Employment taxes

• Income tax: The Faroe Islands employ a progressive tax system. No tax is paid on the first DKK 65,000 of taxable income. Beyond that, tax rates range from 15% to 30%, with the total government and municipal tax not exceeding 50%.
• Social security contributions: Employees contribute to a mandatory work-related pension scheme. The combined contribution rate is 15%, split between employers and employees, increasing by 1% each year until 2029.

Leave policy

• Annual leave: Employees are entitled to 5 weeks (25 days) of paid vacation per year and an additional 17 days of public holidays.
• Maternity leave: New moms can take up to 46 weeks of maternity leave. That’s right, 11 months to care, recover, and bond. You can start your leave 4 weeks before your due date.
• Paternity leave: Fathers and co-parents are entitled to 4 weeks of paternity leave, which can be taken within the first 14 weeks after the birth of a child.
• Parental leave: After maternity/paternity leave ends, parents can share an additional 10 weeks of leave; how you split it is up to you. Families here truly have the opportunity to be a family.
• Sick leave: If you’re feeling unwell, you’re covered. Employees can take paid sick leave for up to 21 days, with a doctor’s note typically required after the third day. For long-term illness, social insurance may cover extended leave beyond the 21 days.

Employment termination

• Notice periods: Standard notice periods apply, varying according to the length of employment and the terms of the contract.
• Final pay: Upon termination, employees are entitled to receive payment for any accrued but untaken holiday pay.

Hiring and contracts

• Employment contracts: A written employment contract is required, outlining the work conditions agreed upon by both the employer and the employee.
• Work permits: Non-Nordic citizens must obtain a work and residence permit before commencing employment.

Payroll and salary payments

Getting paid in the Faroe Islands is straightforward and timely.

• Pay frequency: Most employees are paid monthly, typically by the end of each month. Some jobs (especially hourly or temp work) may pay biweekly.
• Minimum wage: There’s no official nationwide minimum wage; however, many industries follow collective bargaining agreements (CBAs) that establish minimum pay rates.
• Payslips: Employers must provide detailed payslips, and your salary is directly deposited into your Faroese bank account.

Benefits

• Pension scheme: Mandatory for individuals up to age 67 with full tax liability in the Faroe Islands.
• Healthcare: Residents contribute to the National Health Insurance, providing access to publicly funded healthcare services

Monthly living costs (Tórshavn Edition)

• 1-Bedroom Apartment (City Centre): Approximately DKK 6,666.67 per month.
• Utilities: Around DKK 1,500 per month.
• Groceries and Dining: Monthly expenses vary but are generally moderate, with local produce and seafood being staples of the diet.

How to get a local ID number

• P-number (p-tal): To work in the Faroe Islands, you need a civil registration number, known as a p-number. Contact the municipality where you reside to obtain it.

Social Security registration

Individuals with full tax liability in the Faroe Islands are required to contribute to the mandatory pension scheme.

Banking

• Opening an account: To open a bank account, you'll need your p-number and proof of residence.
• Major banks: BankNordik, Eik Banki, Norðoya Sparikassi, Suðuroyar Sparikassi.

Housing and rental process

• Rental agreements: A standard contract specifying rent and conditions must be signed by both landlord and tenant.
• Tenant rights: The Faroese Tenancy Act provides tenants with protections, ensuring fair treatment and clear terms.

Healthcare system

• Coverage: Healthcare is generally free, funded by the government and resident contributions to the National Health Insurance.
• Services: Includes primary care, hospital services, and certain specialized treatments.

Driving and public transport

• Public transportation: The Faroe Islands have a network of buses and ferries that connect major towns and islands.
• Driving: Renting a car is a common way to explore the islands. Roads are well-maintained, and traffic is minimal.

Emergency and important contacts

• Emergency Services: Dial 112 for police, fire, or medical emergencies.
• Police (Non-Emergency): +298 351448
• Medical Assistance: 1870
• Dental Emergency: +298 314544

Work permits and Visa requirements

• Nordic citizens: Free to move to the Faroe Islands to work, study, and live.
• Other citizens: Must obtain a work and residence permit before taking up employment.

Business culture and work norms

Work environment: The Faroese job market follows Nordic traditions, emphasizing a well-organized labor market and a healthy work-life balance.