Act no. 73
24 May 2005
Tourism Administration Act
Objective and Ultimate Authority
The purpose of this Act is to promote the development of tourism as an economic sector and an important facet of Icelandic economic and societal activity. The guiding principles shall be economic efficiency, Icelandic culture, environmental protection, professionalism, and the safeguarding of consumer interests.
The Minister of Industry, Energy and Tourism shall have the ultimate authority over matters covered by this Act unless otherwise stipulated by law.
The Icelandic Tourist Board shall handle the implementation of tourism affairs pursuant to this Act, as has been stipulated in other legislation.
The Minister of Industry, Energy and Tourism shall appoint the Director of the Icelandic Tourist Board for a term of five years. The Director shall function as the presiding officer of the Icelandic Tourist Board. The Director of the Icelandic Tourist Board shall hire other Board employees.
The chief duties of the Icelandic Tourist Board are the following:
1. Issuance of licences, registration of operations, and monitoring in order to ensure that requirements for operations are met.
2. Development, quality control, and organisational issues related to tourism; that is, the implementation of a defined tourism strategy, the co-ordination of environmental and educational affairs, the dissemination of information, regional and local development, and international collaboration.
3. Marketing and promotion of tourism services in accordance with the Minister’s decision as current at any given time.
The Minister may, in a regulation, stipulate further concerning the role and functions of the Icelandic Tourist Board and concerning individual projects under the Board’s auspices.
The Icelandic Tourist Board is authorised, upon obtaining the approval of the Minister, to assign to others the task of handling specific projects and acting as parties to collaborative projects, including acquiring ownership shares in companies operating in specific sectors.
The Minister shall appoint the Icelandic Tourism Council, which shall comprise ten representatives. The chairman and vice-chairman shall be appointed by the Minister without nomination, and other representatives shall be appointed by the Minister upon receipt of nominations from the following parties: The Icelandic Travel Industry Association, which shall nominate three representatives; the Association of Local Authorities in Iceland, which shall nominate two representatives; the Iceland Tourism Association, which shall nominate two representatives, and the Trade Council of Iceland, which shall nominate one representative. The term of appointment for members of the Icelandic Tourism Council shall be four years; however, the terms of appointment for the chairman and vice-chairman shall be limited to the appointing Minister’s tenure in office.
The Director of the Icelandic Tourist Board and a representative of the Ministry shall attend Tourism Council meetings and shall have the right both to address the meetings and to present proposals.
At least once a year, the Icelandic Tourism Council shall make recommendations to the Minister concerning the marketing and promotion of tourist services. In addition, the Icelandic Tourism Council shall act as the Minister’s advisor on matters involving tourist affairs planning. The Tourism Council shall provide commentary on amendments to tourism-related legislation and regulations and on other matters assigned to it by the Minister; the Council shall also provide commentary on matters that it deems it appropriate to address in the interests of the tourism industry.
The Minister is authorised to issue a regulation on the activities of the Icelandic Tourism Council.
For the purposes of this Act, the following terms shall have the following meanings:
1. For the purposes of this Act, tour operator shall refer to a party, either an individual or a legal entity, who, either on his own initiative or at the request of a customer, organises, offers, and sells professionally the following tourism-related services to the public:
a. The organisation and sale of tours to groups and individuals, and the organisation of tours, stays, and leisure-time activities, both in Iceland and abroad.
b. The organisation of meetings, exhibitions, and conferences and any services related thereto, both in Iceland and abroad.
c. Any sort of agency retailing or resale of tickets for travel by ship, automobile, aircraft, or railway.
d. Leisure-time activities, such as horseback-riding tours, snowmobile tours, river rafting tours, and adventure tours using specially equipped motor vehicles.
e. Travel and refreshments as a part of services rendered.
2. For the purposes of this Act, travel agency shall refer to a party, either an individual or a legal entity, who, either on his own initiative or at the request of a customer, organises, offers, and sells package tours professionally, either in Iceland or abroad.
A travel agency may also handle and offer all travel-related services offered by a tour operator, whether these are provided in the form of package tours or not.
The term “travel agency” refers both to tourism wholesalers and to tourism retailers pursuant to Act no. 80/1994 on Package Tours.
3. For the purposes of this Act, booking services refers to the operation of all types of booking services offered to the public, to tour operators, and to travel agencies, whether within Iceland or abroad; this shall include electronic booking services.
