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Information for applicants

The annual premium to the Travel Insurance fund is 2,5% of the security amount for the year 2022, for further information refer to "Determining the security amount when applying for travel agency licence".

The operations of travel agencies are subject to the Act on the Icelandic Tourist Board No. 96/2018, Act on package travel and linked travel arrangements No. 95/2018 and Regulation on the Travel Insurance Fund No. 812/2021.

According to Chapter III of the Act on the Icelandic Tourist Board, anyone intending to operate as a travel agency must be licensed by the Icelandic Tourist Board.

If the operations of an applicant are subject to the Act on package travel and linked travel arrangements the applicant must be a member of the Travel Insurance Fund prior to the licence being issued. The validity of issued licences is indefinite.

An application for licence must be submitted to the Icelandic Tourist Board no later than two months before the beginning of planned operations.

A travel agency is an entity, either a natural person (individual) or a legal person (company), that compiles, organises, offers for sale and/or sells package travel or facilitates the sale of linked travel arrangements for business purposes, regardless of whether done on own initiative or at the request of a customer, domestically or abroad.

The term travel agency refers to all traders, i.e. organisers and retailers who offer for sale or sell services that are subject to Act on package travel and linked travel arrangements No. 95/2018.

A travel agency may also perform and offer for sale all travel services offered by a day tour provider, whether in the form of a package or not.     

It is highly important that managers and representatives of travel agencies familiarize themselves with laws and regulations applying to the operations of their travel agencies and that all information provided is correct and in accordance with current legal requirements.

Please bear in mind that the Icelandic Tourist Board can cancel a licence or impose administrative fines on a travel agency that has provided false or inadequate information required for the determination of premiums and insurance, regardless  whether violations are committed willfully or by negligence. An intentional violation or violation that is the result of gross negligence, can result in fines or imprisonment of up to two years, in the case of a serious offence.

Compulsory licensing

The sale of package travel and linked travel arrangements is subject to licence according to Act no. 96/2018 on the Icelandic Tourist Board.   This means that any company or person who organizes and sells package travel or facilitate linked travel arrangements must hold a travel agency licence and be a member of the Travel Insurance Fund.

The application process for travel agency licence is digital, applications are accessed online using electronic ID. Necessary supporting documents must be completed and gathered before starting the application process. Please refer to the chapters on supporting documents and application process. 

Travel agency licences are not granted until membership to the Travel Insurance Fund has been approved. Before membership of is approved the applicant must provide security and pay annual premium.

Membership of the Travel Insurance Fund

Membership of the Travel Insurance Fund is mandatory.

The membership of the Travel Insurance Fund must be approved before a travel agency licence is issued.

Applying for membership of the Travel Insurance fund is done online as a part of the application for travel agency licence. The processing of applications is digital.

Members of the Travel Insurance Fund pay a base charge as well as an annual premium. The members must also provide a security decided by the Icelandic Tourist Board. The security amount is decided based on forecasted turnover subject to insolvency protection according to the documents provided. 

The amount of the annual premium is based on the security amount and the proportion ranges from 2,5% to 10% of the security amount of the trader. The board of directors of the Travel Insurance Fund determine the proportion of the security no later than July 1st each year.

A trader who has provided valid security in another EEA State and presents confirmation to that effect is regarded as meeting the security requirement provided for in the Act on package travel and linked travel arrangement and is exempt from the membership requirement of the Travel Insurance Fund.

The purpose of insolvency protection

Payments that travellers have made for package travel or linked travel arrangement that are not provided for according to contract, due to the insolvency or bankruptcy of a travel agency, are protected by the Travel Insurance Fund and will be refunded by the Fund.

The protection of the Travel Insurance Fund is also effective for refunds if the license of a travel agency is cancelled due to default of the travel agency i.e., security according to the decision of the Icelandic Tourist Board has not been provided, the default on premium or base charge, or the travel agency has failed to provide required information for the assessment of premium and security amounts. 

If a licence is cancelled due to any other reason than the aforementioned, such as if the licence holder calls for the cancellation or the cessation of operations, the protection of the Travel Insurance Fund does not apply.

Insolvency protection for the sale of package travel

All travel-related services that form a part of the contract for package travel and are not provided as a result of the insolvency, bankruptcy, or the cancellation of a licence, as explained above, will be refunded.

  • Refunds apply to:
    • Payments for package travel that has not been performed, regardless of whether the tour has been paid in full or partially.
    • Repatriation of travellers if carriage of passengers is a part of the package travel contract.
  • If a tour is in progress, travellers shall be, to the extent possible, allowed to complete the package travel in accordance with the original contract.   

The Travel Insurance Fund only covers direct financial loss, but not possible inconvenience or damage. Interest cost or other costs of making claims are not covered.

