Nimrod Yaron Albania

Digital Nomad Taxation in Montenegro

BananaBlitz — Sun, 15 Dec 2024 15:45:31 +0000

One of the most public cultural and economic trends of the 21st century is digital nomadism. Driven by the trend of globalization it determines the evolution of technology, mobility, and connectedness in how work, life, and travel have transformed in people. To address the rising need for new regimes that regulate nomadism, numerous countries in the world have adopted limited visa programs and revised taxation rules to meet the requirements of digital nomads. Montenegro is among those countries and this article will have a closer examination of digital nomads’ tax situation in Montenegro.

Tax Resident in Montenegro

An individual is considered a resident of Montenegro for tax purposes if they meet any of the following criteria: they spend at least 183 days within a tax year in Montenegro, have a domicile in the country, or maintain their center of personal and economic activities there. Additionally, individuals sent abroad to work on behalf of a Montenegrin resident (whether a legal entity or a natural person) or an international organization are also classified as residents.

Definition of a Digital Nomad in Montenegro

A digital nomad is a foreigner who is employed or performs work electronically for a foreign company or his own company that is not registered in Montenegro.

Digital Nomad Tax Rates

In Montenegro, digital nomads are governed by the law of tax on personal incomes of the country. The first €8,400 of professional income is tax-free. Income in the range from €8,400 to €12,000 is taxed at 9% and income above €12,000 at 15%. Investment income, including dividends and capital gains, is subject to a uniform 15% tax rate. Further, there are local surtaxes imposed outside these federal tax rates and where the rate of surtax changes based on the municipality of the taxpayer. These tax rules provide a structured yet competitive system for digital nomads working in Montenegro.

To read more about taxes in Montenegro, click here.

Residency as Digital Nomad in Montenegro

The Law on Foreigners in Montenegro defines the regulations governing entry and stay in/by foreigners, as well as their employment in the country. According to this legal act, a foreigner working remotely for a foreign company or independently (unemployed, no registration in Montenegro) can apply for temporary residence permit provisionally for the category of digital nomads.

In order to get a digital nomad residence permit in Montenegro, the applicant is required to submit its application at the office of the Ministry of Internal Affairs at its place of residence. The application is finalized on a designated form either in Montenegrin or in English and for that application applicants need to submit biometrical features, i.e., photograph, fingerprints and a digitized signature. Necessary documents are proof of financial means, housing, health, insurance, current passport or ID, a spent criminal history, and a clean history of remote work of an employing foreign business or personal activity in an area different from Montenegro.

The permit, which takes only 40 days to be issued, has validity for a maximum of 2 years and can be renewed for another 2 years according to the submission’s requirement no later than 30 days prior to the expiry date of the permit. Applicants can stay in Montenegro until their application is processed, provided that such an application is submitted before the end of the 90-day single entry-restriction period. Family reunification is allowed for spouses and minor children.

To read more on the digital nomad experience in Montenegro, click here.

Additional Relevant Information

Living in Montenegro on a digital nomad visa provides a perfect balance of work and relaxation. With its affordable cost of living and welcoming locals, Montenegro is a top choice for remote workers worldwide. If a foreigner who has the status of a digital nomad establishes a company in Montenegro or registers as an entrepreneur in accordance with the law regulating the forms of performing economic activities and their registration, he or she loses the status of a digital nomad.

To read about tax benefits in Montenegro, click here.

If you are considering residing in Montenegro as a digital nomad, it is recommended to evaluate all the legal and financial aspects with legal and/or financial advisors. Our firm specializes in international taxation, and our team is ready to assist with any related matters. If needed, we can connect you with top professionals to support your business activities in Montenegro. Please feel free to contact us.

הפוסט Digital Nomad Taxation in Montenegro הופיע לראשונה ב-Nimrod Yaron Albania.

Strategic Investments in Kosovo

BananaBlitz — Sun, 24 Nov 2024 17:34:06 +0000

Kosovo is actively promoting itself as an attractive location for strategic investments to encourage economic and social development. The government has worked actively to promote projects that will lead to economic growth, employment, innovation, and hence an increase in citizens’ quality of life. These priority sectors consist of such areas as energy, infrastructure, manufacturing, health, and others. Using incentives and straightforward procedures, Kosovo aims to attract domestic and foreign investors to drive its growth.

Encouraging Strategic Investments for Kosovo’s Economic and Social Growth

The status of a strategic investor or strategic investment project in Kosovo can be obtained by projects that meet criteria and procedures defined by law. This status is dedicated to projects in priority sectors of economic and social development, which contribute to economic growth, job creation, the implementation of new technologies, the improvement of Kosovo’s economic competitiveness, the increase of exports, the reduction of trade deficits, and the overall improvement of citizens’ well-being and living conditions. The included sectors are energy, infrastructure and mining, transport and telecommunications, tourism, manufacturing, agriculture and the food industry, healthcare, industrial and technological parks, as well as wastewater and waste management. In this way, this status aims to encourage projects with significant positive impacts on Kosovo’s economy and society.

