Iceland Implements New Cruise Fee

Iceland's authorities have introduced a new infrastructure fee for cruise passengers which will apply to all cruise operators regardless of when they trips were booked

Iceland’s authorities have introduced a new infrastructure fee for cruise passengers, aimed at enhancing competition among tourism companies and generating additional revenue for the government. The fee, which amounts to approximately £14 per day, was approved by lawmakers in June of last year and will be levied on passengers aboard international cruise ships docked in Icelandic ports or customs zones.

According to the Icelandic Ministry of Finance and Economic Affairs, the fee will be charged at around 2,500 ISK (£14.35) for each passenger for every 24-hour period spent in Icelandic waters. A spokesperson for the ministry emphasised that this infrastructure tax applies to all cruise operators regardless of when the trips were booked, marking a significant shift in the taxation of international cruise ships visiting the country.

“The operators of cruise ships in international navigation will be required to pay an infrastructure tax for each passenger entering the country’s customs territory,” the spokesperson stated. The ministry noted that this new tax is not expected to impose a significant administrative burden on ship operators, who already pay an accommodation tax. The payment process for the infrastructure fee will mirror that of the existing accommodation tax, with a slightly extended payment timeline of seven days post-visit.

In recent years, Iceland has seen a marked increase in the number of cruise ships visiting its shores. However, this surge has placed local tourism operators at a competitive disadvantage, as cruise lines have been paying only minimal taxes, such as port and lighthouse fees. The ministry asserted that the new tax aims to level the playing field for domestic and foreign tourism companies.

Despite the potential revenue boost, some industry insiders are expressing concerns. Sigurður Jökull Ólafsson, Chairman of Cruise Iceland, reported a noticeable decline in bookings at certain ports, with some locations experiencing drops of up to 17 percent. Smaller ports, particularly in rural areas, have been hit hard, with one port in the Westfjords seeing a reduction in visits from 30 to just 12.

While major cruise lines such as MSC Cruises and Fred Olsen Cruise Lines have confirmed that their sailings to Iceland will continue as planned, the introduction of the infrastructure fee is causing ripples throughout the industry. Ólafsson criticised the previous government’s decision to implement the fee retroactively, stating it poses challenges for operators, ports, and local businesses.

Cruise Iceland is currently lobbying for amendments to the legislation from the new government, suggesting that the fee should only apply to trips sold after the January 2025 implementation date or that it should be reduced significantly to mitigate the impact on rural areas.

The Cruise Lines International Association (CLIA) has also voiced concerns, labelling the fee as disproportionate compared to similar charges in the travel sector and highlighting that the generated revenue does not sufficiently benefit Icelandic rural communities. The organisation is urging the government to work collaboratively with local authorities to create a balanced approach that supports both tourism and local communities.

As the January deadline approaches, the discourse surrounding the infrastructure fee continues, with stakeholders advocating for adjustments that could safeguard Iceland’s burgeoning cruise industry while ensuring fair treatment of local tourism operators.

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