Faroe Islands

410. The Faroe Islands can legally issue the following five types of rulings within the scope of the transparency framework: (i) preferential regimes1 and (ii) permanent establishment rulings.

411. For the Faroe Islands, past rulings are any tax rulings issued prior to 1 September 2019.

412. In the prior year peer review report, it was determined that there is no obligation for the Faroe Islands to conduct spontaneous exchange information on past rulings. Therefore, the Faroe Islands was recommended to put in place an effective information gathering process to identify all relevant past rulings and all potential exchange jurisdictions as soon as possible.

413. During the year in review, the Faroe Islands did not implement steps to identify past rulings or to identify potential exchange jurisdictions, and therefore the recommendation remains in place.

414. For the Faroe Islands, future rulings are any tax rulings within scope that are issued on or after 1 September 2019.

415. In the prior year peer review report, it was determined that the Faroe Islands had no processes in place for the record keeping of rulings for the purposes of the transparency framework. Therefore, the Faroe Islands was recommended to put in place an effective information gathering process to identify all relevant future rulings and all potential exchange jurisdictions as soon as possible. The Faroe Islands intended to implement guidelines and practices to make sure the necessary information to meet the requirements of the transparency framework is required in all cases.

416. During the year in review, the Faroe Islands identified one future ruling but it did not implement steps to identify past rulings or to identify potential exchange jurisdictions, and therefore the recommendation remains in place.

417. In the prior year peer review report, it was determined that the Faroe Islands did not yet have a review and supervision mechanism under the transparency framework. During the year in review, the Faroe Islands did not implement such a review and supervision mechanism, and therefore the recommendation remains in place.

418. The Faroe Islands is recommended to put in place an effective information gathering process to identify all relevant past and future rulings and all potential exchange jurisdictions and to implement a review and supervision mechanism, as soon as possible (ToR I.A).

419. The Faroe Islands has the necessary domestic legal basis to exchange information spontaneously. The Faroe Islands notes that there are no legal or practical impediments that prevent the spontaneous exchange of information on rulings as contemplated in the Action 5 minimum standard.

420. The Faroe Islands has international agreements permitting spontaneous exchange of information, including being a participating jurisdiction to (i) the Multilateral Convention on Mutual Administrative Assistance in Tax Matters: Amended by the 2010 Protocol (OECD/Council of Europe, 2011[4]) (“the Convention”), (ii) the Nordic Convention on Assistance in Tax Matters and (iii) bilateral agreements in force with four jurisdictions.2

421. In the prior year peer review report, it was determined that the Faroe Islands is still developing a process to complete the templates on relevant rulings, to make them available to the Competent Authority for exchange of information, and to exchange them with relevant jurisdictions. Therefore, the Faroe Islands was recommended to develop a process to complete the templates for all relevant rulings and to ensure that the exchanges of information on rulings occur in accordance with the form and timelines under the transparency framework going forward.

422. During the year in review, the Faroe Islands did not implement such a process, and therefore the recommendation remains in place.

423. As no exchanges took place in the year of review, no data on the timeliness of exchanges can be reported.

424. The Faroe Islands is recommended to develop a process to complete the templates for all relevant rulings and to ensure that the exchanges of information on rulings occur in accordance with the form and timelines under the transparency framework going forward (ToR II.B).

425. As there was no information on rulings exchanged by the Faroe Islands for the year in review, no statistics can be reported.

426. The Faroe Islands does not offer an intellectual property regime for which transparency requirements under the Action 5 Report (OECD, 2015[1]) were imposed.

References

[3] OECD (2021), BEPS Action 5 on Harmful Tax Practices - Terms of Reference and Methodology for the Conduct of the Peer Reviews of the Action 5 Transparency Framework, OECD Publishing, Paris, http://www.oecd.org/tax/beps/beps-action-5-harmful-tax-practices-peer-review-transparency-framework.pdf.

[1] OECD (2015), Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance, Action 5 - 2015 Final Report, OECD/G20 Base Erosion and Profit Shifting Project, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264241190-en.

[2] OECD (ed.) (2017b), Harmful Tax Practices - 2017 Progress Report on Preferential Regimes, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264283954-en.

[4] OECD/Council of Europe (2011), The Multilateral Convention on Mutual Administrative Assistance in Tax Matters: Amended by the 2010 Protocol, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264115606-en.

Notes

← 1. With respect to the following preferential regimes: 1) Tonnage tax regime; 2) International shipping regime.

← 2. Parties to the Convention are available here: www.oecd.org/tax/exchange-of-tax-information/convention-on-mutual-administrative-assistance-in-tax-matters.htm. Parties to the Nordic Convention on Assistance in Tax Matters are Denmark, Finland, Iceland, Norway and Sweden. The Faroe Islands also has bilateral agreements with Greenland, India, Switzerland and the United Kingdom. The bilateral agreements with Switzerland and India are the Danish tax treaties, which are territorially extended to include the Faroe Islands.

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