Iceland is not in the EU. They are in the process of joining since like a decade but have never completed their application. They are in the EFTA and the EEA however.
According to an Icelandic friend not fully joining the EU is on purpose. There are people on Iceland that enjoys the benefits of EFTA and EEA, yet does not want to fully tackle corruption. Iceland is the most corrupt Nordic country by far (yet on a global scale still pretty good).
Well yes and no, the topmost reason is that rural folk simply are very eurosceptic there (see polls on that matter) and the election system favors them a bit, so overall, the eurosceptic parties remain in power (for now). Though I've yet to see an analysis on the matter since Russia's imperialistic invasion of Ukraine.