The Government of Iceland has agreed to not prolonging transitional provisions to limit access of Croatian citizens to the Icelandic labour market. Interim provisions III of the Act on Foreigners no. 96/2002 that state that citizens of Croatia must apply for residence and work permits until the 1st of July 2015 will therefore cease to apply. All provisions of the EEA agreement and the Act on Foreigners on citizens of EEA and EFTA member countries will apply to citizens of Croatia from the 1st of July 2015.
Citizens of Croatia that have already been issued valid residence and work permits, along with an Icelandic Identification Number (kennitala), will not be required to renew those permits. Citizens of Croatia arriving for the first time in Iceland after the 1st of July 2015, will register their stay with Registers Iceland (Þjóðskrá Íslands) as other citizens of EEA and EFTA do, see here.