The SELA regional newsletter features an overview of the most important regional legislative developments recently announced in the jurisdictions of SELA coverage.
Many of the changes recently implemented impact the regions ability to attract foreign investments and related to tax, customs and other investment incentives, illustrating just how strategically important the governing bodies of the region see foreign investment.
Law on Tourism
Following recent amendments enacted by the Albanian Parliament on the Law on Tourism, on 9 May 2018, the Government approved the conditions, criteria and procedures for the status of special investor (i.e. “special status”) for a 4 or 5-star hotel.
Based on decision (DCM) no. 257 of the Council of Ministers, to obtain special status, investors in the tourism sector must fulfill, the following main general conditions:
- the investment should relate to the construction of accommodation facilities (certified in Albania pursuant to the law as it applies to 4 or 5-star hotels) in priority tourism development areas.
- the investor must fulfill, or enter into a management agreement with another operator, according to the following criteria:
- if the application relates to a 4-star special status hotel, to have invested in the construction and / or management of at least 5 (five) accommodation facilities in the field of tourism, located in at least 3 (three) different EU member states, which are certified with 4 or 5 stars by the competent authorities for the relevant jurisdiction; or
- if the application relates to a 5-star special status hotel, to have invested in the construction and / or management of at least 5 (five) accommodation facilities in the field of tourism, located in at least 3 (three) different EU member states, which are certified with 5 stars by the competent authorities for the relevant jurisdiction;
- these accommodation facilities must be under direct ownership of the applicant and / or the managing operator or managed by them through a management agreement, lease, franchising or similar agreement; and
- if the condition of the location of the accommodation facilities in in at least 3 (three) different EU member states is not fulfilled, to have invested in the construction and / or management of at least 8 (eight) accommodation facilities in the field of tourism, located anywhere else, which are certified with 5 stars by the competent authorities for the relevant jurisdiction;
- the investor must show that it has not been convicted by a final court decision for committed criminal offenses;
- the investor must show that it has met all obligations deriving from domestic / foreign tax legislation;
- the investor must show that it conducts business in compliance with the domestic / foreign legislation and is not subject to bankruptcy and / or liquidation procedures or any other similar procedures that may affect the construction and / or operation of the accommodation structure.
In addition to the above general conditions, the investor must also meet the following financial criteria:
- if the application relates to a 4-star special status hotel, the expected investment must be of at least Euro 8 million; or
- if the application relates to a 4-star special status hotel, the expected investment must be of at least Euro 15 million; and
- the aggregate turnover generated by the investor in the last 3 (three) business years, must have been at least equal to 40% of the expected investment for the proposed accommodation facility.
The available benefits for “special status” accommodation facilities in tourism include:
- reduced VAT rate (6%);
- exemption from property taxes;
- no corporate tax for a 10-year period;
- exemption from construction development taxes.
Announced Changes to Tax Legislation
In a recent press conference, the Albanian Minister of Finance announced a number relevant changes to the tax legislation. It was announced that these changes will come into effect as of July 2018. However, the relevant draft acts are still not published, and therefore the announced changes, and their effective date might be subject to change. The announced changes affect the following taxes:
It was announced that property developments made by investors certified as agritourism operators, pursuant to DCM no. 22, dated 12 January 2018 "On the approval of the criteria for the certification of agritourism activity” will be exempt from the tax on the impact to the infrastructure by new constructions. The current rate of the tax on new constructions, other than residential buildings, is between 1% and 4% of the value of the investment, depending on the location of the development.
Value Added Tax
A reduction of the VAT rate, from 20% to 6%, will be applied to investors being certified as agritourism operators, pursuant to DCM no. 22, dated 12 January 2018 "On the approval of the criteria for the certification of agritourism activity” with respect to the supply of accommodation (sleeping) services and restaurant services (excluding the sale of beverages), by agritourism facilities.
The transaction for the exchange between the land owner and the developer, of land with construction areas, will not be a triggering event for the application of capital gains tax on the land owner (currently at a rate of 15%). These types of arrangements between land owners and developers are widely used in Albania, especially in residential developments, and therefore the proposed change is quite relevant for the property development sector. With this tax deferral, if implemented as such, capital gains tax for the land owner shall be triggered upon the further disposal of the construction areas acquired from the developer.
In addition, based on the announced changes, it is expected that the current annual turnover ceiling (8 million Lekë (approx. EUR 65,000) relevant for the application of the reduced business profit tax rate of 5%, will be raised to 14 million Lekë.
