The Icelanders brought home two points with their third straight victory in the opening group in Kristianstad.
Croatia had zero points heading into the intermediate round after a heavy loss to Sweden in the group final in Malmö on Wednesday. The Blues and Yellows won by eight points (33–25).
Against Iceland, Croatia - who took World Cup silver a year ago - led by four goals at halftime. The match remained nerve-wracking.
Right-back Odinn Thor Rikhardsson was responsible for three goals in one minute in the final stages, but the Icelanders never got closer than 29–30.
Switzerland–Hungary ended in a 29–29 draw, and both teams have one point.
