Dividend tax refunds

Concerning the statute of limitations applicable to claims for reimbursement of dividend tax.

Under Faroese law, a general statute of limitations applies to monetary claims, including tax claims, which provides for a limitation period of five years. In addition, a separate three‑year deadline applies to requests for amendment of tax assessments.

The change is made in light of the fact that TAKS considers an application for reimbursement of dividend tax to constitute a request for an amendment of the tax assessment.

Pursuant to Section 8(2) of the Tax Administration Act, a taxpayer may, no later than three years after the end of the income year, submit new information that justifies an amendment of the tax assessment.

On this basis, the statute of limitations will henceforth be three years.

The change enters into force on 1. of May 2026.  

Legal Sources can be found under Relevant Links.

Please note that a new digital form has been created for this purpose and can be found on the right-hand side under Files.

When individuals and companies, based in other countries, receive dividends from Faroese companies, they incur limited tax liability in the Faroe Islands. As they are based in other countries, they are also liable to pay tax on the dividends there. This may result in double-taxation. In order to resolve this issue, the Faroe Islands have entered into double-taxation agreements with various countries, stipulating how dividend tax should be divided (see outline below). The procedure is for the dividend paying company to retain the percentage rate valid in the Faroe Islands (normally 35%), after which the recipient may apply for a refund, down to the percentage rate outlined in the appropriate double-taxation agreement.

The chart below shows an outline of countries that have entered into a double-taxation agreement with the Faroe Islands regarding dividend tax. The chart shows the percentage rate that the Faroes should keep.

For companies that are based in the Nordic countries or Switzerland and hold 10% or more, the practice is that the distributing company can get a confirmation from TAKS which releases them from withholding dividend tax. The conditions are that the distribution goes to a foreign company which is based in the Nordic countries or Switzerland and that the company holds at least 10% of the distributing company.

The application must contain:

• The recipient of the distribution
• The amount

The following must also be enclosed:

• Documentation of tax liability in the home country
• Details about owner relations

TAKS must receive and approve the application before the dividends can be distributed. After this, the Faroese company may distribute dividends without withholding tax. Remember to enclose the confirmation with the dividend statement.

If the application has not been confirmed by the time of distribution, the Faroese company must withhold tax and pay it to TAKS. The foreign company may then apply for a dividend tax refund, in line with the practice mentioned above.

Apply for each distribution separately.

Find the application for a dividend tax refund in an English and a Danish version under forms to the right.

Currency

The new digital form, used to apply for a refund of dividend tax, only accepts amounts in Norwegian and Danish kroner.

The payout will only be made in Danish kroner.

You must enclose the following with the application:

• Documentation detailing the received dividend and paid tax.
• Confirmation from the tax authorities where the applicant is based.