Insolvency protection for the sale of linked travel arrangements

Payments received by the travel agency facilitating linked travel arrangement for travel-related services that are not provided as a result of the insolvency or bankruptcy or the cancellation of a licence, as explained above, will be refunded. If the travel agency is also responsible for the carriage of passengers, the protection also includes the repatriation of travellers.

Base charge

All new members of the Travel Insurance Fund must, at the end of their first year of operations, pay a base fee that amounts to 1,5% of the base security amount (GT) of that year.

During the course of the following four years of operations they must pay 1,5% of the difference between the base security amount (GT) of each year and the highest base security amount of the previous years of operations.

  • Decision year one (1): 1,5% of GT for the year
  • Decision year two (2): 1,5% of the difference between GT year one and GT year two
  • Decision year three (3): 1,5% of the difference between GT year three (3) and the higher of the two GT year one (1) or GT year two (1)
  • Decision year four (4): 1,5% of the difference between GT year four and the highest of GT year three, GT year two, and GT year one
  • Decision year five (5): 1,5% of the difference between GT year five and the highest of GT year four, GT year three, GT year two, and GT year one

If the base security amount is lower than or equal to that of previous year, no base charge is collected.

Please note that no receipts are issued for the payment of the base charge to the Travel Insurance Fund. Instead, a print payment receipt from an online bank and/or the decision letter announcing the amount can be used as supporting documents in bookkeeping.

Annual Premium

Applicants for travel agency licences, and hence membership of the Travel Insurance Fund must pay a premium to the fund, irrespective of what time of year they apply.

The amount of the premium is based on the security amount of individual travel agencies and the ratio can be between 2,5% and 10% of each travel agency's security amount. The ratio of the premium is determined by the board of directors no later than July 1st each year. 

The premium must be paid before membership of the fund is approved and before the travel agency licence can be issued. The due date of the premium is four weeks after the applicant is noted of the decision, a payment slip becomes available in the applicant’s online bank.

Premiums are non-refundable.

Premiums are paid annually, and the amount is determined by the Icelandic Tourist Board during the course of the annual reassessment of security amounts. The ratio of the premium may change from one year to another. The board of directors of the Travel Insurance Fund determines the ratio of the premium no later than July 1st each year. The board of directors is authorised to set the premium anywhere from 2,5% to 10% of the security amount.   

If an applicant defaults on the first premium on the due date, the application will be declined.

Please note that no receipts are issued for the payment of the premium. Instead, a print payment receipt from an online bank and/or the decision letter announcing the amount can be used as supporting documents in bookkeeping.

Security

Members of the Travel Insurance Fund must provide a security according to the decision of the Icelandic Tourist Board. The security shall remain in effect while the licence to operate, provided for in the Act on the Icelandic Tourist Board, is in effect and for up to six months from the time that the licence or membership of the Fund is cancelled.

The calculation of the required security amount of each trader is primarily based on the level of yearly income subject to insolvency protection. In addition, the security amount takes into account the financial situation of the trader and the risk of operations.   

The security may have the form of:

  1. Cash on an account held in the name of the Icelandic Tourist Board in a recognized commercial bank or savings bank,
  2. A guarantee issued by a commercial bank or savings bank or insurance with an insurance company,
  3. Another form of security that the Icelandic Tourist Board considers adequate. A declaration shall be submitted regarding the terms of insurance and confirming that the insurance amount is in compliance with Act No. 95/2018.

Traders subject to insolvency protection may have a valid security in another EU-state, in that case they must provide sufficient proof thereof.

Which turnover is subject to insolvency protection

Turnover from package travel and linked travel arrangements is subject to insolvency protection.

Package travel
All payments received by trader for the sales of package travel are subject to insolvency protection. Traders of package travel can be organisers or retailers.

For definition of package travel see here.

Linked travel arrangements
The payments received by a travel agency, that facilitates linked travel arrangements, are subject to insolvency protection. If the travel agency facilitating linked travel arrangement does not collect any payments the transaction is not subject to insolvency protection.   

For definition of linked travel arrangement, see here.

Exempt from insolvency protection
The following is exempt from insolvency protection:

  • Tours that are less than 24 hours in duration, unless overnight accommodation is included,
  • Tours that are offered occasionally (non-regular tours) and on a not-for-profit basis and only to a limited group of travellers,
  • Tours purchased in relation to the purchaser’s trade or business on the basis of a general contract.

Which party should provide insolvency protection?

Organiser

As a rule, an organiser is responsible for the insolvency protection for all package-travel the organiser compiles, offers for sale or sells.

The organiser is responsible for the insolvency protection for all package travel that the organiser sells directly to customers.

The organiser is also responsible for the insolvency protection for package travel organised by him/her and sold by others.

  • In this instance, the travel agency selling the package travel is considered a retailer.
  • The same travel agency can be an organiser of its own tours and at the same time be a retailer selling package travel for other travel agencies. 

