Faroe Islands VAT / MVG (Meirvirðisgjald 25%) Calculator
Calculate standard 25.0% Meirvirðisgjald (MVG), reverse extract embedded sales tax from gross receipts, verify export zero-rating, and prepare periodic TAKS tax settlement returns.
Transaction Parameters
Commercial invoice total with 25.0% Meirvirðisgjald added to the net taxable base.
Invoice Tax Statement All amounts in DKK
| Invoice Element | Statutory Basis | Rate | Amount (DKK) |
|---|---|---|---|
| Net Supply Price | Taxable consideration (ex. MVG) | — | 8,000.00 kr. |
| Meirvirðisgjald (MVG) | Logtingslog um meirvirðisgjald | 25.0% | 2,000.00 kr. |
| Total Gross Invoiced Amount | Total customer settlement | — | 10,000.00 kr. |
Faroe Islands Meirvirðisgjald (MVG) System Architecture
Single Standard Rate (25.0%)
Unlike jurisdictions with multiple reduced rates for food or hospitality, the Faroese tax system applies a uniform 25.0% MVG across nearly all commercial supplies under Logtingslog um meirvirðisgjald.
Reverse Tax Extraction (20.0%)
When pricing is quoted inclusive of MVG (such consumer prices), exactly 20.0% (1/5th) of the total retail ticket price represents statutory MVG remitted to TAKS, while the remaining 80.0% forms the net revenue.
Export Zero-Rating
Consignments exported outside the Faroese customs territory—such salmon, pelagic catches, or offshore engineering consulting provided to foreign enterprises—are zero-rated (0% MVG). The exporter charges 0% MVG while retaining full right to reclaim input MVG on operational expenses.
Mandatory Registration Threshold
Commercial entities and sole proprietors must register for MVG with TAKS once gross taxable sales exceed 50,000 DKK over any rolling 12-month period, submitting quarterly or semi-annual electronic declarations.
Frequently Asked Questions (FAQ)
What is the standard VAT (MVG) rate in the Faroe Islands? ↓
The statutory rate of Meirvirðisgjald (MVG) in the Faroe Islands is a uniform 25.0% levied on the domestic sale of goods and taxable services under Logtingslog um meirvirðisgjald.
How do you extract 25% MVG from a gross price? ↓
To extract embedded 25% MVG from a gross price, multiply the gross amount by 0.20 (or divide by 1.25 to find the net base, and subtract the net from the gross). Exactly 20% of the customer's total gross payment represents the statutory MVG.
What is the mandatory threshold for MVG registration with TAKS? ↓
Any business enterprise or sole proprietor whose commercial taxable sales exceed 50,000 DKK within any consecutive 12-month period must register for MVG with TAKS.
Which goods and services qualify for zero-rated (0%) MVG? ↓
Zero-rated supplies include direct exports of physical goods abroad (including fish and aquaculture harvests exported to European or overseas markets) and international maritime transport, bunkering, and aviation services.
Can foreign companies reclaim Faroese MVG? ↓
Foreign enterprises without a registered place of business in the Faroe Islands can apply to TAKS for an MVG refund on business expenses incurred locally (e.g., business travel, commercial conferences, maritime repairs), subject to reciprocity agreements.
📊 TAKS & Faroese Labor Market Funds (Samhaldsfasti) Matrix
| Statutory Component / Legal Deduction Item | Calculated Amount (DKK) |
|---|---|
| Primary Net / Statutory Payable Amount | 0 kr. |