4. For the purposes of this Act, information centre refers to a party who provides impartial information to the public. An information centre neither organises nor sells nor advertises tours or other travel-related activities.
5. For the purposes of this Act, package tour refers to a predetermined combination of no fewer than two of the following items: transportation, accommodation, and/or other services rendered to the customer, which services cover a significant portion of the tour, when the tour is sold or offered for sale at an all-inclusive price and when services related to the tour cover a period of at least 24 hours or include accommodation. A tour shall be considered a package tour even if separate invoices are prepared for each portion of the tour and payment is made in portions.
6. Operations requiring licensing refers to all operations and services that are provided by tour operators and travel agencies and fall under the definition of the law, whether these operations and services are provided by an individual, a company, or an organisation.
7. For the purposes of this Act, operations requiring registration refers to all operations of booking services and information centres, whether the services thus provided are rendered by an individual, a company, or an organisation.
8. For the purposes of this Act, a customer may be an individual, a company, an organisation, or an institution.
Tour operator and travel agency licences
Any party intending to operate as a tour operator or travel agency shall obtain a licence to do so from the Icelandic Tourist Board. The licence shall be issued by the Icelandic Tourist Board, and the licensee shall display it in his place of business.
The Icelandic Tourist Board shall have a graphic identification or logo that licensees are authorised to use upon issuance of the licence. The licensee shall use this logo in all advertisements of his operations, as well as on his Internet website.
The licence to operate a travel agency or to function as a tour operator is not subject to expiry.
Only those parties who have been granted a licence pursuant to this Act are authorised to use the term “tour operator” or “travel agency” in the name or title of their business.
A tour operator or travel agency’s business shall be operated at a fixed location that is open to the public at specified times. This requirement may be waived, however, if the service is operated solely on an electronic basis, in which case the licensee must fulfil the conditions stipulated in Article 6 of the Act on Electronic Commerce and Other Electronic Services, no. 30/2002, concerning the information that must appear on the licensee’s Internet website.
It is permissible, on the basis of the licence, to operate a branch of a tour operator or travel agency’s operations. The party responsible for such a branch shall also meet the requirements stipulated in Article 9.
The Icelandic Tourist Board shall maintain a register of those holding licences pursuant to this Act and shall publish it in an accessible manner; for example, on its Internet website. The revocation of such licences shall also be announced on the Internet website.
The Icelandic Tourist Board shall decide which Icelandic travel associations shall be exempt from the provisions of this Act with respect to travel within Iceland.
An application for a licence to operate a travel agency or act as a tour operator shall be filed with the Icelandic Tourist Board at least two months before the proposed activities are to begin.
In order to receive a licence, the applicant, or his representative if the applicant is a legal entity, must meet the following requirements:
a. have their domicile in a member state of the European Economic Area or in a state which is signatory to the Instrument of Constitution of the European Free Trade Association or in the Faeroes.
b. He must be at least 20 years of age.
c. He must be legally competent and may not, during the last four years, have been convicted of an offence that is related to a commercial activity and is punishable under the General Penal Code, the present Act, or the acts on limited liability companies, private limited liability companies, bookkeeping, annual accounts, bankruptcy or public levies.
d. He must be entitled under the law to dispose of his estate.
e. He may not have had a licence to operate a travel agency or act as a tour operator revoked within three years prior to the date of the application.
f. present a confirmation of liability insurance from an insurance company
The Icelandic Tourist Board is authorised to seek further documentation with regard to the granting of a licence.
The applicant shall furnish confirmation that security has been provided, as is specified in Section V, before the licence to operate a travel agency may be granted.
The application for a licence shall specify the name of the tour operator or travel agency and shall specify all alternate names that the party intends to use in his operations. It is prohibited to conduct business activities under names other than those specified in the licence.
It is permissible to add alternate names to a licence that has been issued if the licensee files a special application with the Icelandic Tourist Board, which shall issue a new licence at no charge.
A foreign tour operator or foreign travel agency intending to open a branch in Iceland shall apply for a licence and shall provide proof of security for its activities pursuant to further provisions of this Act.
The licensee is authorised to return his licence to the Icelandic Tourist Board; however, a travel agency is not permitted to cancel its security pursuant to this Act until it has received the Icelandic Tourist Board’s confirmation of the receipt of the licence.
