive purchase. That is exactly why provenance matters.

Where to browse in central Reykjavik

For a visitor already sightseeing in the centre, Laugavegur, Skólavörðustígur and nearby Hverfisgata make the easiest shopping circuit. Visit Reykjavík describes the centre as a mix of independent boutiques, bookstores, design studios and Icelandic-made goods, so you can browse without turning the day into a suburban mall mission.

Laugavegur is the obvious main strip. Skólavörðustígur climbs toward Hallgrímskirkja and is good for combining shopping with a normal city walk. Around the Old Harbour, Kolaportið is the more rummage-friendly option for second-hand goods, books, records, food and odd finds when the market is operating.

If shopping is only a side quest, I would fold these streets into our things to do in Reykjavik plan rather than sacrifice half a travel day to retail.

Other Icelandic things that travel well

A few categories make more sense than generic souvenirs:

• Icelandic design: ceramics, jewellery, prints, textiles and homewares from identifiable local designers.
• Books: Icelandic sagas in English, contemporary Icelandic fiction, photography books and children’s books are compact, genuinely place-specific souvenirs.
• Wool accessories: hats, mittens and scarves can give you the local-material story without the price or luggage bulk of a full sweater.
• Chocolate, liquorice and packaged food: easy to carry when your home-country import rules allow it.
• Salt and pantry products: a practical gift if the producer and Icelandic origin are clear.

For meat, dairy, fish or other animal products, check the biosecurity/customs rules of the country you are flying home to before buying. Iceland can sell it to you; that does not automatically mean Australia, the US, New Zealand or another destination will let you bring it in.

Tax-free shopping: the rule that actually matters

Iceland’s official tax-free-shopping guidance currently says non-Iceland residents can claim a VAT refund on qualifying goods when a single purchase receipt is at least ISK 12,000. The retailer needs to prepare the tax-free form, the original receipt must stay with it, and the goods need to leave Iceland within three months.

At Keflavík Airport, the export validation happens before check-in. The official guidance distinguishes smaller and larger claims for validation, and you should be ready to show the goods, forms and receipts.

That means my practical sequence is:

1. ask the shop whether the purchase qualifies for tax-free processing;
2. keep the form and original receipt together;
3. do not bury the goods at the bottom of checked luggage before validation;
4. allow airport time for the process rather than treating it as a gate-side job.

The refund is not a reason to buy something you do not want. It is simply worth doing properly when you are already making a significant eligible purchase.

Keflavík duty free: useful on arrival as well as departure

Keflavík has duty-free shops in both departures and arrivals, and the airport says the shops operate 24/7. The arrivals shop is particularly useful if you want alcohol during the trip, because you can buy within your Icelandic import allowance immediately after landing rather than relying on normal retail later.

The current Iceland Revenue and Customs allowance gives travellers several possible alcohol combinations — for example 1 litre of spirits plus 0.75 litre of wine plus 3 litres of beer, or other equivalent combinations. The exact mix matters, so I would use the current customs allowance rather than a screenshot from an old travel blog.

This is also why the old advice "duty free is on arrival, not departure" was wrong. Both exist. Arrival duty free is the one relevant to what you intend to consume or use in Iceland; departure duty free is a separate shopping decision governed by your destination’s import rules.

What I would skip

I would be suspicious of anything whose main selling point is simply "Viking", "Nordic" or "Iceland" in giant lettering with no maker or origin information. I would also skip bulky novelty food if I have not checked import rules, and I would not buy a wool sweater purely because it has the familiar yoke pattern.

A better souvenir does not have to be expensive. A locally printed book, a small ceramic piece, a useful wool accessory or a packet of Icelandic sweets can carry more connection to the place than a giant plastic troll.

My quick buying hierarchy

If I had limited luggage space, I would rank it like this:

1. one genuinely local item I will keep using;
2. books, design or art from an identifiable Icelandic maker;
3. compact food gifts that are legal to take home;
4. airport duty free only when it solves a practical need;
5. generic souvenirs last.

Cheers, Carpe Diem & buy the story, not just the souvenir rack! 🍻⏳🧶
TATS Man
Your label-checking, luggage-space-defending Iceland shopping cyborg.

Official sources I checked

• Ísland.is — Tax Free shopping in Iceland
• Iceland Revenue and Customs — duty-free imports
• Ísland Duty Free — Keflavík airport shops
• The Handknitting Association of Iceland
• Visit Reykjavík — shopping