Process for Applying and Engaging in Strategic Investment Projects in Kosovo

Investors, who may be foreign, domestic, or public authorities, can apply for strategic investor status by submitting a written request to the Investment Agency. The Government of Kosovo may also invite investors for strategic projects through public tenders or engage in direct negotiations when permitted by international agreements. Priority projects are drafted by the Government based on developmental interests and are published to be implemented by strategic investors. Decisions and calls for investments are published on the Government’s official website to ensure transparency.

Tax Benefits and Exemptions for Businesses in Kosovo

In Kosovo, dividends received by both residents and non-residents are not taxed. Businesses that purchase new heavy machinery can get a one-time 10% tax deduction when the machinery is first used in Kosovo, though they cannot use this if they already benefit from other tax breaks. Companies that sponsor sports can receive a tax credit of up to 30%, and those sponsoring youth or cultural activities can get a 20% tax deduction. Additionally, VAT is exempt from the import of manufacturing equipment and raw materials. Raw materials produced in Kosovo are also temporarily VAT-exempt until 2028. Businesses that earn income from outside Kosovo and pay tax abroad can receive a tax credit for those foreign taxes, up to the Kosovo tax rate. In addition, a government-affiliated website has been established to guide interested parties on how to establish a business in Kosovo, simplify the employment regulations, and navigate the strategic investment framework.

To read more about tax incentives in Kosovo, click here.

Why Invest in Kosovo?

Kosovo offers numerous opportunities for investment across various sectors. Its economy has shown strong economic performance in terms of GDP growth, thanks to export growth and private consumption. As energy production and some degree of stressed consideration towards alternative energy production increase, it provides an investment opportunity, especially in power plants and energy storage facilities. Mining remains important in Kosovo since Kosovo still possesses large quantities of critical minerals, such as nickel and manganese, but exploitation is still limited, both because of the inadequacy of being able to carry out a rapid review of the exploration licenses. The telecommunication and IT sector is in an expansion phase and Kosovo is a regional hub of IT-enabled activity. The healthcare sector, strength of quality care and infrastructure, represents a cash-rich business opportunity for private sector investments. Waste management and recycling are still on the road to maturity, and these can evolve even further by the EU policy measures addressed to Kosovo. Along with the economic development, increasingly sophisticated specialized services (e.g., legal service, commercial service, service design service) are in demand. Each of these impacts, along with the pro-West orientation of Kosovo’s population and the stability of its economy makes Kosovo attractive from the point of view of investing.

To read more about Kosovo, click here.

If you are interested in investing in Kosovo, it is advisable to consult with a professional on investment opportunities that best suit your needs. Our firm specializes in international taxation, and our team is ready to assist with related matters. We can connect you with top professionals to support your business activities in Montenegro if needed. Please feel free to contact us.

הפוסט Strategic Investments in Kosovo הופיע לראשונה ב-Nimrod Yaron Albania.

Foreign Direct Investments in Bulgaria

BananaBlitz — Sun, 24 Nov 2024 17:27:29 +0000

Foreign Direct Investments (FDA) in Bulgaria have seen important changes over the years. The country offers a welcoming environment for investors, including low taxes, affordable labor, and political stability. Bulgaria’s location in the European Union and access to key markets make it an attractive destination for business. This article will provide a comprehensive overview of Foreign Direct Investments in Bulgaria.

Foreign Direct Investments in Bulgaria: Trends, Growth, and Key Drivers

FDAs in Bulgaria have undergone significant changes. The highest level of investments peaked in 2007, reaching an all-time high of 13.88 billion United States Dollars. By the end of 2022, the cumulated stock of FDAs in the country reached 57.3 billion US dollars which corresponds with 64.4 percent of the country’s Gross Domestic Product. Foreign Direct Investment demonstrated in 2023 a very considerable increase, 28.1%, reaching 3.37 billion Euros and 3.62 billion USD, according to the Bulgarian Central Bank. Switzerland was the top importer of Foreign Direct Investment in 2023 at 396 million U.S. dollars, and Belgium followed at $354 million U.S. dollars. The technology, media, and telecommunications sectors attracted the most investment, with construction, real estate, and financial services also drawing significant interest. These developments identify a recovery in the foreign direct investment that is being fueled by individual countries and specific sectors.

Bulgaria’s Attractive Investment Climate

Bulgaria is an attractive destination for foreign investment because of a low corporation income tax and low labor costs. Foreign investments are not screened by the government, and there are no restrictions on foreign ownership or control of companies. Foreign investors receive the same treatment as local companies. The Invest Bulgaria Agency (IBA) assists foreign investors through information, administrative, and guidance instruments on incentive schemes. Bulgaria offers several advantages for investors. The cost of living is also quite low, an attractive option for business people and expatriates. As a member of the European Union, Bulgaria benefits from regular reform cycles that align with EU standards. The country has a strong defense against external economic shocks and enjoys political stability, which further supports a favorable investment climate. Bulgaria is known for its prudent tax regulations, earning a positive reputation in this regard. Additionally, the country has maintained a budget surplus since 2013. Its strategic location enhances its appeal, with easy access to major markets across North Africa, the Middle East, and the European Union, facilitated by the Danube River, five Pan-European corridors, and four key airports.

