GLOBAL EMPLOYER OF RECORD IN 190+ countries
Employer of Record in the Faroe Islands
Build an initial team in the Faroe Islands without taking on incorporation for one hire or a developing workforce. Acumen acts as your Employer of Record, letting you respond to the business need now and revisit entity set-up only if the local operation grows.
GLOBAL EMPLOYER OF RECORD
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Acumen International delivers global employment solutions across 190+ countries.
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Hiring and compliance support across North America, Europe, and Asia-Pacific.
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Lawful employment and payroll in regulated, compliance-intensive countries.
Growth economies
Expanding into new regions? Hiring support across fast-moving economies.
Risky and remote locations
Compliant employment solutions in jurisdictions with limited infrastructure.
Employing in the Faroe Islands through an Employer of Record
With an Employer of Record, Acumen International is the legal employer of the people who work for your business in the Faroe Islands. Acumen secures the work and residence permit where one is needed, signs the employment contract on terms that meet Faroese standards, registers each employee for tax at source with TAKS, and carries the employer’s legal obligations. Your business selects the person and directs the work. Where the right person has not yet been found, Acumen International can also run the search, from specialist recruitment to executive search, with background and education checks before the offer.
Situations where an Employer of Record serves a Faroese hire
- Contractor compliance. Specialists working full time for your business in the Faroe Islands move onto employment contracts, so tax at source, pension and labour market contributions are paid as they fall due.
- One accountable provider. Permits, contracts, payroll, pension and compliance sit with Acumen International rather than with several advisers.
- No entity to set up or maintain. You employ in the Faroe Islands without incorporating a company or registering as a Faroese employer.
- Market tests and short-term projects. An aquaculture, energy or shipping project is staffed for its duration without permanent infrastructure.
- Bridge to your own entity. While your Faroese company is being set up, the first hires start with Acumen International and transfer once it can employ them.
- Fast team launch. Nordic hires start without permits, and permit applications for others run alongside the contract, so the team starts on schedule.
- Mergers and restructuring. Faroe-based staff stay employed without a break while the group structure around them changes.
- NGO staffing. Research bodies and international organisations employ project and specialist staff under Faroese terms.
- Employer liability. Acumen International holds the Faroese employer’s liability, so statutory duties sit with the party TAKS and Útlendingastovan hold accountable.
- Remote team expansion. Team members based in the Faroe Islands join a distributed team with Faroese contracts, tax and pension.
Employing for another business in the Faroe Islands: the legal basis and its limits
Pay and conditions in the Faroe Islands are set mainly through collective agreements between employers’ associations and unions, rather than a single labour code. Acumen International employs your team directly on terms that meet those standards, and provides their services to your business under a commercial agreement. These rules frame the arrangement:
- Wages paid by a Faroese employer are taxed at source by TAKS; staff paid by an employer based outside the Faroe Islands must instead declare B-income and pay monthly tax bills themselves.
- A work and residence permit covers one employer and one job, and a new job, even within the same company, needs a new permit.
- Permit holders’ pay and terms must correspond to Faroese standards, including the minimum wages in the relevant collective agreement.
- The Faroe Islands are outside the EU, so EU free movement does not apply, and a Faroese permit is not valid in Denmark or Greenland.
What Acumen International handles in the Faroe Islands, from recruitment to exit
| Stage | What it involves in the Faroe Islands |
|---|---|
| Recruitment and checks | Finding the candidate where needed, with background and education checks before the offer |
| Permits | The employer’s part of the work and residence permit application, and extensions before expiry |
| Contract and registration | A written contract on terms matching the relevant collective agreement, and the employee’s Faroese personal ID number and tax registration |
| Pay | Monthly payroll in Danish kroner, with tax, labour market contributions and mandatory pension withheld at source |
| Holiday | Holiday pay or the holiday supplement accrued from 1 April to 31 March |
| Exit | Written notice under the contract and collective agreement, final pay and holiday settlement |
Pay rules in the Faroe Islands
The Faroe Islands have no statutory minimum wage. Minimum pay is set sector by sector in collective agreements, and a foreign national’s pay must reach those minimums for a permit to be granted. Salaries are paid in Danish kroner, and salaried staff receive a holiday supplement of 1.5% of the salary earned in the holiday year, in addition to paid holiday.
