Faroe Islands payroll and mandatory contributions

Source-cited draft. Professional review is pending. Figures are limited to the periods and assumptions below. This Guide prepares working papers; it is not authority to file or pay.

Scope

Prepare 2026 payroll evidence and contribution checks for ordinary A-income. Separate worker deductions, employer charges and contractual pension funding. Shipping, posted workers, age exceptions and B-income require separate treatment.

Sources were accessed on 22 October 2026. A dated rate table controls its stated period; an undated guidance page does not prove that all later amendments have been incorporated.

Published employee-side amounts

TAKS's 2026 overview lists health insurance DKK 175/month plus 0.70%, parental contribution 0.86%, unemployment 0.6%, labour-market pension 3%, and mandatory pension 12%. Broadcasting charges differ by age. These are separate categories, not a single universal payroll percentage. 2026 TAKS overview.

The mandatory-pension statute's schedule reaches 12% in 2026; its eligibility and exceptions must be applied. Establish who funds the contribution under the contract before treating the whole amount as an additional employer expense or an employee deduction. Pension Act, section 2 and employer provisions.

Employer-side checklist

TAKS publishes employer charges including industrial sickness 0.05%, wage-guarantee fund 2 per thousand, parental 0.86% and unemployment 0.6%. Its holiday-pay table distinguishes hourly-paid 12% from salaried holiday supplement 1.5%; these are not additive rates for the same worker. 2026 employer charges.

The employer labour-market pension share is 3% of paid A-income, with stated exceptions for foreign workers under FAS and similar arrangements. Check the monthly invoice and classification. TAKS employer AMEG guidance.

Procedure and arithmetic

1. Confirm P-tal, work/residence dates, age, municipality, church membership and employment category.
2. Reconcile each wage payment to the automatic A-income withholding system.
3. Establish each contribution's own base, exemption and payer. Do not assume every percentage applies to the same amount.
4. Reconcile employee net pay, pension remittances, employer invoices and holiday accrual separately.
5. Preserve the actual withholding statement and payment receipts as the primary reconciliation evidence.

Isolated arithmetic tests, assuming an established DKK 30,000 contribution base: 0.86% = 258; 0.6% = 180; 3% = 900; 12% = 3,600; 2 per thousand = 60. Health on an eligible full month with that established base is 175 + 0.7% × 30,000 = 385. These are component checks, not a net-pay result or a claim that all bases are identical.

Boundaries and remaining checks

Reconcile the contract's pension funding, age limits, benefits, holiday-pay basis, nonresident/FAS exceptions and collection dates against their governing rules before releasing payroll. An English overview is insufficient evidence for every statutory exception. Retain the Faroese provision and a reviewed translation where it controls the outcome.

Self-checks and output

• Retain the relevant source version, the applicable period and the facts establishing scope.
• Reconcile every input to the client's records; keep estimates separate from actual amounts.
• Recompute the example and boundary cases before applying the method.
• Record exclusions and unresolved points explicitly. Do not convert a missing source into an exemption.
• Deliver a calculation, evidence list, filing calendar and reviewer questions. Record the exact revision reviewed.

Disclaimer

General tax and accounting reference material only. These drafts have not been professionally attested. A qualified professional in the relevant jurisdiction must check the facts, current law, elections and deadlines before anyone files, pays or acts on an output.

Contributed by Ryan Duguid.