Taxation in North Macedonia
The taxation system in North Macedonia is a complex structure that plays a crucial role in the country’s economic approach, ensuring a balance between generating revenue and promoting growth and investment. This system includes various taxes, each regulated by intricate rules and rates. To effectively manage finances and ensure compliance, it is vital for businesses, investors, and individuals to have a thorough comprehension of this environment.
Taxation system
North Macedonia’s taxation system is crafted to harmonize with national fiscal strategies and global commitments, providing a structured but flexible method of taxation. This system likely incorporates a mix of flat rates, progressive tax scales, and specific exemptions, mirroring the nation’s economic aims and social goals. Grasping the complexities of these tax systems is crucial for maximizing financial results, maintaining compliance, and taking advantage of opportunities within the legal structure.
Capital gains tax
The taxation system in North Macedonia is determined by an individual’s residency status. Residents for tax purposes are subject to taxation on their global income, whereas non-residents are only taxed on income earned within North Macedonia. The typical personal income tax rate is 10% for the majority of income types, including capital gains, whereas a 15% rate is imposed on winnings from games of chance. Additionally, a special 70% tax rate is enforced on income that cannot be verified in terms of its source.
Corporate taxation
North Macedonia has a uniform corporate income tax rate of 10%. Companies that are residents are taxed on their global income, whereas non-resident companies are taxed on income sourced from North Macedonia. The tax base is calculated as the difference between income and expenses, modified for specific non-deductible expenditures. Branch offices are taxed in the same manner as subsidiaries.
Personal income taxation
In North Macedonia, personal income is typically taxed at a flat rate of 10%, applicable to various types of income such as earnings from employment, self-employment, royalties, rental income, capital gains, and other sources. Income derived from games of chance is subject to a 15% tax rate. Additionally, unexplained income, for which the source cannot be established, incurs a severe tax rate of 70%.
Dividend taxation
Individuals are taxed at a rate of 10% on dividends they receive. However, dividends exchanged between resident companies are not subject to tax. The tax framework aims to ensure that individuals are taxed on their dividend earnings, while encouraging corporate dividend transactions domestically through tax exemptions.
Property tax
In North Macedonia, property tax is levied at the municipal level. The tax rate typically falls between 0.1% and 0.2% of the property’s value, varying according to the specific municipality. Taxable properties consist of real estate, including land and buildings. Local authorities assess the value of the property, and tax liabilities are determined based on this assessed value.
Inheritance taxation
In North Macedonia, the inheritance tax is applied at rates between 2% and 5%, based on the level of inheritance. Immediate family members typically face a lower rate, whereas more distant relatives are charged higher rates. The tax framework is designed to consider multiple elements, including the connection between the heir and the deceased.
International taxation
North Macedonia imposes a 10% corporate tax rate on the global income of resident companies. In contrast, non-resident companies are taxed solely on income generated within North Macedonia. The tax framework guarantees that both residents and non-residents are taxed on their business operations within the country, while double tax treaties offer relief to prevent double taxation.
Cryptocurrency taxation
The National Bank of North Macedonia has announced that cryptocurrencies are illegal, which prohibits their trading and usage. As a result, there is no established tax system for cryptocurrency transactions. The government has adopted a position against digital currencies, affecting both locals and foreigners.
VAT system
In North Macedonia, VAT is applied to the sale of goods and services, in addition to imports. The typical VAT rate is set at 18%. A lower rate of 5% is designated for specific items, including basic food products, water, and pharmaceuticals. Furthermore, a 10% reduced rate is applicable to food and beverages consumed immediately, as well as to certain other food items. Exports are subject to a VAT rate of zero.
Our taxation solutions
In a tax landscape that is continuously changing, expert support is essential. Our firm provides a range of specialized tax services specifically designed to address the varied requirements of individuals, corporations, and investors in North Macedonia. We aim to manage the intricacies of the tax code, reduce liabilities, and guarantee complete adherence to regulations.
- Personal tax advisory: Tailored advice to minimize tax exposure while ensuring legal compliance.
- Corporate tax strategy: Comprehensive planning to maximize tax efficiency and leverage incentives.
- Capital gains optimization: Expert guidance to manage and reduce taxes on capital gains.
- International tax planning: Advanced strategies for optimizing cross-border tax outcomes.
- Cryptocurrency advisory: Compliant tax strategies for both individual and corporate crypto activities.
- Inheritance and estate planning: Strategic planning for efficient wealth transfer and reduced inheritance taxes.
- VAT compliance: Full-service support for VAT registration, reporting, and optimization.
Book a consultation
Navigating the intricate realm of taxation requires professional guidance to create a considerable impact. Reach out to us today to arrange a consultation with our team of tax specialists. We will collaborate with you to create a customized tax strategy that meets your goals and guarantees complete adherence to the regulatory framework in North Macedonia.
Disclaimer
Tax laws and regulations are in a continual state of flux and can differ depending on personal circumstances. The information presented here serves as general guidance and may not represent the latest changes. It is strongly advised to seek the assistance of a qualified tax professional for tailored and current advice relevant to your specific situation.