Iceland's Prime Minister Sigmundur David Gunnlaugsson was the first political fallout following the Panama papers leak incident in 2016.
The huge data leak from Panamanian law firm Mossack Fonseca revealed that the country's coalition government head and his wife concealed millions of dollars worth of investments in an offshore company.
The premier stepped down from power after a mass protest in Reykjavik amid mounting public outrage.
The prime minister, who has repeatedly denied any wrongdoing, had earlier sought to remain in office by asking to dissolve parliament and call new elections. He said he and his wife have paid all their taxes and done nothing illegal.
But after the president turned him down, Gunnlaugsson met senior Progressive party officials and reportedly suggested himself that he step down.
The leaked documents from the Mossack Fonseca law firm in Panama reveal Gunnlaugsson and his wife, Anna Sigurlaug Pálsdóttir, bought a British Virgin Islands-based offshore company, Wintris Inc, in December 2007 to invest her share of the very substantial proceeds from the sale of her father's business, Iceland's only Toyota importer, The Guardian reported.
Gunnlaugsson sold his 50% stake to his wife for a symbolic $1 at the end of 2009, eight months after he was elected to parliament as an MP for the centre-right Progressive party. He failed, however, to declare an interest in the company either then or when he became prime minister in 2013.
His office has said his shareholding was an error due simply to the couple having a joint bank account and that it had "always been clear to both of them that the prime minister's wife owned the assets". The transfer of ownership was made as soon as this was pointed out, a spokesman said. The prime minister also denies he was required to declare an interest.
Gunnlaugsson's office said in the statement that the couple had provided "detailed answers to questions" about the Wintris assets, which they had "never sought to hide". The holdings had been reported as an asset on Pálsdóttir's income tax returns since 2008 and all relevant taxes had been paid accordingly in Iceland, it said. No parliamentary disclosure rules had been broken.
But Gunnlaugsson's political opponents and many ordinary Icelanders, more than 10,000 of whom staged a first mass protest outside parliament on Monday night, have been outraged at what many see as an attempt by their prime minister – even if he has done nothing illegal – to hide money offshore.
Opponents are also angered by what many Icelanders see as hypocrisy: Gunnlaugsson rose to power as part of a grassroots group called In Defence of Iceland, pledging to protect the country from its "vulture" foreign creditors and relieve the burden on ordinary Icelanders – and stressing how important it was to keep Icelandic assets in Iceland.
Gunnlaugsson is also accused of a serious conflict of interest for failing to disclose his involvement with the company.