Organiser of package travel can make a contract with a retailer stating that the retailer is responsible for insolvency protection of package travel compiled by the organiser but sold by the retailer.

  • Such contracts can only be made with retailers within the EEA.
  • If a contract is made with retailers established outside the EEA the organiser is responsible for the insolvency protection.
  • The organiser must be able to present a contract, if requested. Otherwise, the total turnover falls under the insolvency protection of the organiser.

For definition of organiser, see here.

Retailer

A retailer selling package travel on behalf of an organiser is not responsible for insolvency protection for the tours he sells. The insolvency protection lies with the organiser unless the retailer takes on the insolvency protection by contract.

Any sale of package travel requires a licence. This means that a retailer who acts as an agent and that only sells package travel organised by a third party and is therefore not responsible for the insolvency protection for those tours, must hold a travel agency licence, be a member of the Travel Insurance Fund, provide minimum security and pay annual premiums. 

Please note that a travel agency re-selling package travel in the agency´s own name although organised by an organiser, is considered an organiser itself and thus responsible for the insolvency protection for those tours. 

For definition of retailer, see here. 

Travel agencies that are established outside the European Economic Area

Entities established outside the EEA, that direct their marketing towards the Icelandic market must be members of the Travel Insurance Fund. These entities must pay the base charge and the fund premium and provide security according to the Regulation on the Travel Insurance Fund, covering the package travel and linked travel arrangements offered in the Icelandic market, as well as fulfilling other requirements of the regulation.

Determining the security amount when applying for travel agency licence

Applicants for travel agency licence must submit a business plan for the current and upcoming year of operations along with other information. For details refer to coverage on supporting documents below.

It is important that managers and representatives familiarise themselves with laws and regulations applying to the operations of their travel agencies, and that all information provided is correct and in accordance with current legal requirements.

Please bear in mind that the Icelandic Tourist Board can cancel a licence or impose administrative fines on a travel agency that has provided false or inadequate information required for the determination of premiums and insurance, regardless of whether violations are committed wilfully or by negligence.

An intentional violation or violation that is the result of gross negligence, can result in fines or imprisonment of up to two years, in the case of a serious offence.

Security amounts are reassessed annually. The deadline for submitting the relevant documents and information is April 1st each year.

It is important, that in addition to the information on this page, applicants familiarize themselves with information and requirements for the annual reassessment of security amounts, see here.

Determining security and premium amount

The membership of the Travel Insurance Fund must be approved prior to issuing a travel agency licence. The membership is approved when the applicant has provided security and paid annual premium.

The Icelandic Tourist Board decides the amount of the security and the premium based on the documents provided by individual applicants.

Security amount:
The security amount is based on expected income subject to insolvency protection.

When assessing the security amount, the following values are determined:

  • G: a base figure which is the average of the turnover subject to insolvency protection of the two highest-income months of the fiscal year.
  • N: Average number of days from full payment until the start of a tour,
  • h: Average proportion of confirmation payments of total payments,
  • d: Average duration of tours in days.

All values are determined for the preceding and current fiscal years. 

A base security amount GT is calculated using the following formula: GT = G*(N/30)+G*h+G*d/30.

Also, to be determined is the previous year’s turnover subject to insolvency protection (V), and the ratio a(V). 

The ratio a(V) shall be:

12% if the annual turnover is less than 300 million ISK. ,
12% - 6%*(V-300 million ISK)/700 million ISK if  V is between 300 million ISK and 1 billion ISK, 6% - 2%*(V-1 billion ISK)/1 Billion ISK if V is between 1 and 2 billion ISK 4% - 2%*(V-2 billion ISK)/3 billion ISK if V is above 2 billion ISK

The security amount (T) equals T = a(V)*GT.

The results from the preceding year and the current year shall be compared and the higher figure shall be the amount of the security.

The amount of the security can never be lower than ISK 500.000.   

The security must be submitted, and the premium paid four weeks from the time the applicant is notified of the decision.

Annual Premium

The Travel Insurance Fund´s board of directors has determined the annual premium for the year 2022 at 2,5%. According to the Act on Package Travel and Linked Travel Arrangements the annual premium shall be between 2,5 to 10% and shall be determined by the board of directors of the fund. The principal rule is that the premium shall be 2,5%.

It is foreseeable that the operations of tourism companies will be challenging this year as was the case last year.

On the other hand, the Travel Insurance Fund did not have any outlays the last year and as a result the assets of the Fund are above the set minimum of 100 million ISK.

Based on that fact the board of directors determines the annual premium at 2,5% for the current year. It is however evident that if payments will be made from the fund and/or risk increases, the percentage of the premium must be raised at the next decision on the premium, that is before July 1st, 2023.  

Premiums are paid annually. The ratio is determined by the board of directors of the Travel Insurance Fund and can be anywhere from 2,5% to 10% of the security amount.

