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 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 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
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
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
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
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
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
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
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. He must be resident of Iceland.
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.
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
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 may, in a regulation, set forth detailed rules concerning both licence
applications and procedures for the issuance of licences.
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
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
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
Security requirement for package tours
For the purposes of this Act, operations requiring security shall refer to the sale of
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
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 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.
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 plan shall be accompanied by an auditor's endorsement stating that it is
correct given the premises provided.
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
Icelandic Tourist Board shall assess the amount of the security on the basis of the data
submitted but shall first request a statement from a chartered accountant.
Before 30 April each year, travel agencies shall send their audited annual accounts and
other data required according to the rules specified in Article 17, Paragraph 2, including a
schedule of activities planned for the operational year, to the Icelandic Tourist Board. On
the basis of this information, and upon receipt of the opinion of a chartered accountant,
the Icelandic Tourist Board shall determine whether the security amount shall be
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 Industry 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
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
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
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
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.