Tax in Faroe Islands
Last reviewed: · by TaxProsRated editorial
TL;DR
Faroe Islands' TAKS administers personal income tax at progressive rates (combined state + municipal typically ~37-44 percent), corporate income tax at 18 percent, and MVG (VAT-equivalent) at 25 percent. Faroe Islands is part of the Kingdom of Denmark with substantial fiscal autonomy.
Tax authority
TAKS (Faroe Islands Tax Administration) under the Faroese government [SC1]. Substantive law: Income Tax Act (Faroese); MVG Act (VAT equivalent).
Filing framework
Individual tax year is the calendar year. Personal annual returns due 1 May. Corporate annual returns due 30 September. MVG quarterly.
Residency
Residents are physically present 183+ days [SC2]. Worldwide income; non-residents on Faroese-source. Faroe Islands has fiscal autonomy from Denmark and operates its own tax framework.
Personal income tax
Progressive bands combined state + municipal + church (where applicable): typically 37-44 percent total marginal at higher incomes. Personal allowances apply.
Corporate tax
18 percent flat. Withholding on non-resident dividends 35 percent (treaty rates apply). Pillar Two not yet transposed at the Faroese level (Denmark transposed at 31 December 2023 but Faroe Islands operates separately).
Indirect tax
MVG 25 percent under the MVG Act [SC3]. Zero-rated on exports.
Cryptoassets
No dedicated framework. Where declared, gains under existing income-tax categories.
Treaties
Faroe Islands is covered by the Nordic Tax Convention (multilateral). Limited bilateral DTT network.
Frequently asked
What is the Faroe Islands corporate tax rate?
18 percent flat. Withholding on non-resident dividends 35 percent (treaty rates apply). Pillar Two not yet transposed at the Faroese level.
What is the Faroe Islands VAT rate?
MVG 25 percent. Zero-rated on exports. Faroe Islands has fiscal autonomy and operates its own tax framework separate from Denmark.
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The figures, dates, and rules on this page are sourced from the documents listed below. Where two sources disagree, both are listed.
- TAKS (Faroe Islands Tax Administration) · accessed
- Government of the Faroe Islands · accessed
Important disclaimer
Informational only — not tax advice. This page summarises publicly available information about tax in Faroe Islands as of May 2026. Tax laws change, individual circumstances vary, and the application of any rule depends on your specific facts.
TaxProsRated does not provide tax, legal, accounting, or financial advice. Before acting on anything you read here, consult a qualified tax professional licensed in your jurisdiction (in the US: CPA, Enrolled Agent, or attorney; in the UK: CIOT- or ATT-qualified adviser; in Australia: TPB-registered tax agent; elsewhere: a locally-licensed equivalent). TaxProsRated, its operators, and its contributors disclaim all liability for action taken in reliance on this page.