Bam Margera -- ARRESTED IN ICELAND ... For Destroying Rental Car

Bam Margera was arrested in Iceland yesterday ... over a rental car he DESTROYED last year and never paid for, this according to the "Jackass" star himself.

It's a pretty bizarre story ... basically, Bam allegedly rented a Toyota Landcruiser from Hertz when he visited the country back in 2012. According to officials, Bam returned the car in TERRIBLE shape 5 days after the rental period was over -- but never paid for the damage, fees and other costs associated with the ride. Then, he left the country ...

So, when Margera returned to Iceland yesterday ... he was arrested upon arrival at the Keflavik Airport.

Bam eventually remedied the situation (after cutting a huge check) -- and was released from custody.

But the best part of the saga was the incredible, probably-drunken post-arrest interview he gave to a Icelandic newssite Visir.is ... in which he ADMITS to trashing the hell out of the car.

"I kicked the door in because I was pissed one night ... and then there was a scratch over there that they had to replace the whole panel for," Bam said.

There's more -- "The back got hit, and then there was … I've been painting like with oil paints so oil paints get everywhere so there was like blue paint all over the inside of the car."