The Faroe Islands have a well-developed and closely regulated legal framework for business activities. Entrepreneurs from the Nordic countries or the European Union will generally find this familiar, but for newcomers from regions with more informal or lightly regulated systems, the level of regulation may come as a surprise.

Most business activities are subject to laws, executive orders, and detailed regulations covering areas such as company registration, taxation, employment, health and safety, environmental protection, and sector-specific requirements. Permits, documentation, inspections, and reporting obligations are common and must be taken seriously.

Regulation is consistently enforced, and compliance is expected from the outset. Informal arrangements or unwritten practices usually have little legal standing. While the system is strict, it is also transparent and predictable, designed to ensure fair competition, legal certainty, and trust in the marketplace.

Understanding and planning for regulatory compliance is therefore essential for anyone wishing to operate a business on the Faroe Islands.