The premium must be paid within four weeks from the time the applicant is notified of the decision.

Reporting of increased turnover – Increasing of security amounts

When travel agencies have been issued a license, they are under the obligation to report to the Icelandic Tourist Board if it is foreseeable that turnover subject to insolvency protection will be significantly higher than specified in the documents that were used to determine the amount of security.

The Icelandic Tourist Board is authorised to require a higher security from travel agencies in cases where the trader´s operations are considered to entail special risk, e.g. if there is significant increase in the sale of package travel that is not reflected in the amount of the security provided by the trader, if the trader´s shareholder´s equity is negative, or if it is likely, for other reasons, that the Travel Insurance Fund may suffer a loss in the event of bankruptcy or insolvency of the travel agency or the cancellation of the travel agency licence. The premium is increased proportionally. 

Travel agencies must submit to the Icelandic Tourist Board all documents and information necessary for the assessment of the increase of the security amount.

Accounting and bookkeeping

Bookkeeping must be in accordance with the current Accounting Act.

All payments received either for the sale of package travels or facilitation of linked travel arrangements, must be recorded the month the tour is executed irrespective of when the payments are received. It is illegal to distribute (equalize) income from package travel and linked travel arrangements over the fiscal year.   

The income from package travel and linked travel arrangements shall be easily distinguishable from other operations in the accounts of travel agencies.

It is important to correctly register monthly income during the fiscal year. The accounting system must show, in a distinguishable way, the distribution of monthly income and expenses.   

Validity of security

The security must be in effect for the duration of the licence and must be available for up to six months of the cancellation of a licence or the closing of operations.

Requirement for licence

The applicant, or his representative if the applicant is a legal person, must meet the following requirements:

  1. have residence in a Member State of the European Economic Area or a state which is party to the Convention establishing the European Free Trade Association or in the Faroe Islands,    
  2. be of legal majority and be competent to manage his own finances, and may not, during the preceding four years in connection with a commercial activity, have been convicted of any offence punishable under this Act, the General Penal Code or the Acts on limited liability companies, private limited liability companies, accounting practices, annual accounts, bankruptcy etc. or government taxes,     
  3. have registered the operations with the Directorate of Internal Revenue.     
  4.  present confirmation that the applicant is covered by liability insurance issued by an insurance company licensed to operate in the European Economic Area.  

The Icelandic Tourist Board may request such further information as it considers necessary to decide whether a licence should be granted (Act on the Icelandic Tourist Board No 96/2018).

Liability insurance

The liability insurance is intended to cover possible injury to clients or damage of their belongings during travel if such injury or damages are the result of the fault of the licence holder or his employees. The insurance must be in effect during the validity of the licence.

A confirmation of liability insurance must be provided with the application.

Licence and logo

audkenni

Travel agency licences are digital only. The license holder shall in all advertisements promoting his operations and, on his website, and other online platforms use a graphic numbered identification provided by the Icelandic Tourist Board. The Icelandic Tourist Board may in special circumstances grant exemptions from this provision at the request of a license holder.

Name and alternative names (marketing names)

The operations of travel agencies may not be conducted under other names than those stated in the license. 

The application shall state the name of the licence holder and shall specify any alternative names that the applicant intends to use. The operations may not be conducted under other names than those stated in the licence. 

Alternative names may be added to valid licences by submitting a special application for such additions to the Icelandic Tourist Board, that will issue a new licence at no charge. 

Alternative names can, in addition to names, be in the form of logos or websites.

Please note that the Icelandic Tourist Board takes no responsibility for alternative names that are registered on the licence of a licence holder. If a licence holder wants to prevent any unauthorized use of alternative names or logos that are registered on his licence, the names must be registered with The Iceland Revenue and Customs (Fyrirtækjaskrá) and the logos with The Icelandic Intellectual Property Office.

Fixed premises

Travel agencies shall conduct their operations at fixed premises open to the public. If services are operated solely online the licence holder must meet the requirements of Article 6 of Act No. 30/2002 on Electronic Commerce and Other Electronic Services, regarding the information that must appear on the licence holder’s website.

Service providers shall provide easy and permanent access to the following information concerning themselves:

1. name,
2. address at which the service provider is established,
3. state identification number,
4. postal address, electronic mail and other information which enables easy communication,
5. VAT number of the service provider,
6. public register in which the service provider is registered, e.g. the Register of Companies, Register of Co-operatives or Register of Firms,
7. licence and supervisory authority where the activity of the service provider is subject to licence.

Please also refer to guidelines on the Consumer Agency website.

Supporting documents with application

The Icelandic Tourist Board urges applicants to familiarize themselves with “Instructions on how to fill out the excel-workbooks (Pdf)” and “Instruction video on how to fill in the excel workbooks.” It is imperative that the forms are correctly filled in.

