I have been to Iceland recently.
I had been to Iceland recently.
What is the difference between the two and which seems correct ?
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They are both correct, but it depends on the context.
For example, if your time frame for answering the question includes the present, then
Have you been to Iceland?
Yes, I have been to Iceland.
your current state of having been to Iceland continues to the present.
However, if the time reference is in the past
Did you go to Iceland before Grímsvötn?
Yes, I had been to Iceland before the eruption.