Benefits of Making Business in Faroe Island | Buy & Sell Business

1. BENEFITS OF MAKING BUSINESS IN THE FAROE ISLANDS WWW.MERGERSCORP.COM

2. At MergersCorp M&A International we help our clients confidentially buy and sell privately held businesses, aligning the interests of all parties for mutual success and satisfaction. It is our goal to make the process of either buying a new business or selling your current business as smooth and efficient as possible. We know how important confidentiality is to our sellers and we treat it with the utmost importance. WWW.MERGERSCORP.COM

3. BENEFITS OF MAKING BUSINESS IN THE FAROE ISLANDS WWW.MERGERSCORP.COM

4. Country Overview The Faroe Islands is a self-governing archipelago, part of the Kingdom of Denmark. It comprises 18 rocky, volcanic islands between Iceland and Norway in the North Atlantic Ocean, connected by road tunnels, ferries, causeways and bridges. Hikers and bird-watchers are drawn to the islands’ mountains, valleys and grassy heathland, and steep coastal cliffs that harbor thousands of seabirds. The Faroe or Faeroe Islands (in Faroese Føroyar) are 18 islands in the middle of the North Atlantic Ocean, northwest of Scotland and halfway between Iceland and Norway. The Islands are a self-governing island territory of Denmark, although they politically aim for higher independence. Tórshavn (Faroese pronunciation: [ˈtʰɔurʂhaun]) is the capital and largest town in the Faroe Islands. The town is named after the hammer-wielding Norse god of thunder, Thor, giving it the meaning: Thor’s harbour. Tórshavn is situated on southeast coast of Streymoy, which is the largest of the 18 islands. With a population of about 20,500 people, Tórshavn is one of the smallest capitals in the world. The climate is oceanic and mild, with little variation in temperature and frequent fog and rain; annual precipitation totals 60 inches (1,600 mm). The warm North Atlantic Current keeps the harbours free of ice.

5. Executive Summary The Faroe Islands are an archipelago between the Norwegian Sea and the North Atlantic, about halfway between Norway and Iceland, 320 kilometers (200 miles) north-northwest of Scotland. The islands are an autonomous country within the Kingdom of Denmark. Their area is about 1,400 square kilometers (541 square miles) with a population of 50,322 in October 2017. The Faroe Islands have been a self-governing country within the Kingdom of Denmark since 1948. The Faroese have control of most domestic matters. Areas that remain the responsibility of Denmark include military defense, policing and the justice department, currency, and foreign affairs. 50,000 people live in the Faroe Islands. Faroe Islands has its own language. The language of the Faroe Islands is called Faroese and it is the official language of the Faroe Islands. Faroese is closely related to Icelandic and to Middle Norwegian, the language used in Norway around 1400. Hence, Faroese is a Nordic language which derives from the Norsemen who settled the islands more than thousand years ago.

6. Introduction – Doing business in The Faroe Islands Doing business in Faroe Islands is easy if you’re part of Nordic, EU and Schengen Countries. Visiting the territory for less than 90 days will require a valid visa. Travelers from the Schengen Area do not need a visa- just a passport or a national ID card will do. But if you’re from other nationals, you must apply for a visa at the nearest embassy of Denmark. The conditions for obtaining a visa for the Faroe Islands are similar to the conditions for obtaining a visa for Denmark. However, you can’t just enter both countries with a visa that is only intended for one country unless it is clearly stated in the terms. Some challenges that await you are insufficient workforce (because of emigration), limited reach (due to its geographic location such as no electric connections to other areas), weather conditions (like cold climate) and language barrier (though few of them can speak English). To sell your business in Faroe Islands, register an account with Easy Buy Sell Business and start posting your Faroe Islands business for sale to expose to potential buyers to contact you directly. Totally free business for sale ads listing and no fees involved.

7. Conducting business in The Faroe Islands Sole proprietorship or private enterprise The Faroese shorthand term for sole proprietorship or private enterprise is FA. In a private enterprise the founder as a private individual and the company are considered as one unit. The founder needs to be registered to pay taxes (certain exceptions can be made, i.e. if the company’s turnover is not particularly high), as well as with a VAT-number. In addition, it is also a good idea to create a company account. There are certain advantages and disadvantages to sole proprietorship of a company. As such, it is of uttermost importance to be conscious of what kind of business one is engaged in, as perhaps a different kind of company might be better suited for one's business needs. Sole proprietorship or private enterprise is most fitting for companies or businesses founded and run by one single individual. Limited company The Faroese shorthand term for a limited company is P/F. The investment demand is DKK 500.000, and in many ways this kind of company resembles the above-mentioned Sp/f. A limited company is well suited for larger companies that require more capital than private companies.