Before filling out the application, applicants must make sure that all certificates, confirmations and other supporting documents are at hand.

It is important that managers and representatives have familiarized themselves with laws and regulations applying to the operations of their travel agencies, and that all information provided is correct and in accordance with current legal requirements.

Please bear in mind that the Icelandic Tourist Board can impose administrative fines on a trader who has provided false or inadequate information required for the determination of premiums and insurance, regardless of whether violations are committed wilfully or by negligence.

An intentional violation or violation that is the result of gross negligence, can result in fines or imprisonment of up to two years, in the case of a serious offence.

The supporting documents the applicant must either complete or provide to upload with the application are:

Natural persons (individuals)

  • Certificate of being registered in the Register of Employees of the Iceland Revenue and Customs
  • Certificate of a valid liability insurance from an insurance company
  • Copy of the last year's tax-return
  • Accounting documents and information on the sale of package travel and linked travel arrangements (see below). The documents include:
    • Operating plans for the current and upcoming years on a monthly basis where the turnover from sales of package travel, on one hand, and linked travel arrangements, on the other hand, are separated from other turnover.
    • Forecasted cashflow for the current and upcoming years on a monthly basis.
    • A copy of the most recent tax return. From April 1st each year the tax-return must be for the preceding year.
  • If a real person operates under a different name than a real name, that name or names must be registered with The Iceland Revenue and Customs (Fyrirtækjaskrá) and a certificate to that effect must accompany the application.

Legal persons / Companies 

  • Certificate of registration with the Iceland Revenue and Customs (Fyrirtækjaskrá)
  • Certificate of being registered in the Register of Employees with the Iceland Revenue and Customs
  • Certificate of a valid liability insurance from an insurance company
  • Founding balance sheet if the company was established during the current year otherwise a signed copy of the previous year's annual financial statement (for applications turned in before April 1st financial statements for the year before last are accepted)
  • Accounting documents and information on the sale of package travel and linked travel arrangements (see below). The documents include:
    • Operating plans for the current and upcoming year on a monthly basis where the turnover from sales of package travel, on one hand, and linked travel arrangements, on the other hand, are separated from other turnover.

Forecasted cashflow for the current and upcoming year on a monthly basis.

Please note that when applying for a legal person, an electronic power of attorney is required.

Accounting documents

When applying for a travel agency license, accounting documents must be submitted for determining the amount of security insurance for the sale of package travel and linked travel arrangements.

The accounting documents are Excel workbooks and can be accessed below. The applicant must save the workbooks on a computer, fill in relevant data and upload with the application.

There are three excel-workbooks; analysis of forecast turnover current year, analysis of forecast turnover upcoming year and a list of retailers providing package security for the travel agency.

Forms and instructions:

The workbooks must be saved to a computer before working with them.

It is highly important that the documents are correctly filled in and all required information provided.

Please note that the Excel-workbooks must be opened and filled in in Excel, but not as “Open Source” or “Numbers”. 

Other certificates
Other certificates as required by the Act on Package Travel and Linked Travel Arrangements No. 95/2018 to accompany the application are obtained automatically.

Application process

Natural person (individual) or a legal person/company?

The licence holder is specified as the applicant in the application. This can be either a natural person (individual) or a legal person (company).

Application for a legal person/company

The online application is accessed using electronic ID, please follow the link below. A company representative who is registered as authorised signatory with Iceland Revenue and Customs (Skatturinn), logs in and selects the respective company. 

Make sure that you have a Debit or Credit card for paying the application fee at hand.

Open application Ferðaskrifstofuleyfi lögaðilar /Travel Agency Licence, legal person/company.

Application by a natural person (individual)

Please follow the link below to open the application. Applicant, that is the licence holder to be must log in using their electronic ID.

Make sure that you have a Debit or Credit card for paying the application fee at hand.

Open application Ferðaskrifstofuleyfi einstaklingar /Travel Agency Licence – natural person/individual

Fees

The Icelandic Tourist Board collects a licence fee and a processing fee for new applications.

The licence fee is a one-time payment, but the processing fee is collected annually, for the first time for processing the application, after that for the annual reassessment of the security amount.

Licence fee

The fee for a travel agency licence is ISK 30.000.

Processing fee

The Icelandic Tourist Board is authorised to collect fees to cover the costs of processing membership applications, annual reassessment of security amounts and premiums and administration of the Travel Insurance Fund.

The processing fee for applications is ISK 35.000.

Please note that the processing fee for annual reassessment of security amounts is:

  • ISK 35.000 if last year’s turnover subject to insolvency protection was up to ISK 300 million 
  • ISK 75.000 if last year’s turnover subject to insolvency protection was above IKS 300 million

Penalties

Periodic Penalties

The Icelandic Tourist Board may impose periodic penalties on those who do not comply with the decisions of the Icelandic Tourist Board until they do so. Periodic penalties can range from ISK 50 thousand to ISK 500 thousand per day. 