If the announced proposal will be implemented as such, the general business profit tax rate of 15% shall apply to businesses with an annual turnover in excess of 14 million Lekë.
Moreover, a reduced 5% profit tax rate, irrespective of the achievement of the above turnover thresholds, shall apply to:
- legal entities operating in the agricultural sector, pursuant to law no. 38/2012 “On agricultural collaboration companies, as well as
- legal entities operating in the agritourism sector, certified as agritourism operator, pursuant to DCM no. 22, dated 12.01.2018 "On the approval of the criteria for the certification of agritourism activity”.
Agritourism operators shall benefit from the above reduced 5% rate for a period of 10 years, provided that their certification is obtained by December 2021, at the latest.
Bosnia & Herzegovina
Law on Thermal Spas of Republic of Srpska
The Law on Thermal Spas of Republic of Srpska (“Official Gazette of RS” No. 20/18) was adopted by the National Assembly of the Republic of Srpska. This Law defines spas, the conditions and the procedure for proclamation of spas and regulates the types of services provided at the spas.
This Law sublimates all previous solutions in the sphere of spa tourism in a way that simplifies the formal procedure for designation of a certain geographical area by the spa. The new Law is conditioned by the fact that the new solutions it brought could not be positioned within the basic text of the Law on Thermal Spas from 2009, which created a normative and legal framework for improving the tourist contents in the spas.
Law on Secondary Education of the Republic of Srpska
The Law on Secondary Education of the Republic of Srpska (“Official Gazette of RS” No. 41/18) plans many changes in order to adapt education to the needs of the market. The goal of the new Law is the reform of the secondary educational system, and to train individuals with the necessary knowledge, skills and competencies necessary for the labor market, employers and the economy of the Republic of Srpska.
The new Law stipulates that associates are also a coordinator or organizer of practical teaching, which plays a key role in establishing cooperation between the school and the economy. In this way, practical instruction will be carried out under the expert supervision of the employer, provided that it has adequate equipment, resources, mentors and other conditions in accordance with the school plan.
The law also introduces the organization of educational work for students with problematic behavior, who have so far been sent to correctional facilities.
Law on Terms of Settlement of Financial Obligations in Commercial Transactions of the Republic of Srpska
The Law on Terms of Settlement of Financial Obligations in Commercial Transactions of the Republic of Srpska (“Official Gazette of RS” No. 31/18) regulates the payment deadlines for the delivery of goods / works / services that can be contracted between business entities and between contracting authorities and business entities, for a maximum of 60 days, and on exception, in cases where the contracting party making the payment of the contractual obligation has issued an adequate collateral, a longer term for fulfillment of a monetary obligation can be agreed.
Contracting authorities from the Republic of Srpska are obliged to limit the deadline for payment to a maximum of 60 days in the tender documentation when issuing future tenders.
Newly Adopted Measures Against Money Laundering Act
At the end of March, a new regime implementing stricter requirements and obligations with respect to the measures preventing the use of the financial system for the purpose of money laundering entered into force.
The regime has two main significant parts. Тhe first one applies to a short list of entities which are burdened with the implementation of the entire set of anti-money laundering rules and therefore with abundant obligations pertaining to almost all phases of the business process. E.g. when establishing business relationships or at a later stage, these entities are obliged to follow the KYC rules, including to establish beneficial ownership, origin of funds, and to give signals, reports, etc.
The second part of the regime is more relieved, however applicable to all companies and other types of legal establishments in Bulgaria. They are now obliged to collect, keep and provide appropriate, accurate and current information regarding their own beneficial owners. This information should also be entered in the Commercial Register. In addition, if the legal representatives are not permanently residing in Bulgaria, the entities should register a contact person – a natural person with permanent residence in Bulgaria.
The Registry Agency shall ensure the technical possibility for entering the above-mentioned information in the Commercial Register not later than 01 October 2018 and the persons subject to this obligation shall file these data not later than 01 February 2019. Secondary legislation to implement the new regime is still in the process of development and is expected with great interest.
Legislative changes in the regime of deployment of electronic communications networks and construction of the related infrastructure according to the newly adopted Electronic Communications Networks and Physical Infrastructure Act
The Bulgarian National Assembly adopted the new Electronic Communications Networks and Physical Infrastructure Act (ECNPIA). It implements the provisions of Directive 2014/61/EU of the European Parliament and of the Council on measures to reduce the cost of deploying high-speed electronic communications networks and aims to update the acts, which set forth the requirements for the deployment of electronic communications networks and the construction of the related infrastructure.