8. Taxation in The Faroe Islands If an employee has limited tax liability in the Faroe Islands, the income earned in the Faroe Islands is taxed at a rate of 42 per cent, with no deductions. Pensions from the Faroe Islands are liable to tax in the Faroe Islands. All citizens of the Faroe Islands are subject to personal taxation. The government tax rate on incomes up to DKK 500,000 is 20%. Incomes higher than this pay a fixed amount, always resulting in a higher percentage. Tax on interest on deposits in a Faroese bank is withheld at source by the bank. Individuals with other capital income than interest from deposits in Faroese banks have to file a capital income tax return. The tax rate on capital gains income is 35 percent.The corporate tax rate in the Faroe Islands stands at 18%.

9. Trade In 2014 the Faroe Islands had a trade surplus of 401 million DKK, a figure that rose to 1.43 billion DKK in 2016. As of 2016, the Faroe Islands mainly imported goods from Denmark (2,467 million DKK), Germany (877 million DKK), and Norway (610 DKK). Imports in Faroe Islands decreased to 642427.50 DKK Thousand in November from 732142.10 DKK Thousand in October of 2019. Faroe Islands Imports - data, historical chart, and calendar of releases - was last updated on February of 2020 from its official source. In 2017, Faroe Islands imported mostly: machinery and transport equipment (31 percent of total imports), of which road vehicles (8 percent), transport equipment, n.e.s. (7 percent) and general industrial machinery and equipment, n.e.s., and machine parts, n.e.s. (5 percent); food and live animals (18 percent), of which feeding stuff for animals (5 percent) and fish, crustaceans, molluscs and aquatic invertebrate (4 percent); manufactured goods (15 percent), of which metals (5 percent); petroleum, petroleum products and related materials (13 percent); miscellaneous manufactured articles (10 percent); and chemicals and related products (8 percent).

10. Banking in The Faroe Islands The banks offer debit and credit cards for withdrawal at cashpoints and making purchases. If the bank assesses your financial standing to be satisfactory, you may be offered a debit card which allows the owner to withdraw amounts higher than the deposit. An interest will be charged for such amounts. A Dankort can be issued for withdrawal and payment within the Danish Realm, and a Visa/Dankort for withdrawal and payment in most countries around the world. Normally, the bank only offers Dankort and Visa/Dankort to customers known to the bank for some time. All banks offer online banking which allows you to transfer money and pay bills within the Danish Realm without paying service fees. Online banking is the easiest and cheapest way to transfer money, but you can also ask the post office or the banks to pay bills or transfer money for you. In this case you will have to pay a service fee. The banks offer mortgage loans for buying real estate property and loans for other purposes, e.g. for purchasing a car. The bank will make an assessment of your financial standing before granting a loan.

11. Our M&A Process NEGOTIATION & CLOSE POST MERGER INTEGRATION (PMI) INTEGRATION (PMI) POST MERGER TARGET APPRAISAL APPROACH DUE DILIGENCE Key Areas  Target & market analysis;  Initial assessment of synergies & value drivers;  Indicative valuation;  Go or No-Go decision;  Preparation of transaction documents (NDA – Non- disclosure Agreement/LOI- Letter of Intent);  Select Transaction team;  Appoint advisors;  Consider funding ability.  Initial approach letter;  Signing of NDA;  Prepare & share initial information requests;  Formulation of LOI (Letter of Intent) & possible negotiations;  Initial meeting and Q&A;  Circulate information on the Target to the Transaction team.  Set scope of due diligence;  Set up VDR (virtual data room);  Coordinating of due diligence, further meetings and Q&A sessions;  Consider points relevant to the Post-Merger (PMI) phase;  Revisit indicative valuation & prepare detailed valuation based on due diligence findings;  SPA negotiations with the seller;  Development of final structure (share/asset deal) and final valuation;  Approvals;  Signing of SPA & Close.  Consider the extent of integration;  Development of 100 Day PMI Plan;  Consider short & long term objectives;  Estimate requirements to capture synergies;  Determine resource needs & optimal allocation. Parties Involved  CFO;  Head of M&A;  Accountants;  Corporate finance advisors;  Consultants.  Senior management;  CEO, CFO, CTO;  Strategy director;  Head of M&A;  Head of Business Development;  Consultants.  Company general counsel;  Lawyers;  Senior management.  Company general counsel;  Lawyers;  Senior management/HR. 11 © Midaxo 2018 www.midaxo.com

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13. MergersCorp.com The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. Member firms of the MergersCorp network of independent firms are affiliated with MergersCorp International. MergersCorp International provides no client services. No member firm has any authority to obligate or bind MergersCorp International or any other member firm vis-à-vis third parties, nor does MergersCorp International have any such authority to obligate or bind any member firm. Copyright © 2020 MergersCorp International. All rights reserved. 13 © Midaxo 2018 www.midaxo.com