Administrative fines

The Icelandic Tourist Board is authorised to impose administrative fines on a travel agency that has provided wrong or insufficient information for the reassessment of the amount of annual premium and security, regardless of whether the violation is committed wilfully or as the result of negligence. 

Administrative fines may amount up to 5% of the total turnover of the previous year of operations for any trader taking part in a violation. In deciding on the amount of a fine, account shall be taken of the nature and extent of the violation or violations, duration of the violation and whether repeated violations are involved. If an administrative fine is not paid within a month from the decision of the Icelandic Tourist Board, default interest shall be paid on the amount of the fine.

Violations that are committed wilfully or through gross negligence can lead to fines, or up to two years of imprisonment in case of serious offences.

If a natural person is found guilty according to the aforementioned, a judgement in a criminal case against such person may include a ban on his/her being issued a licence under the Act on the Icelandic Tourist Board, a ban on his/her serving on the board of directors of a company possessing such a license, serving as its managing director or participating in any other manner in the management of an company that is subject to licence for up to three years. 

If an alleged violation is subject both to administrative fines and penal sanctions, the Icelandic Tourist Board shall assess whether the case should be reported to the police or concluded with an administrative decision. If violations are major, the Icelandic Tourist Board shall refer them to the police. A violation is major if it involves significant amounts, if the violation is of a particularly reprehensible nature or committed under any conditions that significantly aggravate the criminality of the violation. Furthermore, the Icelandic Tourist Board may, at any stage of an investigation, refer a case involving the violation of law for police investigation.

Cancellation of licence

The Icelandic Tourist Board is authorised to cancel a licence and can, given certain conditions, be under the obligation to do so. For further information, refer to a separate coverage on the cancellation of licence.

Cancellation of licence

The Icelandic Tourist Board shall cancel the licence of a travel agency in the event of insolvency or bankruptcy of a licenced trader.

The Icelandic Tourist Board is authorised to cancel the licence of a travel agency that fails to provide security, according to decision, or pay annual premium on the due date. The Icelandic Tourist Board may also cancel the licence of a travel agency that fails to provide the information necessary to assess the amount of the premium or security. 

If a licence is cancelled due to the aforementioned, the travel agency cannot become a member of the Travel Insurance Fund, and hence not obtain a travel agency licence, until the premiums in default have been paid, and if applicable, the Fund has been reimbursed for any amount paid out of the fund to travellers.

If a licence is cancelled due to the aforementioned reasons the cancellation of the licence, along with a call for claims, is published in the Official Gazette and in other prominent manner, as may be considered appropriate at any time. Travellers shall file their claims in writing and the claims shall be submitted within two months from the publication of the call for claims. The board of directors of the Travel Insurance Fund may extend the deadline for filing the claims by three months when special circumstances warrant. Claims shall be supported by sufficient documentation to proof the claim. Any expenses incurred following the insolvency or bankruptcy of a trader shall be paid out of the trader’s security. 

Only claims arising from the aforementioned reasons are covered by the Travel Insurance Fund. The Travel Insurance Fund pays all legitimate claims that are submitted and enforces the trader’s security. In the event that the trader’s security does not fully cover the claims of travellers, the Travel Insurance Fund has a claim against the travel agency in question or its bankruptcy estate. A claim held by the Fund will rank in accordance with paragraph 1 of Article 112 of the Act on bankruptcy etc. No. 21/1995 in the course of the bankruptcy proceedings.

The cancellation of a licence due to any other reason than the aforementioned shall be published in the Official Gazette, on the website of the Icelandic Tourist Board and in any other prominent manner, considered appropriate at any given time. Any claims that may arise are not covered by the Travel Insurance Fund and those who consider themselves to hold claims towards the travel agency must direct those to the agency.

Right of recourse

Upon the payment to travellers from the Travel Insurance Fund, the fund acquires a claim towards the trader in question or the bankruptcy estate. The Travel Insurance fund can enforce the trader’s security to settle the claim. In the event of the bankruptcy of a trader, a claim held by the Fund, that has not been paid in full out of the security provided by the trader, will rank in accordance with paragraph 1 of Article 112 of the Act on bankruptcy etc. No. 21/1995 in the course of the bankruptcy proceedings.

Administrative appeal for review

Administrative decisions of the Icelandic Tourist Board can be appealed to the Minister. A decision taken by the Icelandic Tourist Board regarding securities can be appealed to the Minister within four weeks from the date of notification to the person subject to the decision. Appealing to the minister does not delay the entry into force of the decision. The decision to cancel a licence, issued according to the Act on the Icelandic Tourist Board No. 96/2018, can be appealed to the Minister within four weeks from date of notification. Appealing to the Minister does not delay the entry into force of the decision.

