Establishing a business in the Faroe Islands is quick and straightforward; formal registration and structuring usually take only a few days.

Types of Business Entities:

Sole Proprietorship / Private

 Enterprise (FA)

The simplest form: the owner and the business are considered one unit.

• Requires tax registration and a VAT number; a separate company bank account is recommended.
• Best suited for a single owner/operator.
• Offers simplicity but also means personal liability.

Entrepreneurial Company (ÍVF)

A legal entity separate from its founder(s).

• Multiple owners are allowed.
• Requires low capital investment (from DKK 1 up to DKK 49,999).
• Liability is limited to the invested capital.
• Profit cannot be distributed until reserves plus share capital exceed DKK 50,000; 25% of profits must be retained annually.
• Suitable for small companies or ventures with limited startup capital.

Private Company (Sp/f)

A legal entity requiring a higher capital requirement (DKK 50,000).

• Structured for businesses needing more capital and equipment.
• Can have a board and multiple directors.

Limited Company (P/F)

Requires a substantial capital investment (DKK 500,000).

• Designed for larger enterprises.
• Also supports a board and directors.

Partnership (Í/F)

Composed of two or more partners (individuals or entities).

• All partners share joint and several liability for the company’s obligations.