VAT it short for value added tax. In Faroese it is called MVG, short for meirvirðirgjald. It is a tax on all commercial sales and services. The VAT rate is 25% and is payable when sales of goods and taxable services are taking place at all stages in the chain of distribution within the Faroe Islands.
The Faroese VAT territory consists of the Faroese landterritory (area), fiords and sea territory until 12 nautical mils from straight base, and the airspace above the mentioned area.
Foreign businesses, which have established activity in the Faroese VAT territory, have the same obligation as any Faroese business to collect and pay VAT to the Faroese Treasury.
If your annual sale of goods and/or services amounts to less than DKK 50.000, you are not required to pay VAT to the Treasury. Furthermore, you are not required to add VAT on the sale of goods and/or services.