Below are listed a variety of facts and figures on the Faroe Islands in an effort to provide the international investor a quick overview of the advantages, the many possibilities and the great potential that the Faroe Islands offers.
- A strategic location half-way between Europe and North America
- Good geographical location in relation to the Nordic countries with access to markets with considerable purchasing power
- Well-functioning infrastructure, which is continuously being expanded and developed
- Efficient distribution systems
- Daily flight connections to the European market via Denmark; weekly car-ferry connection to Denmark, Norway and Shetland; cargo ships sail weekly throughout the year to Denmark, Iceland and other countries
- Low inflation (CPI): 0.5% (2003)
- High GDP per capita: 204,218 DKK / 28,853 US$* (2002)
- Low corporate tax rate: 20%
- Attractive taxation rules
- Stable public policy, economy and currency
* Using the Avista exchange rates from Copenhagen stock exchange on 31-12-02.
- Internationally focused with excellent language skills: Scandinavian, English and some German and French
- Faroese workers are flexible and productive. The Faroese workplace demonstrates a high degree of respect for the needs of a workers family life
- Extensive resources available – especially in new technologies such as IT and mobile telephony
- Low rates for office space
- Reasonable data and telecommunication tariffs
- Competitive salaries for management, engineers and scientists
- Comprehensive social welfare system, generally based on the Scandinavian welfare model
- Living standards and quality of life are high, and on level with the other Scandinavian countries
- Well-developed systems for public education, social welfare, and national health care. These services are for the most part publicly financed
- European and Scandinavian regulatory framework and quality standards
- Tariff-free access for most products to the single market of the European Union
- Clean, natural environment
Non-Faroese residents are free to make direct investments in Faroese companies, subject to the conditions contained in general or sector-specific legislation.
Fisheries and fish farming
Shareholding by foreigners in a company holding shares in a fisheries or fish farming company is allowed, but shareholding by foreigners is limited to a total of 33% of a directly fisheries- or fish farming-related company.
According to domestic rules, persons who do not have a legitimate, rooted connection to the Faroe Islands, who have not been registered in the Faroese national registry for the past two years, and who do not have a full obligation to pay their taxes in the Faroe Islands can not own more than 1/3 of the shares and/or votes in a fisheries- or fish farming-related company. They cannot, by the passage of a resolution, agreement or in any other manner – directly or indirectly – gain the right to control more shares or votes.
The Faroese corporate tax rate is 20%, thereby ranking among the lowest corporate tax rates within the OECD member countries.
Capital Gains Taxes
The Faroese capital gains tax rate is 35%, but for corporations, various investment funds, etc. capital gains are taxed at the regular corporate tax rate, which is 20%.
Capital gains tax on income from Faroese sources that is paid in another country, can – if there exists no double taxation treaty with that country – be deducted from the tax on the income realized in the Faroe Islands. The deduction cannot exceed the tax that is paid in the foreign country, nor can it exceed the tax that would have been paid in the Faroe Islands, according to Faroese regulations.
Operating loss carry-forwards may be carried forward to the succeeding 5 years.
Taxation of Non-Residents
Non-resident persons are subject to tax on income from Faroese sources.
According to domestic regulations, non-resident individuals staying in the Faroe Islands for longer than 180 days out of a 12-month period are subject to tax on their worldwide income.
Individuals who are in the Faroe Islands for a temporary stay, i.e., less than 180 days, are taxed on Faroese-source income.
Exemptions from the above rules may be provided for in double taxation treaties.
Faroese, Icelandic and Danish Legislation
Laws and regulations in relation to Securities Market: The Market/Laws and Regulations.
Privatization of Public Enterprises
The present Faroese Government has agreed on privatizing some of the public enterprises in the near future. The enterprises considered are primarily the following:
The Faroese Telecom: Føroya Tele
The Faroese Airline Company: Atlantic Airways
The Faroese Bank: Føroya Banki
The Faroese Life Assurance Company: LÍV