Fuel tax exemption to end as VAT returns to petrol and diesel

Aksel V. Johannesen, Faroese Minister of Finance, confirmed on Friday that the temporary exemption from value-added tax (VAT) on petrol and diesel will not be extended beyond its current expiry date of 31 July 2026.

Johannesen stated that the government does not intend to prolong the VAT-free period on fuels, which was introduced as a temporary measure when global oil prices rose. The exemption was approved by the Løgting, the Faroese parliament, on 16 May 2026 and was set to expire on 31 July unless extended.

The minister’s confirmation follows consultations with fuel retailers and parliamentary leaders, which indicated no plans to amend the legislation before the exemption lapses automatically at the end of the month.

From 1 August 2026, VAT at the standard rate will be applied to all petrol and diesel sold at Faroese service stations, resulting in a corresponding increase in pump prices.