Following its independence in 2008, Kosovo has made significant changes in social and economic development. Despite the challenges of the past, Kosovo has undertaken all efforts through internal and external policies to create a favorable situation for economic growth and investor engagement. This article will provide information about business activity in Kosovo which aims to help everyone who has intentions of investing in Kosovo.
Kosovo’s Economic Landscape
In 2022, despite the strong effect the COVID – 19 pandemic had a on its economy, Kosovo experienced a GDP growth rate of 3.5 percent primarily fueled by exports and private consumption. Kosovo’s main exports span various industries, including, agriculture, mining, and construction. The country’s main exports are scrap metal, nickel, lead, and mattresses. Furthermore, Kosovo provides convenient access to the European Union (EU) via air, road, railway transport, and three seaports.
Currently the business environment in Kosovo is getting really competitive compared to other countries in the region, by offering foreign investors an appealing and welcoming environment thanks to advantages such as low tax rates and tax system, rather straightforward business registration, and transparent laws on foreign investment. For example, an individual can register an LLC within 2 days, free of charge with zero chartered capital.
Moreover, Kosovo has drawn substantial foreign interest, with numerous international companies investing there. Many are enticed by Kosovo’s youthful workforce, affordable labor, nearness to the EU market, and its natural resources. Additionally, Kosovo also offers favorable terms for products entering the EU market through a Stabilization and Association Agreement (SAA).Top of Form
Investment Advantages and Legal Regulations in Kosovo
The laws and regulations in Kosovo align with global standards for encouraging and safeguarding investments. The country maintains a straightforward corporate income tax rate of 10 percent. In August 2022, with support from USAID, Kosovo introduced a Commercial Court. This court is designed to handle business disputes fairly, swiftly, and predictably, aiming to enhance the business environment by minimizing corruption risks and fostering trust among investors and the private sector in the judicial system. In its inaugural year, the court has already shown promising results, resolving business cases with greater efficiency and transparency.
Kosovo has a steady monetary policy. It is unique because it is one of the few countries outside the EU that uses the Euro as its official currency. This move has cut down on exchange rate worries and made trading and investing easier by lowering transaction costs.
The country’s location in the center of the Balkans makes it a gateway to the Balkans and CEFTA members. Together, these areas make up a market of around 28 million people, providing ample opportunities for trade and business.
In addition, Kosovo has a young, multilingual workforce, with many speaking English and German. Half of its population is under 30 years old. Kosovo also offers competitive labor costs and tax policies. With an average monthly salary of €371, it ranks among the lowest in Europe.
Investment Opportunities in Kosovo
There are several sectors that provide investment opportunities in Kosovo, including, the energy, health and the mining sectors.
Energy Sector – Currently Kosovo mainly relies on coal to fuel its power plants, but the country is wanting to expand its energy production and broaden its energy sources, especially by embracing renewable energy. Moreover, in February 2023, the EU unveiled a €75 million Energy Support Package aimed at broadening subsidy and incentive programs to enhance energy efficiency, particularly targeting vulnerable households.
Health Sector – Kosovo needs better basic and special medical care, more doctors and nurses, hospitals, and medicine. Right now, most health services are run by the government, but more and more private companies are getting involved. Many people from Kosovo go to nearby countries for medical help. This situation could be a good chance for investors from outside to invest and have high returns by offering local solutions.
Mining and Minerals – In the past, mining played a big role in Kosovo’s economy, but it is not as important anymore because there hasn’t been enough investment in equipment, buildings, and new mines, even though the country has evidence of critical minerals. However, there is a good opportunity for foreign investors in this sector, the Independent Commission of Mines and Minerals (ICMM) has given out more than 500 licenses for exploring and mining since 2007.
As Kosovo’s economy continues to grow, there will be an increasing demand for specialized services in different sectors. This includes the need for support with finances, legal matters, building and design, software development and graphic design. As businesses expand and new ventures emerge, the demand for these services will grow to ensure smooth operations and compliance with regulations. This presents opportunities for skilled professionals and companies to contribute to Kosovo’s economic growth and development.
It is important for individuals, before proceeding with investment, to be aware of the legal, financial and tax implications. Our firm offers comprehensive knowledge and experience in the international taxation realm. Contact us, and we would be happy to arrange an introductory meeting with you.
