Its capital is Reykjavik (7)
I believe the answer is:
<span class="explanation-format__ClueExplanation">'<span class="explanation-format__original">its capital is reykjavik</span>' is the definition.<br/ ><span class="explanation-format__explanation">(I've seen this before)</span><br/ ><br/ >This is the entire clue.<br/ ></span>
(Other definitions for iceland that I've seen before include "North Atlantic island republic" , "The capital city is Reykjavik" , "Althing its parliament" , "Volcanic country" , "Northern country" .)