Employment contracts and working time in the Faroe Islands
| Rule | What it means for you |
|---|---|
| A full-time week is around 40 hours, with overtime and terms set by collective agreement | Hours and overtime pay follow the agreement that covers the role |
| Annual leave is five weeks, in addition to public holidays | Leave planning starts from five weeks a year |
| Holiday accrues from 1 April to 31 March and holiday allowance is paid on 2 May | Holiday costs are accrued monthly and settled once a year |
| Union membership is voluntary | Terms are set by the applicable agreement whether or not the employee joins |
| A permit holder may work only for the employer and in the job on the permit | A change of role is applied for before it takes effect |
Ending employment in the Faroe Islands
Notice periods are set by the collective agreement that applies to the role and by the employment contract, and notice must be given in writing. On exit, outstanding salary and holiday entitlement are settled with the final pay.
For a permit holder, the end of the job also ends the basis for the permit: losing the job must be reported to the immigration authorities, and the permit is revoked.
Employment risks in the Faroe Islands and how Acumen International covers them
| Risk | Where it arises | How Acumen International covers it |
|---|---|---|
| Worker misclassification | A contractor working full time under your direction can be treated as an employee, with tax and contributions due for past periods | Your team is employed on Faroese terms, with tax withheld at source from the first payroll |
| IP ownership | Rights in work created in the job sit with the local employer unless the contracts pass them on | Contracts confirm the rights and transfer them onward to your business |
| Client liability for pay and contributions | An unclear arrangement can make your business look like the real employer | The contract, permit, pay and filings stay with Acumen International, and the service agreement sets out each party’s role |
| Equal pay for assigned staff | Permit holders’ pay must match Faroese standards and collective agreement minimums | Pay is benchmarked against the applicable agreement and comparable roles before the offer |
| Permanent establishment | An employee who negotiates or signs contracts for your company can create a taxable presence in the Faroe Islands | Signing authority stays with your company and is written into the role |
| Exit cost | Notice and terms set by collective agreements differ by sector | The applicable agreement is identified at hiring, so exit terms are known in advance |
| Sponsor obligations | A permit covers one employer and one job, and is revoked when the job ends | Acumen International is the employer on the permit and applies for any change before it applies |
| Pay transparency | The Faroe Islands are outside the EU, but EU-based groups apply the Pay Transparency Directive to their workforce | Pay structures are documented on objective criteria |
Work and residence permits in the Faroe Islands
Nordic citizens can live and work in the Faroe Islands without a permit. Everyone else needs a work and residence permit for a stay of more than three months, applied for before work starts and processed by Útlendingastovan since 1 September 2024.
- The general route grants a permit where the qualifications are not available in the Faroe Islands and the pay and terms correspond to Faroese standards.
- The EU scheme lets EU citizens work for an employer pre-approved for the scheme, at least 30 hours a week, under a collective agreement, as a specialist, researcher or senior official, or on Faroese-standard terms. Permits run for up to a year, processing takes up to 30 days, and the scheme is suspended if unemployment stays above 3.5% for three months.
- The Fast Track agreement lets pre-approved companies paying Faroese-standard terms bring in foreign employees with processing of up to one month.
- Every permit is tied to one employer and one job, must be extended before it expires, and lapses with long absences from the islands.
What Acumen International contributes
- The Faroese employer the application needs. The employer completes its own part of the permit application and is named on the permit. Acumen International fills that role for your hire, so a specialist can be approved for your business without a Faroese company of your own.
- Terms that clear the standards test. A permit is granted only on pay and terms that correspond to Faroese standards. Acumen International sets the offer against the collective agreement that covers the role, so the application meets the test the authorities apply.
- The fastest available route. For EU citizens and for employers eligible for pre-approval, Acumen International pursues the EU scheme or Fast Track route where it applies, cutting processing to a month or less.
- A permit that keeps pace with the role. Extensions are filed before expiry, so the person can keep working while they are processed, and any new role is applied for before it starts.
Family members
A spouse or partner and children can generally accompany the permit holder; under the EU scheme, this covers a spouse, registered or cohabiting partner and children under 18 living at home.
