Iceland becomes a sovereign state, yet remains a part of the Danish kingdom.

The Kingdom of Iceland was a sovereign and independent country under a constitutional and hereditary monarchy that was established by the Act of Union with Denmark signed on 1 December 1918. It lasted until 17 June 1944 when a national referendum established the republic of Iceland in its place.

The Danish–Icelandic Act of Union, an agreement signed by Iceland and Denmark on 1 December 1918, recognized Iceland as a fully independent and sovereign state, known as the Kingdom of Iceland, which was freely associated to Denmark in a personal union with the Danish king. Iceland established its own flag, declared its neutrality and asked Denmark to represent on its behalf foreign affairs and defense interests, while maintaining full control of them. Iceland opened its first embassy in 1920. The Act would be up for revision in 1940 and could be revoked three years later if agreement was not reached.