The Minister is authorised to issue a Regulation containing further provisions with regard to applications for licences, the implementation of licensing and monitoring of licence holders, including the categorisation of licences and safety matters.
Operations requiring registration
Those intending to engage in operations for which registration is required pursuant to this Act shall send the Icelandic Tourist Board a written notice to this effect.
The Icelandic Tourist Board shall issue a certificate confirming that the operations have been reported and that they meet the notification requirements set forth in this Act.
The Icelandic Tourist Board shall maintain a register of those parties who have submitted notification of their activities and shall publish it in an accessible manner; for example, on its Internet website.
Only those parties who have received a certificate pursuant to this Act are authorised to use the terms “booking service(s)” and “information centre” in the name or title of their operations.
Registered parties are authorised to use the logo of the Icelandic Tourist Board.
Information centres receiving public funding shall keep that part of their operations financially separate from other parts of their operations, such as booking services. The Minister may set further rules concerning bookkeeping and financial separation between services receiving public funding and other operations.
The notice sent to Icelandic Tourist Board concerning operations requiring registration shall include the following information, as appropriate:
a. Name of the operation, national identification number, address, telephone number, and e-mail address.
b. Name and national identification number of the person responsible for the operation.
c. Operational form.
d. Detailed description of business activities.
e. Whether the operation receives public funding; and if so, what funding.
f. Opening hours of business establishment.
The Icelandic Tourist Board is authorised to remove a registered entity from the register if the registered operation has ceased or if the operation has expanded so that it falls under the definition of a tour operator or travel agency. The Icelandic Tourist Board shall render a ruling if a disagreement arises concerning the category to which an operation belongs.
Security requirement for package tours
For the purposes of this Act, operations requiring security shall refer to the sale of package tours.
A travel agency shall provide security for the reimbursement of money that a customer has paid for a package tour that has not yet taken place, and for the customer’s transportation home from a package tour, whether within Iceland or abroad, in the event of bankruptcy or the cessation of the travel agency’s operations. The security shall also be sufficient to allow the customer to complete a package tour in accordance with the original itinerary of that tour.
The security described in Article 2 may take the following forms:
a. Money deposited in a recognised bank or savings bank in the name of the Icelandic Tourist Board; cf. Article 17.
b. A surety issued by a commercial bank or savings bank, or accident insurance granted by an insurance company. These parties shall hold licences to operate in the European Economic Area. They shall also provide a statement to the effect that the scope and amount of the security are in compliance with this Act.
c. Other security deemed comparable by the Icelandic Tourist Board. A statement shall be presented to the effect that the scope and amount of the security are in compliance with this Act.
The security provided pursuant to Article 14 shall remain in effect as long as the licence to operate the travel agency is valid. The security shall remain available for up to six months following the loss of an operating licence pursuant to Article 21, or following the cessation of operations.
Those customers of a travel agency who have commenced a package tour shall be enabled to complete their tour. This means that everything for which the customer has already paid, and which is in accordance with the pre-arranged package tour, whether this consists of transport, accommodation, or other pre-paid parts of the tour, shall be paid out of the security funds so that the customer is able to complete his tour. It shall not be obligatory, however, to pay for items that the customer purchases additionally; i.e., parts of the tour that do not constitute a portion of the pre-arranged package tour.
A customer who has made partial payment to a travel agency for a package tour shall receive a reimbursement of the amount he has paid, whether a final agreement has been negotiated concerning the package tour or not, if he can present satisfactory proof of payment.
Those who have paid for package tours, in part or in full, but have not begun their tours shall be reimbursed the money they have paid.
If security funds have been used to enable a customer to complete a package tour in accordance with the original agreement, no further claims will be addressed.
In the event of the transport of passengers back to Iceland through the involvement of the Icelandic Tourist Board, because of bankruptcy or cessation of a travel agency’s operations, before a package tour is completed, reimbursement shall be made only for that portion of the package tour that the passenger was not able to complete.
Only direct financial loss resulting from a package tour shall be compensated by the travel agency’s security funds; no compensation shall be paid for loss that may be traced to possible inconvenience or non-pecuniary damage.
The amount of the security pursuant to Article 14 shall be determined from among the following items; the item yielding the highest security amount shall be used as the basis for the calculation:
a. 60% of the turnover for the two consecutive months with the highest sales;
b. 35% of the turnover for the four consecutive months with the highest sales; or
c. 15% of total annual turnover.