Employer cost and income tax in the Faroe Islands
Wages from a Faroese employer are A-income: TAKS withholds tax and the following contributions before pay reaches the employee. Rates for 2026:
| Contribution | 2026 rate |
|---|---|
| Mandatory pension (kravd eftirløn) | 12% |
| Labour market pension fund | 3.0% |
| Unemployment insurance (ALS) | 0.6% |
| Parental benefits (barsilsgjald) | 0.86% |
| Health insurance | DKK 175 a month plus 0.70% |
Income tax
Income tax combines a municipal tax of 16% to 23%, set by each municipality, with a progressive national tax on income above DKK 65,000 a year; church members also pay 0.6% to 0.9%. Someone who stays 180 days or less in a 12-month period without a permanent address pays a flat 42%, plus 3% to the labour market pension fund.
Sectors employing through an Employer of Record in the Faroe Islands
- Aquaculture and seafood companies employ biologists, veterinarians, engineers and export managers.
- Shipping and maritime businesses employ marine engineers, vessel managers and technical superintendents.
- Energy and offshore projects employ engineers, project managers and HSE specialists.
- Hospitals and health services employ doctors and specialist clinicians.
- Research and education bodies employ researchers and lecturers.
Hiring cases in the Faroe Islands and how they are handled
| Case | What local rules add | How it is handled |
|---|---|---|
| An aquaculture company hires a fish health veterinarian from Scotland | A UK national needs a work and residence permit, granted only on Faroese-standard pay and where the expertise is not available locally | The offer is set against the applicable agreement and the application documents the specialist need |
| An offshore project recruits a Portuguese subsea engineer | Under the EU scheme, a pre-approved employer and at least 30 hours a week; processing up to 30 days | The EU scheme route is used where the employer qualifies, with the permit timed to the project start |
| A shipping firm hires a Norwegian vessel manager | As a Nordic citizen, no permit is needed | Contract, personal ID number and tax at source are arranged before the start |
| A Canadian marine biologist is promoted to lead a research programme | The permit covers one job, so the new role needs a new permit | The new application is filed and approved before the promotion takes effect |
Benefits, payroll and leave in the Faroe Islands
The mandatory pension of 12% is part of every Faroese pay packet, and the collective agreement that covers a role sets its further pension and sickness terms.
Payroll obligations
| When | What happens |
|---|---|
| Before the start | The permit is granted where needed, and the employee has a Faroese personal ID number |
| Every pay period | Salary is paid in Danish kroner, with tax and contributions withheld at source by TAKS |
| 1 April to 31 March | Holiday entitlement and the holiday supplement accrue |
| 2 May | Holiday allowance is paid |
| Before a permit expires | The extension is filed |
Leave entitlements
| Leave | Entitlement | Paid by |
|---|---|---|
| Annual leave | Five weeks, plus public holidays | Employer, through holiday pay or the holiday supplement |
| Sick leave | Sickness benefit of no more than 80% of wages, subject to a cap | Public sickness benefit |
| Parental leave | Up to 52 weeks in total, with four weeks of maternity leave before the birth | Parental benefit scheme, funded by barsilsgjald |
Sources
- Taxation in the Faroes
- Work and residence permits in the Faroe Islands
- EU scheme: work at a pre-approved employer
- Exemption from the requirement of a work permit
- Fast Track agreement for the Faroe Islands
- Work permit
- Working in the Faroe Islands
- Leiðbeiningar: Vinna í Færeyjum
FREQUENTLY ASKED QUESTIONS
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Can we retain an employee who relocates to the Faroe Islands if we have no entity there?
Often, yes, where the role and the individual’s right to work can be supported. Acumen can assess a local EOR arrangement in the Faroe Islands, allowing the employee to remain part of your business without making incorporation the condition of the move.
Is an Employer of Record suitable for one senior or specialist hire in the Faroe Islands?
Yes. An EOR can be particularly useful when the role is commercially important but one hire does not justify setting up an entity in the Faroe Islands. Acumen provides the local employment structure while your business retains control of the role, objectives and day-to-day work.
How does Acumen handle payroll currency for employees in the Faroe Islands?
Acumen separates the employee payroll requirement from the client’s funding preference. Salary is paid in the currency permitted for employment in the Faroe Islands; where an alternative payment currency is lawful and practical, it can be reviewed. Client invoices can be handled in an agreed major currency where the service structure supports it.