A decision to impose periodic penalties may be appealed to the Minister within fourteen days of being notified to the person subject to the decision.  Periodic penalties shall not begin to accrue until this period has passed. Periodic penalties are legally enforceable after expiry of the time limit for appeals, but an appeal to the Minister will delay enforcement until a final decision has been rendered. Action brought before the courts will not delay enforcement.

Administrative complaints regarding other decisions than those on periodic penalties or securities follow the Administrative Procedures Act - No. 37/1993. The main rule is that a party to a case shall have the right to complain to a higher authority within three months of the notification to a party of an administrative decision.

Publishing and handing over of information

The Icelandic Tourist Board may publish on its website a list of licenced travel agencies holding sufficient insolvency protection.

The Icelandic Tourist Board may also hand over information and documentation necessary in the enforcement of insolvency protection to administrative agencies of other countries.

Are further licences needed?

Applicants must find out whether other licences are required for their operations.

Safety Plans

Anyone performing or intending to perform organized tours within Icelandic territory shall prepare a written safety plan for each type of tour, regardless of whether the entity concerned sells the tour directly to a traveler or through a third party. The safety plan shall be always available in writing in Icelandic and English.

The obligation to provide safety plans covers domestic as well as foreign tourism providers.

Organized tours may not be offered for sale, promoted, or marketed in any way whatsoever in the absence of a safety plan. Travel agencies, that sell or promote tours for other providers must make sure that safety plans are in place before offering tours for sale.

Safety plans are not submitted with the application for license, but the Icelandic Tourist Board can at any time call for the submission of safety plans.

Further information on safety plans and their preparation can be found here.

Consumer protection 

The Consumer Agency monitors compliance to the Act on package travel and linked travel arrangements and Regulations established on their basis except the part covering insolvency protection, that is monitored by the Icelandic Tourist Board. The Act incorporates strong consumer protection and coordination of consumer rights in the European Economic Area.

Obligation to provide information and content of the package travel contract 

The Act imposes on the traders of package travel the duty to provide information:

  • before entering into contract,
  • in the contract on package travel and
  • before the beginning of the package travel.

Before entering into a contract on package travel, the trader shall provide the traveller with the following information among other;

  • that the tour is package travel,
  • the basic rights of the traveller and,
  • that the tour is covered by insolvency protection in the case of insolvency or bankruptcy of the trader

This information is standard and in a standard format that must be uses by all traders.

The trader must furthermore provide the traveller with appropriate information on the tour, about the trader and basic terms and conditions, see here.

Standard forms for providing information before entering into a package travel contract:

The obligation to provide information is according to Regulation no. 1286/2018.  

The trader carries the burden of proof that the requirements of acts on information disclosure are met. If an organizer or retailer has failed to inform the traveller on additional charges or costs the traveller shall not pay those charges or costs. 

It has become quite common that travel documents are entirely electronical, and it can be assumed that most travellers will ask for information and documents pursuant to article 9 of the Act in electronic manner. The documents should however be provided on paper if the traveller asks for that, this is particularly relevant since the documents listed in the article are important travel documents such as tickets and information on departure times. (Article 6-9)

Changes to the package travel contract prior to departure

A traveller may transfer the package travel contract to another traveller. A notice, on a durable medium, to the organiser or retailer, that is given at least seven days before is considered to be reasonable. The organiser or retailer shall notify the transferer of the actual cost of the transfer, the cost shall be reasonable and fair, and documents confirming the cost shall be submitted. The organiser or retailer are only permitted to demand payment equal to the actual cost incurred due to the transfer. (Article 11)

Prices, stated in the package travel contract may only be raised as a consequence of changes in:

  • the price of carriage of passengers resulting from changes in the cost of fuel or other power sources,
  • the level of taxes or fees on the travel services included in the contract, the exchange rates relevant to the package travel.

Price increases are only permitted if the package travel contract grant the traveller similar rights to price reduction. The organiser or retailer shall notify the traveller clearly and comprehensibly of all price increases with a justification for the increase and a calculation of the increase. The notice must be on durable medium and given the latest 20 days before the start of a package travel. This means that it is not permissible to raise the price the last 20 days before the start of a tour. (Article 12)

The trader may not make changes to the package travel unless the right to make those changes is reserved in the package travel contract. If the trader intends to make changes, he must, without delay inform the traveller clearly and comprehensibly on a durable medium of the proposed changes, how those changes will impact the package travel and what the consequences will be if the traveller fails to respond within the given time limit.

A traveller may terminate a package travel contract if change(s) entail significant alterations of any of the main characteristic of travel related services if the organiser cannot fulfil special requests of the traveller that the organiser has previously agreed to or if the price is increase by more than 8%.).

