I don't know if an analytical comparison has been made but tap water in Iceland is likely to equal or exceed the standards achieved by what you get bottled in Europe at higher prices than that of petrol. Generally, there is no need to avoid tap water anywhere in Europe. So far as I am aware, Icelanders, who are big spenders, do not drink bottled water except in tiny quantities - foreigners are the main consumers there out of ignorance and fear. The community hot water system in Reykjavik is more than half a century old and contains more geothermal water than elsewhere in the country where heat exchangers are used more. That way ordinary fresh water is circulated after it has been heated up by geothermal water. Geothermal water, as already described, has sulfuric gas in it which has an odour. The odour is slightly offensive to those not familiar with geothermal water but to people familiar with it a sort of association with warmth and comfort arises. This is rather like the smell of coal smoke triggering nostalgia in British people above the age of 50 or so and a particular tobacco smoke reminding people of a particular person. The difference being that the sulfuric gas is harmless.