The law implements a number of new legal definitions and extends the scope of existing ones such as: physical infrastructure, electronic communications network, network operator, electronic communications network operator, etc.
ECNPIA provides for the development of a unified database (Single Information Point) with up-to-date information on the use, maintenance and construction of electronic communications networks. The Single Information Point shall grant access of the network operators to information on procedures and acts relating to the deployment, maintenance, construction and use of communications networks and the related infrastructure, planned or ongoing construction, sample documents, criteria and deadlines and other information.
Among the significant innovations concerning the procedure for construction, deployment, maintenance and improvement of the communications networks in Bulgaria is the possibility the respective permissions to be requested electronically. This possibility should be procured within two years after the promulgation of the law, i.e. in March 2020.
Amendments of the Limitations of Cash Payments Act
The Bulgarian National Assembly adopted amendments of the Limitations of Cash Payments Act (published in the State Gazette No. 31/10.04.2018).
The change in the legislation provides for a new opportunity for the budget organizations serviced by the Bulgarian National Bank to collect revenues through card payments.
This legislative amendment gives a useful and free of charge option for payment of the amounts due by the natural and legal persons to the respective budget organizations. Moreover, the widespread use of card payments in the public sector is aimed at reducing the financial burden on the consumers in making payments and reducing the costs of administering cash payments.
The above amendments triggered amendments also to the Roads Act. In the light of the forthcoming start of the project for implementation of a toll-fee system it is explicitly stated that the servicing of card payments for the collection of the toll fees shall be carried out in accordance with the Limitations of Cash Payments Act.
Strategic Investment Projects Act
On 5 April 2018 the Strategic Investment Projects Act entered into force. When proposed by the Government of the Republic of Croatia it was emphasized that the purpose of this legislative change is to simplify and accelerate procedures for the preparation of investment projects.
The Act provides several significant changes to the benefit of potential investors:
- the minimal amounts criteria of the total investments costs for a strategic project is decreased from HRK 150 million to HRK 75 million;
- the percentage of proof of the amount of funds for financing the project has been decreased from 10 % to 5 % and will be accepted if in the form of deposit, bank letter and/or the funds already invested in the project. The President of the Government of the Republic of Croatia has stated that the intended changes provided in the Proposed Act aim to strengthen the investment environment in Croatia.
General Data Protection Regulation (GDPR)
The Act on Implementation of General Data Protection Regulation (GDPR) entered into force on 25 May 2018. The Act fully implements the EU Regulation on the Protection of Natural Persons with regard to the processing of personal data and on the free movement of such data, repealing Directive 95/46/EC (General Data Protection Regulation) into the Croatian national legislative system. By adoption of the Act, the General Data Protection Regulation entered into force in the Republic of Croatia and repealed the Act on Protection of Personal Information.
The amended Waters Act entered into force on 26 May 2018, which transposes EU directives in the domain of water policies, waste water purification, flood risk assessment and management into Croatian legislation. The Act broadens the scope of the term “water”, which now covers all waters in order to achieve water protection goals. Further, the amendments introduce the term “water activities” which includes accumulation, storage purification and distribution of underground waters and collection and purification of waste waters. A specific legal regime for hydro power system buildings is provided, which regulates expropriation of construction land and the acquisition of land rights to build on the public water domain.
Final Proposal of the Forests Act
The Government of the Republic of Croatia submitted the final proposal of the Forests Act on 30 May 2018. The new Act aims to achieve long-term legal framework for achieving the optimal balance between forest management on the one hand and forest protection on the other by regulating the methods and systems of management, utilization, development and disposal of forests and forest land with the aim of securing the principle of sustainable development.
Further, the Act provides for the establishment of the Registry of Forestry Area of the Republic of Croatia in the form of an electronic data registry, it defines the forest owner and categorizes them according to the legal capacity of the forest owner and the size of the forest land plot. Regarding the disposal of forests that are the property of the Republic of Croatia, the new Act provides for the opinion of the relevant authority as a precondition for excluding state owned forests from the forestry area, if covered by spatial plans and within the scope of construction area.
Act on Amendments of the Electric Energy Market Act
The Act on Amendments of the Electric Energy Market Act proposed on 24 May 2018, transposes the provisions of the EU legislation concerning the common rules for internal market in electricity. The term “third country” is precisely elaborated, meaning that it covers countries from the Energy community, and operator certification procedure applies to those countries, obligation of the operator on securing the confidentiality of commercially sensitive information, obligation of operator of transfer system to draft rules on congestion management within Croatian electric energy system and identifies the Croatian Energy Regulatory Agency as the only authority competent to for approving the rules made by the operator of transfer system.