The security amount shall not, however, be less than ISK 1 million.
The Minister of Industry, Energy and Tourism shall set rules concerning the bookkeeping and accounting of travel agencies in order to separate the sale of package tours from other activities and to ensure that the information necessary to assess the security amount is available.
The Icelandic Tourist Board may demand higher security amounts in cases involving particularly hazardous operations or if other factors make it clear that the security stipulated in this Act will not be sufficient in the event of bankruptcy or cessation of operations of the travel agency.
With a view to significant changes on the consumer market, the Icelandic Tourist Board is, pursuant to a substantiated request from a travel agency and the presentation of requisite evidence in accordance with Paragraph 4, Article 18, authorised to grant temporary exemption with regard to the assessment of the amount of liability insurance for the year 2010. This exemption is conditional upon a significant reduction in the sales of package tours at the travel agency in question. The Tourist Board’s decision to grant an exemption on the basis of this provision shall be based on Article 14. Otherwise, the provisions of Article 17 apply.
The Tourist Board may revoke its decision and raise the insurance amount in the event that passenger numbers and/or package tours have increased and/or operational income relating to package tours has increased in the case of a tourist bureau which has been granted an exemption in accordance with Paragraph 1. When deciding whether a travel agency´s income has increased to a sufficient extent to revoke the exemption, the interest of consumers shall be of fundamental concern.
To make it possible to assess the security amount, an applicant for a licence to operate a travel agency shall submit a detailed plan covering operations, flow of payments, and financial position for the current and the following year. The plan shall be segregated by months, and the estimated turnover for operations requiring security shall be specified separately.
The Icelandic Tourist Board shall assess the premises of the plan and is authorised to request contracts and other data that it considers necessary in order to assess the plan. The Tourist Board assesses the amount of liability insurance on the basis of available evidence and is authorised to consult a chartered accountant.
Travel agencies shall, before [1 October] each year, submit their annual accounts to the Tourist Board audited in accordance with the Act on Annual Accounts No. 3/2006 and other documentation required by regulations, cf. Paragraph 2, Article 17, as well as a plan of anticipated activities during the year of operation. The Tourist Board determines, on the basis of this information, whether a change in the amount of liability insurance is required and is authorised to consult a chartered accountant.
In the event that a travel agency seeks an exemption in accordance with Paragraph 1 Article 17a, the Tourist Board is authorised to process the request when in receipt of the following
a. substantiated request for exemption,
b. audited annual accounts for the previous year; it is permitted, however, to submit unaudited accounts, endorsed by an accountant.
c. insurance chargeable turnover of the previous year, itemised by month, endorsed by an accountant.
d. plan of insurance chargeable turnover during the current year, itemised by month, endorsed by an accountant.
In other respects, the provisions of Paragraph 3 apply with regard to the annual financial reporting of travel agency.
The Icelandic Tourist Board is authorised to charge travel agencies fees that are to be paid to the Board in order to cover the costs of monitoring pursuant to this Act. The amount of the fees shall be published in the rules that the Minister of Transport, Tourism and Telecommunications sets pursuant to Article 17, Paragraph 2, upon receiving the recommendations of the Icelandic Tourist Board. The fees shall cover the cost of investigations of bookkeeping and other matters as necessary to verify the amount of security at any given time.
In the event of bankruptcy or a cessation of operations on the part of a travel agency, the Icelandic Tourist Board shall have a call to present claims published in the Official Gazette. The call shall instruct customers to submit written declarations of claims for payment from the security amount within 60 days of the publication of the call to present claims. Claim declarations shall be accompanied by the evidence necessary to prove the existence of a claim, such as travel tickets and receipts. The Icelandic Tourist Board determines what data provide sufficient proof of the existence of a claim. The decisions of the Icelandic Tourist Board may be appealed to the Ministry.
The Icelandic Tourist Board is authorised to appoint an administrator to oversee the disposal of the security amount. The administrator shall handle the arrangements necessary to return passengers home and shall reimburse them from the travel agency’s security funds. Expenses incurred in connection with the administrator’s work shall be paid from the security funds.
Loss of licence
The licence to function as a tour operator or to operate a travel agency shall be revoked if the licensee or the party responsible for the licensee’s operations becomes insolvent or is deprived of financial autonomy. The licence shall also be revoked if the security that the travel agency is required to submit pursuant to Section V is cancelled or does not meet the requirements set forth in the provisions of this Act.
