The principal rule is that most foreigners, who are coming to the Faroe Islands in connection with the offshore petroleum sector, are not obligated to register for VAT.

The sea area, where the petroleum licences are located, is outside the Faroese VAT territory, and therefore not comprised by the Faroese VAT Act.

It is expected that the goods, which will be used in connection with the offshore petroleum sector, will be stored in a special Customs- and VAT exempted area (transit area), which is sanctioned by the Faroese Customs- and Tax Administration. In these cases there is no obligation to pay VAT, when goods are transported offshore.

However, if the goods are imported to the Faroe Islands, there is an obligation to pay VAT.