Can I control if I don't know the local language?

I am on the Iceland queue for ATC training but I love in England. I’m about 3 months into the queue so don’t want to leave and I still really want to control. But will it be a problem if I can’t speak icelandic or can I just use English. I also read somewhere VFR is often done in the local language but does that apply to vatsim.

In Iceland specifically you’ll be fine with just English.

In theory VATSIM policies do not allow Divisions/Sub-Divisions to require knowledge of local languages, but in practice many Divisions/Sub-Divisions will only train you if you speak the local language.

Probably also worth noting that despite local language not technically being a requirement, you may still struggle a lot if you don’t know it.
If a vACC is mostly made up of locals (which seems to be the case for most of them), conversations among the local community will usually be in the local language, which can lead to you feeling left out. Mentors may not be able to train you as effectively and efficiently, especially if they themselves only have limited control of the English language - the same obviously also goes for the rest of the staff and community with any help you might need. And depending on the make-up of the local pilot community and real world rules regarding local language use in radio communications, there may also be regular situations in which pilots try to communicate with ATC in the local language.

Whether all, some, or none of this affects the vACC of your choice… - best to ask local staff.
However, Iceland is part of VATSCA, whose members tend to speak English at a very high level, and according to the Icelandic AIP (GEN 3.4.3.4, specifically), there are barely any situations in which communications in Icelandic are permitted, so apart from maybe the first point, you should be fine, as Lars says.