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Faroe Islands

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About

Faroe Islands

Capital
Official languages
Population 
Currency

ISO 4217

Tórshavn

Faroese and Danish

49,749

Faroese Krone

DKK

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Economy

The Faroe Islands have a strong and stable economy, with a GDP of $2.7 billion in 2019. This is a significant increase from the $2.3 billion GDP in 2018. The Faroe Islands have a low unemployment rate of 2.2%, and the average salary is around $50,000 per year. The Faroe Islands have a strong fishing industry, which accounts for around 90% of their exports. The Faroe Islands also have a thriving tourism industry, with over 200,000 visitors in 2019. The Faroe Islands have a strong banking sector, with the Faroese Bank being the largest financial institution in the country. The Faroe Islands also have a strong renewable energy sector, with wind and hydroelectric power accounting for around 40% of their energy production. Overall, the Faroe Islands have a strong and stable economy, with a GDP growth rate of around 3.5% in 2019.

Taxation

The Faroe Islands, being an autonomous region of Denmark, have their own tax system separate from that of Denmark. In the Faroe Islands, taxes are levied on both corporate and personal income.


Corporate Taxation:

The standard corporate income tax rate in the Faroe Islands is 18%. However, there are certain deductions and exemptions available, which can bring the effective tax rate down to 0%. For example, companies can deduct expenses related to research and development, as well as costs associated with the acquisition of certain types of intangible assets.


Personal Taxation:

Residents of the Faroe Islands are subject to personal income tax on their worldwide income. The tax rates vary depending on the level of income, ranging from 0% to 55%. The highest marginal tax rate of 55% applies to income over 1.5 million DKK. However, there are also various deductions and exemptions available, which can reduce the amount of tax payable.


Tax Payment:

Tax returns are generally due by the end of March for the previous calendar year. The tax year in the Faroe Islands is the same as the calendar year. Taxpayers can submit their tax returns online or in paper form. The tax authorities will then issue a tax assessment, which will show the amount of tax owed or any refund due.


Tax payments are generally due in two instalments, in June and November of the year following the tax year. The exact due dates may vary depending on the taxpayer's specific circumstances, so it is important to check with the tax authorities for the correct deadlines.


In summary, the tax system in the Faroe Islands is relatively straightforward, with both corporate and personal income being subject to taxation. Tax returns are generally due by the end of March, with tax payments being made in two instalments in June and November.

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