National Reform Program 2018
On 26 April 2018 the Government of the Republic of Croatia has announced the National Reform Program 2018. The program aims to accomplish three main goals: strengthening of economy competitiveness, connecting the education with the labor market and sustainability of public finance. The Program envisages the adoption of the Strategy of Digital Transformation of Economy, aimed at improving the regulatory framework for stimulating investments in the context of the EU Single Digital Market, the further decrease in taxes and administrative obstacles, the improvement of electronic start-up of business, the liberalization of the service market, an increase of competitiveness in the port sector and quickening the procedure of concessions on maritime domain.
New Law on Energy
Pursuant to the European Union accession process and in light of Macedonia’s commitment to adopt the EU’s energy acquis communautaire, the Government of the Republic of Macedonia, represented by the Ministry of Economy, has drafted a new Law on Energy that was adopted in May this year.
The Law focuses on liberalization of the energy market. It is brought about due to the fact that the existing law that it replaces, does not meet the standards set out by the EU, giving rise to several issues the new Law overcomes, namely:
- Consumers, since they do not possess the status of qualified consumers, do not have the right to choose an electricity supplier of their preference;
- Households and small consumers do not have the possibility to be supplied by a universal supplier at prices approved by the Energy Regulatory Committee;
- AD ELEM, the country’s largest electricity provider by installed capacity, is regulated and not sufficiently adjusted to fit market conditions;
- The legal entity producing electricity and the legal entity transmitting electricity, AD ELEM and AD MEPSO, respectively, are managed by the same entity, due to which there is no effective independence;
- There are restrictions on the access to the electricity market; and
- The lack of additional financial support to the production of renewable energy can lead to a slowdown in further breakthrough.
What the Law Introduces
The purpose of the Law is creating an effective framework for cooperation, mutual notification and coordination of the activities of Macedonia’s authorized bodies and the institutions of the Energy Community.
To remedy the above mentioned issues, the Law introduces various changes. It sets out to end the monopoly of the energy market, so small and medium sized enterprises will have the possibility to choose their energy suppliers, which is set to increase competitiveness. Furthermore, the Law envisages an increase in the market share of renewable energy sources, as the Government will undertake the task to maximize their use.
As of 2019, AD ELEM will have to redirect 80% of its production to the universal supplier, chosen via a tender, and year by year this percentage will decrease, reaching 30% by 2025. The Law also decentralizes the competence of the Government: AD ELEM will continue being the Government’s responsibility, while AD MEPSO’s management will be taken over by the Ministry of Transport and Communications, and Macedonian Energy Resources (MER) will be handled by the Ministry of Economy.
Regarding renewable energy sources, the Law transposes the provisions from the EU Directive on renewable energy sources that refer to statistical transfers, common projects and coordination of the measures for support with countries from the European Union and other countries. Regarding financial support measures for encouraging renewable energy production, the existing feed-in tariffs will remain, but will be used only for certain technologies determined by the Government of the Republic of Macedonia.
The Law also envisages approving state aid intended for encouraging renewable energy production.
The licensing terms are being improved. Thereby, participation on the Macedonian energy market has been simplified for traders and suppliers with electricity and natural gas, who hold licenses issued from countries that are parties/participants in the Energy Community Treaty. Such traders and suppliers will be able to participate on the market without the need to obtain a Macedonian license, rather, they are given the possibility for performing of the same energy related activities on the Macedonian market, by simple registration, through application of the reciprocity principle.
Law on Amendments to the Law on State Survey and Real Estate Cadaster
The National Assembly of Montenegro adopted the Law on Amendments to the Law on State Survey and Real Estate Cadaster which entered into force on 17 March 2018. The aim of this law is to harmonize the relevant law with the Law on Spatial Planning and Construction of Buildings in order to legalize facilities which were not constructed in accordance with the law.
Law on Amendments to the Law on Protection of Competition
The National Assembly of Montenegro adopted the Law on Amendments to the Law on Protection of Competition which entered into force on 8 March 2018. The main reasons for adoption of the Law on Amendments to the Law on Protection of Competition is to fulfill one of the main conditions for opening Chapter 8 that relates to the protection of competition. State aid control and administration were within the shared competence of the State Aid Control Commission and the State Aid Preparation Unit. Both institutions are part of the Ministry of the Finance and therefore not fully operationally independent. The Law on Amendments to the Law on Protection of Competition allows the transfer of state aid control functions to the Montenegrin Competition Agency, a functionally independent institution, which will undergo an internal reorganization to accommodate the new scope of work.
