Moving to the Faroes for work
A new country, a new language, a new culture, as well as new administrative rules to be observed. Moving to a new country may be demanding, but here you can read about tax matters and find links to other authorities that advise on related matters.
Rules regarding work permits in the Faroe Islands vary according to the applicant’s country of origin. The Danish Agency for International Recruitment and Integration reviews and administers work permit applications in cooperation with the Faroese Immigration Office. More information about the rules and regulations concerning Faroese residence and work permits are available at the New to Denmark website, or at the Faroese Immigration Office.
If you are a citizen of Finland, Sweden, Norway, Denmark, Iceland or Greenland, you are free to work in the Faroe Islands. You do not need to apply for a work permit.
If you are an non-Nordic EU citizen, you must apply for a work permit in order to work in the Faroe Islands. Application forms can be found on the website newtodenmark.dk. Find relevant application forms by searching for “Faroe Islands”.
Citizens from other countries
If you are a citizen of a country outside the European Union, you must also apply for a work permit in order to work in the Faroe Islands. Application forms can be found on the website newtodenmark.dk. Find relevant application forms by searching for “Faroe Islands”.
If you only work in the Faroe Islands for a period of 180 days or less in a 12 month period and you do not move your permanent address to the Faroes, you are subject to limited tax liability in the Faroes. This means that you must pay a standard tax rate of 42% on all income earned in Faroes, but you remain tax liable in your country of residence. If you work onboard a FAS ship or a bareboat ship, the tax rate is 35%. When you have limited tax liability, you are not entitled to child tax credits or interest subsidy in the Faroe Islands.
If you are subject to limited tax liability in the Faroe Islands, you must apply for a temporary p-tal (Faroese civil registration number) in order to receive wages. Find the application form for temporary p-tal under Forms.
If you either move your permanent residence to the Faroe Islands or work there for more than 180 days in a 12 month period, you are fully tax liable in the Faroes. Full tax liability means that all income, whether earned in the Faroes or abroad, is subject to taxation in the Faroes, effective from the first day there.
If you come to the Faroe Islands for reasons of fixed-term employment, and you are fully tax liable here, you may apply for becoming exempt from contributing to a pension and to the unemployment insurance.
Conditions and applications
Compulsory pension contributions
To qualify for a pension exemption, you must be fully tax liable in the Faroes, and the employment contract must directly state that the employment is for a fixed period of time. If you meet the conditions, you may be granted an exemption from compulsory pension contributions for up to a total of 60 months.
To become exempt, submit the application form “Application for the exemption from compulsory pension contributions in the Faroe Islands”, and enclose a copy of your employment contract. It is most convenient for everyone, if the exemption is granted before the first payment of wages is made.
Please note, if you started paying into a pension in the Faroes, but you qualify for an exemption, you can request to have your contribution refunded. In this case, you must submit the application form “Request for a refund of pension contributions”. You are required to submit a copy of your employment contract with the application.
To become exempt from paying the unemployment insurance premium, send an application to ALS, short for Arbeiðsloysisskipanin (the unemployment fund), and enclose a copy of your limited residence and work permit. The exemption may be granted for up to a year at a time. It is most convenient for everyone, if the exemption is granted before the first payment of wages is made.
For more information on how to apply and the conditions, contact ALS. Find the link to ALS under quick links.
In the Faroe Islands, if you are a wage earner (i.e. paid by the hour), you have the right to a paid holiday. The system of holiday allowance, in Faroese Frítíðarløn, is set up for this purpose.
Every time you are paid wages, your employer is responsible for making a holiday allowance contribution to TAKS' holiday fund. The contribution corresponds to 12% of your wages. The holiday allowance then accumulates throughout the year until 2 May, every year, when the allowance is paid out to your account.
If you are leaving the Faroes, you should not cancel your Faroese bank account until after the holiday allowance has been credited.
More information about holiday allowance can be found under quick links.
Below is a list of mandatory contributions that are usually withheld from your pay if you are fully tax liable in the Faroes. These include:
Kringvarpsgjald is a broadcast receiver license that all individuals aged 24 or over and fully tax liable in the Faroes, pay to the public broadcasting network, Kringvarp Føroya. People aged 24-66, pay DKK 150 per month, and people aged 67 or over, pay DKK 50 per month.
Heilsutrygd is the name of the national health insurance. Everyone with a registered residence in the Faroes is covered. Individuals aged 18 or over and covered by the insurance, are required to pay the insurance premium, which is DKK 175 per month + 0.7% of their income.
Barsilsgjald is the contribution to the Parental Benefit Fund, Barsilsskipanin. All individuals, aged between 16 and 66 and fully tax liable in the Faroes, are required to pay 0.86% of their income to the fund.
ALS-gjald is the unemployment insurance contribution. All individuals, aged between 16 and 66 and fully tax liable in the Faroes, are required to pay the insurance premium, which is 1% of their income.
AM-gjald is the labour market supplemental pension contribution. All individuals under the age of 67, regardless of whether they are subject to full or limited tax liability in the Faroe Islands, are required to contribute 3% of their income to the AM-fund. Once reaching retirement age, individuals may receive pension from the AM-fund if they have lived in the Faroe Islands for a minimum of three years while between the ages of 15 and 67.
Eftirløn is Faroese for pension. All individuals up to the Faroese state pension age, 67, and fully tax liable in the Faroes are required to save up for a pension. The minimum pension contribution for 2022 is 8%.
Útlendingastovan, the Faroese Immigration Office, will be able to assist you. Visit their website for relevant information on the subject, available in both Faroese and English. See the link under quick links.
You will also find information about the rules and regulations concerning Faroese residence and work permits on the New to Denmark website.