The Act on Foreigners No. 96/2002 will be amended, effective August 1st, 2008.

The main changes are that citizens of EEA or EFTA countries no longer need residence permits, but instead, those individuals now shall register their residence with the National Registry, Þjóðskrá. Family members of EEA citizens, who are citizens of countries outside the EEA still need to apply for residence permits at the Directorate.

There will be changes in residence permits based on employment. When amendments are in effect, there will be three categories of residence permits based on employment; residence permits for work requiring specialized knowledge, residence permits for athletes and residence permits on the grounds of temporary shortage of labourers.

Foreigners who have been granted work and residence permits without restrictions (B-permits) according to the original Act on Foreigners No. 96/2002 will keep their rights and continue to count towards a permanent residence permit. They are eligible for family reunification.

Foreigners who were granted restricted work and residence permits (C-permits) according to the original Act on Foreigners No. 96/2002 will now be classified as based on temporary shortage of labourers. Their permits will therefore not count towards permanent residence permits and are not eligible for family reunification.