Law on Foreigners
The National Assembly of Montenegro adopted the new Law on Foreigners which entered into force on 3 March 2018. The law aims to regulate the conditions for entry, exit, movement, stay and work of foreigners in Montenegro in accordance to international standards and in a quality manner compatible with European legislation. The Law on Foreigners shall take full effect at the moment of acceding to the European Union.
Law on Services
The National Assembly of Montenegro adopted the new Law on Services which entered into force on 8 November of the same year. One of the main reasons for the adoption of the Law on Services is harmonization with the Stabilization and Association Agreement between the European Union, its Member States and the Republic of Montenegro and the Internal Market Services Directive 2006/123/EC.
The Law on Services regulates services where a decision from the authorities is necessary for their performance, such as architectural, engineering, veterinary, educational, craft, agricultural and forestry services, cultural services, tourism, sports and fitness services, construction, property related services, industry such as installation and maintenance of machines, commercial, retail services, services provided by lawyers and others. As the service market is very dynamic, the law also provides rules for new services that appear on the market.
Law on Financial Leasing, Factoring, Purchase of Receivables, Micro-credit and Credit-Guarantee Operations
The National Assembly of Montenegro adopted the new Law on Financial Leasing, Factoring, Purchase of Receivables, Micro-credit and Credit-Guarantee Operations which entered into force on 11 November 2017 and shall apply after the expiration of a period of six months from the date of entry into force i.e. from 11 May 2018. The law aims to regulate financial leasing, factoring, debt recovery, micro-credit and credit and guarantee operations, as well as the establishment, operation and control of the business of companies engaged in these operations.
Companies currently engaged in the business of financial leasing, factoring or purchase of receivables, other than Montenegrin banks whose license already covers these activities, are obliged to file applications to obtain relevant licenses from the Central Bank until 11 December 2018.
Law on Amendments to the Customs Law
The National Assembly of Montenegro adopted the Law on Amendments to the Customs Law which entered into force on 8 November 2017. The amendments introduce the institute of authorized economic operator and other procedural related matters. One of the main reasons for the adoption of the Law on Amendments to the Customs Law is further harmonization with the European legislation, primarily with Regulation 952/2013 regarding Union Customs Code.
Law on Foreigners
The National Assembly of the Republic of Serbia recently adopted the new Law on Foreigners which regulates thoroughly and in detail the conditions for entry, movement, residence and return of foreigners, as well as the competences of the relevant state authorities. This law entered into force on 3 April 2018 but it will start to apply 6 months later, i.e. on 3 October 2018. The respective bylaws should be adopted within 6 months after the law entered into force, and it may be expected that these secondary acts of legislation will further regulate certain provisions of the law in a more comprehensive manner. The main reasons for adoption of this piece of legislation are specifying certain provisions and regulating certain areas which were unregulated, all in order to implement the regulations more effectively in practice.
Law on Central Record of Beneficial Owners
The main reasons for the adoption of the Law on Central Records of Beneficial Owners, which was adopted on 25 May 2018, are improvement of the existing system and harmonization with the international standards in this area. This law regulates the establishment, content, basis of recording and the manner of operation of the Central Record of Beneficial Owners of legal persons and other entities registered in the Republic of Serbia, as well as other matters of importance for recording the beneficial owners. This law is still not published and is not available on the official website of the National Assembly of the Republic of Serbia.
Law on the Registration Procedure in Real Estate Cadaster and Underground Lines Cadaster
The Law on the Registration Procedure in Real Estate Cadaster and Underground Lines Cadaster, which was adopted on 25 May 2018, regulates the rules of the registration procedure in the cadaster of real estate and the cadaster of the lines in their maintenance, the subject and types of registration in that procedure and the rules of the procedure for issuing extracts from the mentioned registers, as well as other issues of importance for maintaining the cadaster of real estate and the cadaster of underground lines. This law is still not published and is not available on the official website of the National Assembly of the Republic of Serbia.
On 19 April 2018, the National Assembly of the Republic of Serbia adopted amendments of several financial laws. Below are some of the most important novelties introduced in this manner.
Law on Foreign Exchange Transactions
Serbian companies will now be able to grant loans to foreign borrowers. In addition, Serbian companies will also be able to provide warranties and guarantees or other collaterals for loans between foreign companies. These guarantees and loans may be limited by the regulations of the National Bank of Serbia in order to preserve public interest or financial stability, depending on the justification in each particular case.
