Panama Papers leak sparks massive protests in Iceland over PM's link to tax havens

More than 10,000 protesters gathered in front of Iceland's Parliament to call for Sigmundur Davíð Gunnlaugsson to resign

Thousands of protesters are calling for Iceland's prime minister to step down after the Panama Papers revealed his wife owned an offshore company with a significant investment in the country's collapsed banks.

Sigmundur Davíð Gunnlaugsson is facing a vote of no confidence after the leaked documents showed he and his wife had bought Wintris from Mossack Fonseca in 2007.

Protesters gathered in front of the Icelandic Parliament in the capital of Reykjavik to call for Mr Gunnlaugsson to stand down, with many beating drums and blowing whistles. At least one threw several tubs of Icelandic sour yoghurt at the walls and windows of the parliament building.

Organisers said more than 10,000 had gathered. An online petition calling for his resignation received 29,000 signatures. Iceland has a population of approximately 330,000.

When asked about his investments in the offshore company Wintris Inc. the prime minister walked out of the interview, saying: "What are you trying to make up here? This is totally inappropriate."

Court records seen by the BBC show Wintris has millions of pounds in claims in the bankruptcies of three major Icelandic banks which collapsed during the 2008 financial crisis.

Mr Gunnlaugsson did not declare an interest in the company when entering parliament in 2009 and sold his 50 per cent share to his wife for $1 (70p) eight months later.

He told Reuters TV: "I certainly won't [resign] because what we've seen is the fact that, well, my wife has always paid her taxes.

“We've also seen that she has avoided any conflict of interest by investing in Icelandic companies at the same time that I'm in politics.

"And finally, we've seen that I've been willing to put the interests of the people of Iceland first even when it's at a disadvantage to my own family."

In the biggest data leak so far, more than 11.5 million documents were passed to the German newspaper Seddeutsche Zeitung, which shared them with 107 media organisations around the world.

The prime minister's office says his shareholding was an error and "it had always been clear to both of them that the prime minister's wife owned the assets".

His spokesman said joint share certificates had been issued because the prime minister and his wife had a joint bank account.

The Icelandic Pirate Party has said it is ready to form a government in the event of a snap election.

The group is now Iceland's most popular political party with over 36 per cent of voters backing it, a recent poll found.

"What would be the most natural and the right thing to do is that [he] resign as prime minister," Birgitta Jonsdottir, the head of the Pirate Party, told Reuters.

"There is a great and strong demand for that in society and he has totally lost all his trust and believability."