Iceland is a fairly unique country in that it does not maintain a standing army and the arming of police is limited to the Víkingasveitin (lit. The Viking Squad, also know as the Special Task Force) which was founded in 1982 and the regular police do not carry any guns. Also, it should be noted that they emphasize only using firearms as a last resort,
The Special Task Force also operates in all parts of the country, and
is trained to deal with particularly dangerous criminals. It should be
stressed, however, that weapons are only used as a last resort if and
when all other means to disarm those concerned, or to dissuade them
from a dangerous course of action, have failed. To enable the Special
Task Force to achieve results through gentler means, several of its
members have received special training in negotiating techniques, and
are called in when desperate and armed individuals have to be dealt
with and human life may be in danger. The Special Task Force is also
specially trained in riot control.
The The Reykjavík Grapevine, an English newspaper, reported the incident as follows:
A 59-year-old man, who opened fire within his home and at police, died
in a confrontation with law enforcement - a first in Icelandic
The Icelandic media says the same thing, but provides some more detail:
Sérsveit ríkislögreglustjóra, stofnuð árið 1982, hefur aldrei áður
þurft að grípa til þess neyðarráðs að beita skotvopnum sínum á
vettvangi, þó svo hún hafi margoft verið kölluð til í þeim tilgangi að
yfirbuga menn, ýmist vopnaða skot- eða eggvopnum. Hins vegar kom fram
í máli Jóns Bjartmarz, yfirmanns sérsveitarinnar, að sérsveitin hafi
skotið gasi í aðgerðum sínum.
Which loosely translates that the National Commissioner's Task Force (i.e. Víkingasveitin) has never had to "impose their firearms at the scene" although they have been called in cases where suspects were armed with firearms or bladed weapons.
Given this, is it entirely reasonable that the Víkingasveitin have never kill anyone in the line of duty since their founding in 1982 and that they would be able to report that accurately. From a broader standpoint, other than the reporting by newspapers, I couldn't find any official documentation if there have been any other fatalities due to police gunfire but such information might be limited due to the Icelandic language barrier.