The amendments to this law also introduce the free movement of capital for short-term portfolio investments. It is now prescribed that residents are able to invest in foreign short-term securities issued by the European Union, EU member states and the OECD, international financial organizations, development banks or financial institutions founded by the state, or legal entities with registered seat in European Union member states.
Law on Tax Procedure and Tax Administration
The Business Registers Agency may not delete a company from its registry until the Tax Police completes the control of the respective company. Further, tax administrative act and tax applications may now be submitted in electronic form. The preliminary measure of securing the collection of taxes and compulsory collection from the debtor's savings deposits are introduced as well.
Law on Factoring
It is now stipulated that the owner of a factoring company cannot be a person convicted of a criminal offense.
Law on Audit
The founder or the owner of an audit company cannot be a person convicted for any of the following criminal offenses: criminal offenses against labor rights, business, property, judiciary, money laundering, terrorist financing, public order, legal traffic, and official duties.
Law on Excise Tax
Amendments to the Law on Excise Tax stipulate that this type of special tax will not be paid for liquefied gas, in case that it is used as energy fuel or reproductive material.
In the continuation of this Newsletter we would like to emphasize the latest Slovenian legislative novelties in the field of enforcement, employment of foreigners and consumer protection.
Claim Enforcement and Security Act (ZIZ)
The new Claim Enforcement and Security Act (ZIZ) entered into force on March 25, 2018. The most notable novelty is to prevent social enforcement of real estate, with debt that is low and thus its repayment by the debtor is realistic or manageable.
According to the novelty, in the event that the real estate asset is the debtor's home (registered permanent residence) and that the debt repayment is clearly disproportionate in relation to the established value of the real estate, the court must inform the Center for Social Work.
The debtor may also, after the deadline stated in the Act, suggest that the court should allow another means of enforcement or to execute enforcement on another real estate asset. However, the latter can also be done by the court ex officio. When the debtor cannot propose another means of enforcement, the court can on the proposal of the debtor or ex officio postpone the enforcement of the real estate for a maximum of six months and only once on the basis of the reasoned opinion of the Center for Social Work, from which it follows that immediate enforcement would jeopardize the livelihood of the debtor or his family members.
Employment, Self-employment and Work of Foreigners Act (ZZSDT)
On 1 July 2018 the new Employment, Self-employment and Work of Foreigners Act (ZZSDT) will enter into force as a result of the adoption of a new Investment Promotion Act (ZSInv), which will also enter into force on 1 July 2018 and will establish two registers, a register of companies with high added value and a register of innovative start-up companies that will facilitate the employment of foreigners.
Due to the fact that the labor market in Slovenia is rather exhausted, companies are looking for workers abroad, in EU Member States and non-EU Member States. The amendment to this Act is in favor of faster recruitment of highly skilled workers that are harder to employ in Slovenia. However, this simplification is not intended for all companies.
According to the new Employment, Self-employment and Work of Foreigners Act the Employment service of Slovenia will no longer check certain conditions in the process of issuing or renewing a single permit for the purpose of employing a foreigner in a company, if the company is entered into one of two previous mentioned registers, under the condition that the employer provides the foreigner with a minimum salary equal to the average monthly gross salary in the Republic of Slovenia.
Consumer Protection Act (ZVPot)
Due to the upcoming summer season a novelty in the field of tourist services will enter into force on 1 July 2018. The new Consumer Protection Act (ZVPot) now offers a more precise definition of the tourist package. The new Act is obtained mainly due to the European Directive on package travel and linked travel arrangements dated 25 November 2015.
The Act provides a wide range of information that the travel organizer must provide to the consumer and also defines the appeal procedure in case the service is not performed in accordance with the contract. The travel organizer becomes responsible for the correct execution of the service. The Act should also provide better protection of the consumer in case of the insolvency of the travel organizer or the seller.
Amendment to this Act reduced the amount the price of the concluded package trip can increase compared to the previous legal regulation, from 10 to 8 percent. The travel organizer may raise the price, if the contract contains this option, and if it also contains a provision regarding price reduction, and if it contains a method for calculating the price change. The mentioned increase is possible only as a direct consequence of the specific changes (price changes of fuel, changes of exchange rates and tourist taxes, for example). If the price rises by more than 8 percent, the consumer can accept the change or withdraw from the contract. In the latter case the travel organizer must return all payments within 14 days.