If a traveller terminates a package on the basis of the aforementioned changes, he is entitled to full refund within 14 days or instead accept a package travel of similar or higher quality. If the traveller accepts the change(s) and they result in a package of lower quality the traveller is entitled to price reduction. If the changes result in price increase, the traveller pays the difference. (Article 13 and 14)  

Termination and withdrawal of package travel

A traveller may terminate package travel before its start for a reasonable fee. The package travel contract may specify a reasonable termination fee based on how long before the start the termination is done and expected loss of the organiser or retailer. If standardised termination fee is not stated in the package travel contract, the fee shall equal the loss of income for the organiser or retailer.

If the termination is due to extraordinary an unforeseen circumstance that significantly affect the performance of the package travel or the carriage of passengers to the destination, or in the event of a price increase exceeding 8% the traveller is not obliged to pay a fee.

The trader shall refund the traveller within 14 days from the termination. Extraordinary or unforeseen circumstances can for example be war, the spread of highly contagious diseases or pandemic, terrorist attacks, political instability or other circumstances that significantly affect travel to the relevant destination(s). (Articles 12 and 15) 

A trader may withdraw or terminate package travel with a full refund but without any compensation if:

  • The number of participants is below that stated in the contract and the trader notifies the traveler of the cancelation within the specified period. The act stipulates timeframes based on the duration of the tour.
  • If the trader is prevented from performing the contract because of extraordinary or unavoidable circumstances and notifies the traveler without undue delay before the start of the travel.
  • The trader shall reimburse any payments owed to the traveler within 14 days of the termination.

Performance of package travel

The organiser and retailer are jointly and severally responsible for the performance of the travel services included in the package travel contract, irrespective whether those services are performed by them or by other travel service providers (Article 17). This entails increased consumer protection and clarity, and the traveler may address either the organiser or the retailer if anything goes amiss. 

The organiser or retailer are given reasonable time to remedy the lack of conformity to the package travel contract. If the remedies result in services of lower quality than specified in the contract the traveler is entitled to a price reduction corresponding to the difference between the agreed services and the services provided. (Article 18)  

If the organiser or the retailer do not remedy the lack of conformity within reasonable time or refuses to remedy the lack of conformity the traveler may do so himself and request reimbursement of the necessary expenses from the organiser or retailer. The traveler may not reject  the remedy proposed by the organiser or retailer unless it results in services of lower quality than those agreed or if the price reduction is inadequate. (Article 18)

The organiser or retailer shall provide repatriation of the traveller in the cases where the traveller terminates a contract legally due to considerable lack of conformity. The organiser or retailer shall furthermore provide assistance to the traveller if the traveller specifically asks for it and also when travels are interrupted due to extraordinary and unavoidable circumstances. (Articles 19 and 20)

The obligation of the organiser or retailer to provide accommodation when the repatriation of travllers is delayed due to extraordinary or unforeseen circumstances is limited to three nights. The three night limit does not apply to sensitive groups (disabled persons or persons of reduced mobility and any person accompanying them, pregnant women and unaccompanied minors or those in need of specific medical assistance) that the organiser or retailer should reasonably be obliged to offer further assistance, provided that he has been informed of their conditions and special needs before the start of the tour.

Default remedies of the traveller

The traveller may terminate the package travel contract in the case of substantial lack of performance. The traveller is in that case also entitled to a price reduction corresponding to the travel related services that are not provided or are highly inadequate. The price reduction shall correspond to the lack of performance. (Articles 20 and 21)

Should a traveller sustain any damages as a result of any lack of performance he is entitled to compensation for any damages that the retailer or the organiser are responsible for and can be traced to their lack of performance.

The organiser or retailer may be exempt from compensation for damages if he can prove that the lack of performance is:

  • attributable to the traveller,
  • attributable to the fault of a third party unconnected to the agreed services and the fault was unforeseeable or unavoidable circumstances,
  • or if the lack of performance is due to extraordinary or unavoidable circumstances.

The last instance refers to “force majeure” circumstances. (Article 22)

Information requirements prior to linked travel arrangements 

Trader, facilitating linked travel arrangements shall provide the traveller with standard information about the following:

  • the traveller will not benefit from any of the rights that legally apply exclusively to package travel,
  • that each service provider is solely responsible for the proper performance of his service according to contract and,
  • that the traveller will benefit from insolvency protection,
  • the protection is however more limited than that for package travel (Article 23 and 24).

Standard forms for providing information regarding linked travel arrangements: 

General provisions

A trader is liable for any errors or technical defects in the booking system and, in given circumstances, errors made during the booking process. The trader is however not liable for booking errors that are attributable to the traveler or are caused by extraordinary or unavoidable circumstances. (Article 28)

If an organiser is established outside the European Economic Area, the retailer established in an EEA state shall be subject to the obligations of organisers as laid out in Chapter V and VII of the Act on package travel and linked travel arrangements unless the retailer provides evidence that the organiser fulfils those obligations. (Chapter V and VII)