Opening a terrace in Reykjavík: permits, hours, noise and smoking

A few warm days in Reykjavík fill every outdoor table in the city. Do the permit work in winter or early spring, so that your terrace is ready when the sun comes. The rules here are as of October 2026.

Do you need a permit?

It depends on whether you serve alcohol outside. The city puts it like this:

“Allir veitingastaðir sem vilja bjóða gestum sínum að þiggja áfengar veitingar úti þurfa útiveitingaleyfi.”¹

Every restaurant that wants to serve alcohol to guests outside needs an outdoor serving permit. Some places can use their own lot, and anyone can apply to use city land (borgarland). City land is everything outside private lots, such as pavements, gardens, squares and streets.¹

A business that does not sell alcohol may put tables and chairs against its own wall “án frekari leyfa”, without further permits.¹ For anything more than that, ask the city first.

Four steps on city land

For a terrace with alcohol on city land, the city lists four steps:¹

1. Apply. Fill in the application to use city land on Mínar síður.
2. Upload a drawing. The drawing shows the outdoor area with all its measurements and the number of tables and chairs. It does not need to be made by an architect.
3. Sign the agreement. The city’s office for transport and urban design (skrifstofa samgangna og borgarhönnunar) reviews the drawing. If it approves, it sends you an agreement to sign electronically.
4. Get the licence changed. Send the signed agreement and the drawing to the sýslumaður. The sýslumaður sends it out for opinions. If no one objects, the sýslumaður issues an operating licence that includes outdoor serving. You may start serving outside from then.

If you apply for your first operating licence, state in the application that it also covers outdoor serving. If your licence does not cover outdoor serving yet, apply to the sýslumaður for a change to it.¹ The restaurant act lists outdoor serving among the conditions that a licence can state.³

Rules for the area itself

• The tables and chairs stay inside the approved area on the drawing. The city places them so that the emergency services can get through, and the police check this.¹
• The area must always leave room for people on foot to pass.²
• You keep the area and its surroundings clean when needed, and always when outdoor serving ends for the day.²
• To raise the number of guests that you are allowed, apply for a building permit to the building commissioner (byggingarfulltrúi).¹
• If you do not follow the city’s instructions or the agreement, the city can end the agreement with 30 days’ notice. The sýslumaður is then told, and the outdoor serving in your licence is withdrawn.¹

How late you can serve outside

The city’s rules from February 2026 say:

“Útiveitingar áfengis má almennt ekki heimila lengur en til kl. 22.00.”²

So alcohol outside is normally allowed until 22:00 at the latest. The limit can be 23:30 in the zone with wider city-centre hours (rýmri miðborgarheimildir), and in special cases, such as a place far from other buildings.² The licence states your outdoor hours, and they can be shorter than this.²

The indoor hours are separate. In the city centre they can run to 03:00 or later at weekends, but the terrace still closes at its own time. Our guide Serving alcohol in Iceland covers the indoor hours.

Noise and speakers

For speakers, the health inspectorate assesses each case and looks at the effect on the neighbours. The city adds:

“Hávaðamörk eru ekki metin í decibelum, heldur hvort hávaðinn sé truflandi.”¹

In other words, the city does not judge a terrace by a decibel number. It judges whether the noise disturbs people.¹ This is also why one place can have more seats, longer hours or more noise than another. The city looks at the location and the surroundings of each one.¹

The noise regulation still gives the limits that a business plans for. A business must aim to keep the noise in the homes around it below the limits in table III.⁴ The limits are measured as an average level (LAeq), in dB, at the wall of the house:

The regulation also sets limits for guests at places where people stay for a short time, which includes outdoor events: 95 dB(A) as an average, 110 dB(A) as a maximum and 130 dB(C) as the highest peak.⁴

Smoking and vaping on the terrace

Smoking is banned in the service areas of businesses, such as restaurants and bars. The ban also covers the matching areas outside when they are not open enough to give good air flow.⁵

The regulation on smoking makes this concrete:⁶

• Smoking can be allowed in an outdoor area that is under the open sky.
• Under a roof, fixed or movable, smoking can be allowed only when walls or other screens close at most ¾ of the area, and enough air flows out through the roof or along the eaves.
• Smoke must not enter your building or anyone else’s, through doors, windows or air intakes.

These rules say where smoking can be allowed. You may still choose a smoke-free terrace.

For e-cigarettes, the law lists where they are banned: the service areas of public institutions and associations, schools and places for children, health facilities, and public transport.⁷ A privately run restaurant is not on that list. This is our reading of the law, so ask the health inspectorate if you are unsure. On your own terrace, your house rules decide.

What it costs

The city publishes a fee table for permits to use city land. For 2026, a permit costs from 55.400 kr. in category 1 to 814.400 kr. in category 4, and each permit is valid for up to one year.⁸ The table does not name terraces, so we cannot say which category applies to one, or whether a separate rent applies. Ask the city for the price of your terrace before you plan the season’s budget.

A worked example: a small café with six tables outside

Halla runs a café with a class II licence on a street in the city centre. She wants six tables on the pavement in front of the café, with wine and beer.

1. In March, she measures the pavement and draws the area with six tables and twelve chairs. She leaves a clear path for people on foot.
2. She applies on Mínar síður and uploads the drawing.
3. The city approves the drawing and sends the agreement. She signs it electronically.
4. She sends the signed agreement and the drawing to the sýslumaður and applies for a change to her licence.
5. When the new licence arrives, she reads the outdoor hours on it. Her licence says 22:00, so she brings the last glasses inside before then.
6. She puts a small speaker inside the door, keeps the volume low and asks the neighbours upstairs to tell her if it bothers them.

On the floor plan in her POS, she adds the terrace as its own area. Her servers then see at a glance which tables are outside.

From 1 January 2027

A new law moves the hygiene and pollution inspection from the municipal health committees to a state agency, Umhverfis- og orkustofnun.⁹ Noise is part of that inspection. From 2027, the agency that assesses your speakers and gives an opinion on your licence will change. The city’s terrace steps and the hours stay the same.

Other municipalities have their own rules on outdoor serving. Outside Reykjavík, start with your municipality and the sýslumaður.