Gross income is the total income before subtraction of taxes and other statutory deductions.
Gross income statements are compiled annually for everyone aged 15 and over.
- Income is money received through work or through proceeds from one’s own business, state benefits such as pension, unemployment benefits, interest subsidies and student grants, plus capital gains such as interest and dividends.
- Net income is income remaining after taxes and other statutory charges have been deducted.
- Median income is the income amount dividing the population into two equal groups, with half of the population having an income higher than this amount and the other half lower.
- Average income is calculated as a normal average.
- The income in a given percentile group is the average income of the person in the percentile group.
See also Net income, Equivalent income, Income distribution and Risk of poverty.
Since net income, gross income and taxes are calculated separately, there may be inaccuracies in the difference between taxes and net and gross income. The reason for this is that although most persons feature in the same quantile in a given year, this is not always the case. For example, there are instances in which a person with a high income may pay little or no tax as a result of unusually high allowances carried over from the previous year.
Income figures have a lag of approx. one year, since income statistics are based on tax lists compiled by the Faroese tax authority (TAKS), which is not completed until just over a year after the registration year when all income assessments have been concluded.