The Icelandic Tourist Board may revoke a licence to function as a tour operator or to operate a travel agency if the licensee or the party responsible for his operations no longer meets the requirements set forth in Article 9. The licence may also be revoked if the licensee or the party responsible for his operations is found to have misused the licence or the logo of the Icelandic Tourist Board, or violates the provisions of this Act in another manner.
The Icelandic Tourist Board is also authorised to revoke a licence if a travel agency does not meet the requirements set forth in Article 18 concerning the submittal of annual accounts and other data that are necessary for the assessment of the security amount pursuant to Article 14. In addition, the Icelandic Tourist Board may revoke a licence if a travel agency does not comply with the Board’s decision to increase the security amount within one month following the announcement of that increase.
Before a licence is revoked pursuant to Article 21, Paragraphs 2 and 3, the Icelandic Tourist Board shall send a warning of the purposed revocation, including the reason for the revocation, and the licensee shall have a period of at least 14 days to correct deficiencies.
In the event that a licence is revoked pursuant to Article 21, Paragraphs 2 and 3, the Icelandic Tourist Board shall send a written notice to this effect. The notice shall state the effective date of the revocation.
A tour operator or travel agency whose licence is revoked shall return his licence to the Icelandic Tourist Board immediately upon receipt of the notice specified in Paragraph 2.
The Icelandic Tourist Board shall advertise the revocation of the licence in a reliable manner, both on its Internet website and in the Official Gazette. The Icelandic Tourist Board may also advertise the revocation of the licence in another manner, as appropriate at any given time.
The revocation of a travel agency licence pursuant to Article 21, Paragraphs 2 and 3, shall be considered as the equivalent of a cessation of operations, and the provisions of Section V shall apply with respect to those operations for which security is required.
The Minister is authorised to issue regulations on tourism administration pursuant to this Act.
All services rendered electronically by travel agencies shall comply with the Act on Electronic Commerce and Other Electronic Services, no. 30/2002.
Administrative decisions made by the Icelandic Tourist Board, such as the refusal to issue licences to tour operators or travel agencies, a decision to revoke a licence, or a decision concerning the category to which services belong pursuant to this Act, may be appealed to the Ministry. Case handling shall be carried out in accordance with the provisions of the Administrative Procedures Act, no. 37/1993.
The operation of activities for which licensing or registration is required pursuant to this Act, without the necessary licence or registration, shall be punishable by fines unless other legislation provides for more stringent sanctions.
Violations of this Act shall be handled in accordance with the provisions of the Code of Criminal Procedure.
In the event of the operation, without the necessary licence or registration, of activities for which licensing or registration is required pursuant to this Act, it is possible to seek a court order demanding the suspension of operations, including the closing of the business establishment or Internet website.
The Icelandic Tourist Board shall charge fees for licence issuance and registration of operations in accordance with a schedule of fees approved by the Minister. The fees charged shall be based on the expense incurred in providing the service.
The Minister is authorised to decide, upon receiving comments from the Icelandic Tourist Board, that a reasonable fee shall be paid for services that are rendered at a tourist locations if the monies so collected, less the cost of collection, are used solely to protect, beautify, and tidy the location, and to improve tourist reception facilities.
These provisions shall not, however, apply to national parks or other areas operated by the Environment and Food Agency unless the Agency gives its approval.
Entry into force
This Act shall enter into force on 1 January 2006.
This Act repeals the prior Tourism Administration Act, no. 117/1994.
Upon the entry into force of this Act, the Icelandic Tourist Board shall assume all of the civil rights and obligations of the office of the previous Icelandic Tourist Board, including the status as a party to rental agreements and collaboration agreements, both domestic and foreign. The assets of the previous Icelandic Tourist Board shall revert to the Icelandic Tourist Board. The employment agreements made by the office of the previous Icelandic Tourist Board with its employees shall continue to be valid with respect to the Icelandic Tourist Board. The appointment of the current Director of the Icelandic Tourist Board shall also retain its validity for the full term of the appointment.
Licensees who are in possession of issued and valid licences to operate a travel agency at the time this Act enters into force shall return their licences to the Icelandic Tourist Board and apply for new licences within six months following the entry into force of this Act.
All licences to operate a travel agency that were issued prior to the entry into force of this Act shall expire six months after the Act enters into force.
Passed by Althingi on 11 May 2005.