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Faroe Islands

Taxes, residence and daily life for people moving to Faroe Islands: for a wealthy family, an expat employee and a remote worker. Researched .

Open Faroe Islands in the interactive guide

At a glance

For an EU-citizen family of five living off a €30M portfolio, the guide's default reader. The interactive guide recomputes everything for other passports and situations.

Tax on a €30M portfolio
€370,100 a year
Wealth tax
none
Children inherit
low tax
Living costs, family of five
€194,319 a year
EU member
no
Currency
DKK
Capital
Torshavn

Tax on investments, inheritance and wealth

The Faroe Islands tax residents' capital income (interest, dividends and gains on shares and other securities) under a separate capital gains tax law at a flat 35% for individuals; ordinary income pays progressive national tax plus 16%-23% municipal tax. Emigrants are deemed to sell securities worth over DKK 100,000. Inheritance is free of income tax, but an inheritance duty (arvaavgjald) of 1%-12% is paid to the probate court; children pay at most 3%. Gifts from parents to children are tax-free. No wealth tax was found.

Inheritance law and trusts

Faroese succession law follows the Danish model, which protects children with a forced share, but the exact rules were not confirmed. The Faroes have no trust law and are outside the Hague Trusts Convention. Foundations exist under Faroese law.

Daily life, scored out of 100

From public indicators (World Bank, UNDP, Transparency International and others); higher is better.

MeasureScore
Healthcare quality and access90
Infrastructure and connectivity98
Cost of living and housing84
Business opportunities and economy92

Research notes

Faroe Islands — family-office tax dossier

Last reviewed: 2026-10-15 Tax year: 2026 Reviewer: research agent (Claude), unreviewed by a tax adviser

Summary

The Faroe Islands tax residents' capital income (interest, dividends and gains on shares and other securities) under a separate capital gains tax law at a flat 35% for individuals; ordinary income pays progressive national tax plus 16%-23% municipal tax. Emigrants are deemed to sell securities worth over DKK 100,000. Inheritance is free of income tax, but an inheritance duty (arvaavgjald) of 1%-12% is paid to the probate court; children pay at most 3%. Gifts from parents to children are tax-free. No wealth tax was found.

US citizens: No US-Faroes treaty; US citizens remain subject to US federal tax.

Residence and eligibility

More than 180 days in a 12-month period, or a registered permanent address (TAKS).

Capital gains

Standard regime

Løgtingslóg nr. 164/2001 on capital gains covers sales of shares, investment certificates and similar securities, debt claims, and also dividends and interest (§ 1). Individuals and estates pay 35% on the net gain (§ 14(2)). On emigration, securities worth over DKK 100,000 (or below acquisition value) are deemed sold; payment can be deferred against a bank guarantee.

Open points for this tax: Gains on real estate are outside this law; treatment of private real estate gains not researched (left null).

Dividends

Standard regime

Dividends are capital income taxed at 35% (Løgtingslóg nr. 164/2001 § 1(5) and § 14); Faroese companies withhold 35%. Foreign tax paid on foreign income can be deducted from the Faroese tax up to the tax on that income (TAKS Uttanlandsinntøka).

Inheritance and gifts to children

Standard regime

Inheritances are free of income tax, but arvaavgjald (inheritance duty) of 1%-12% is paid to the probate court depending on the heir and the size of the share (TAKS). The 1908 Danish inheritance duty act, in force in the Faroes by Anordning 468/1921, sets for spouse and children: 1% on shares up to DKK 1,000, rising in steps to 3% on shares over DKK 100,000 (§ 2 A), the band rate applying to the whole share. Advance inheritance (forskotsarvur) is subject to the duty; ordinary gifts from parents to children are tax-free.

Open points for this tax: Later amendments to Anordning 468/1921 not checked; the TAKS summary (1%-12%) matches the original table. | Scope for foreign assets of a Faroese-domiciled deceased and whether a spouse in undivided estate (óskift búgv) defers the duty for children not analysed.

Wealth tax

Standard regime

No wealth tax found: TAKS lists taxes on income, interest, gifts and inheritance, pension tax and capital gains tax, with no tax on wealth.

Special regimes

None modelled; see Residence and eligibility.

Company taxation (kept separate from personal tax)

Headline CIT rate: 18% (0.18). Companies and funds pay 18% on capital gains under Løgtingslóg 164/2001 § 14(2); the general corporate rate is believed to be 18% as well (not verified at source).

Cost of living notes

City: Tórshavn (incl. Hoyvík and Argir).

Open questions

Sources

Change log

Residence and succession sources

Tax sources are cited in the research notes above.