Paying for sex is illegal in Iceland. In April 2009, the Icelandic Parliament passed new legislation that makes paying for sex illegal (the client commits a crime, but not the prostitute). Prostitutes, however, like in Sweden, still commit a crime if they work together as this constitutes "running a brothel". A 2007 poll demonstrated that "70% of Icelanders were in favour of criminalizing the buying of sex. There is a marked difference between the views of men and women; approximately 83% of women are in favour of a ban whilst 57% of men support a ban."
The original plan, by the then Minister of Social Affairs, Ásta Ragnheiður Jóhannesdóttir, included both prostitution and stripping. Strip shows have been banned since 2010. The law only applies (or is applied) to stripping done in private. Jóhanna Sigurðardóttir, Iceland's former prime minister, who is openly lesbian, said: "The Nordic countries are leading the way on women's equality, recognizing women as equal citizens rather than commodities for sale." The politician behind the bill, Kolbrún Halldórsdóttir, said: "It is not acceptable that women or people in general are a product to be sold." The law is supported by Icelandic feminists. Internationally, radical feminists, such as Julie Bindel, have celebrated the ban as a landmark decision for feminism. Other bloggers disagree, arguing that it may drive the industry underground.Feminist views on prostitution vary – while all support making the acts of the prostitute legal, some support making the acts of the customer illegal and some do not.
The police have stated that they do not have the resources to enforce the law and that despite the law prostitution is thriving. Consequently, a vigilante group called "Stóra systir" ("Big Sister") has been formed.
Before 2007, selling sex was illegal: according to the 206th article of the Icelandic Penal Code (almenn hegningarlög): "Anyone engaging in prostitution for own upkeep shall be subject to imprisonment for up to 2 years." That paragraph was deleted in 2007, as the "government argues most people who solicit sex do so because they have no other choice or because they are forced into prostitution by others. By making soliciting sex legal, the government believes individuals who have been forced into prostitution would rather come forward and lead police to those responsible." This move was supported by international women's groups.