Debt Restructuring issues
The Faroese Board of Appeal has the authority to restructure debt owed by individuals to the Treasury. Only private individuals can apply for debt restructuring. This means that private limited companies, public limited companies, and similar entities cannot apply to the Board for debt restructuring.
In general, the same considerations apply as in bankruptcy proceedings before the Probate Court. This means, for instance, that the debtor must prove they are unable to fulfil their obligations to the Treasury, and that it is unlikely they will be able to do so in the coming years. A significant discrepancy must be documented between the debtor’s ability to pay and the debt owed to the public sector. Restructuring under this law must be considered a last resort to resolve debt issues with the Treasury. The Faroese Board of Appeal may fully or partially forgive or restructure the debt. If the applicant does not meet the conditions for restructuring, the Board may grant a deferral of payment.
The Faroese Board of Appeal can only restructure the following types of debt:
- National income tax and labour market contributions (AM-gjald)
- VAT
- Customs duties
- Payroll tax
- Production levies
- Business loans and guarantees provided by the Faroese Government
- Student loans from Studni
- Interest and other charges related to the principal debt
Relevant Considerations
Applications for debt restructuring must be submitted using the designated application form, which can be downloaded from this website. It is essential that the Board receives all relevant information and documentation in order to process the application. A guide to the application form and the necessary supporting documents can also be downloaded from this site.
Legal Basis
The activities of the Faroese Board of Appeal are regulated by Parliamentary Act No. 147 of 25 November 2021 on the Faroese Board of Appeal and Executive Order No. 161 of 14 December 2021 on its Rules of Procedure.
The rules for debt restructuring are specified in Parliamentary Act No. 29 of 8 April 2005 on the Restructuring of Tax, VAT, and Customs Debt, etc.
Faroese Board of Appeal
In debt restructuring cases, the Board is generally composed of the Director and two legal professionals. The Board may seek advice from an expert during the preparation of a case. In addition, the Board may include one or more experts in its composition.
Expert advice in debt restructuring cases is usually provided by individuals with expertise in accounting, business operations, or banking. A list of the experts affiliated with the Board of Appeal can be found on the website. Click here to view the experts.
Contact
Applications for debt restructuring should be submitted to:
Føroya Kærustovnur
Undir Hornabakka
Postboks 45
110 Tórshavn
or by email to: fks@fks.fo