To read more about Bulgaria click here.

Supporting Foreign Investment

Invest Bulgaria Agency has a very important role in assisting investors, offering support both during the initial investment phase and throughout the process of establishing a business. The 2004 Law for the Promotion of Investment among foreign and domestic investors guarantees equal treatment. As a priority for economic growth, the government has made industrial production and the high-tech industry a strategic focus and has provided numerous incentives, such as land acquisition, infrastructure building, and workforce training through public-private partnership mechanisms. These activities place Bulgaria as a potential destination for foreign direct investments, in the field of high-tech and industrial.

To read more about investment opportunities in Bulgaria click here.

If you are interested in investing in Bulgaria, it is advisable to consult with a professional on investment opportunities that best suit your needs. Our firm specializes in international taxation, and our team is ready to assist with related matters. We can connect you with top professionals to support your business activities in Bulgaria if needed. Please feel free to contact us.

הפוסט Foreign Direct Investments in Bulgaria הופיע לראשונה ב-Nimrod Yaron Albania.

Comparing Withholding Taxes in the Western Balkan

BananaBlitz — Sun, 03 Nov 2024 17:42:30 +0000

Withholding taxes in the Balkans vary significantly by country, and they typically apply to payments made to non-residents on income types like dividends, interest, royalties, and service fees. This article aims to provide an overview of withholding taxes in several Western Balkan countries, specifically in Albania, North Macedonia, Kosovo, and Montenegro. It is designed to offer readers, including those considering relocation or investment, a comprehensive and insightful understanding of withholding taxes and benefits available in each of these countries.

Overview of Withholding Taxes

Albania

Dividends

Dividends paid by an Albanian company to non-residents are subject to an 8% withholding tax, though a lower rate may apply under an applicable tax treaty.

Interests

Interest payments from Albanian residents to non-residents are subject to a 15% withholding tax, which may be reduced if an applicable tax treaty provides a lower rate.

Royalties

Royalties paid by Albanian residents to non-residents are subject to a 15% withholding tax, with the possibility of a lower rate if an applicable tax treaty allows.

To read more about Albania click here.

North Macedonia

Dividends

In North Macedonia, dividends paid to non-residents are taxed at a 10% withholding rate. Dividend income includes any profit earned from shares or similar ownership rights in a company where the profit isn’t being used to cover debts. It also includes profit from other corporate rights that are treated similarly to share income for tax purposes in the country where the distributing company is based.

If the foreign recipient of the dividend is from a country that has a double tax treaty with North Macedonia, this withholding tax rate may be reduced.

Interests

In North Macedonia, interest payments to non-residents are subject to a 10% withholding tax. This tax applies to income earned from any debt claims, which means any funds owed, whether or not they are backed by a mortgage or linked to the debtor’s profits. It covers income from bonds or other securities (including bonuses attached to them) and income from loans.

However, if the recipient is from a country that has a double tax treaty with North Macedonia, this 10% withholding tax may be reduced.

Royalties

In North Macedonia, royalties paid to non-residents are subject to a 10% withholding tax. This tax applies to payments for the use of intellectual property rights, which include things like copyrights on literature, art, or scientific works, as well as cinematography, software, patents, trademarks, designs, models, plans, trade secrets, and “know-how” (specialized knowledge or expertise).

If the recipient of the royalties’ lives in a country that has a double tax treaty with North Macedonia, this withholding tax rate may be lowered.

To read more about North Macedonia click here

Kosovo

Dividends

Dividends are exempted from withholding tax.

Interests

Interest payments to non-resident corporations are subject to a 10% withholding tax. However, interest on loans from Central Bank of Kosovo-licensed financial institutions to their clients is exempt from withholding tax.

Royalties

Royalties paid to non-resident corporations are subject to a 10% withholding tax.

To read more about Kosovo click here.

Montenegro

Dividends

Payments of dividends and profit shares to non-resident legal entities are subject to a 15% withholding tax in Montenegro unless a double tax treaty specifies a lower rate or exempts the payment from withholding tax.

Interests

Interest payments to non-resident legal entities are subject to a 15% withholding tax in Montenegro unless a double tax treaty provides for a lower rate or exempts the payment from withholding tax.

Royalties

Payments of royalties and other intellectual property rights to non-resident legal entities are subject to a 15% withholding tax in Montenegro unless a double tax treaty specifies a lower rate or exempts the payment from withholding tax.

To read more about Montenegro click here.

Summarized Comparable Study on Withholding Taxes in Albania, North Macedonia, Kosovo and Montenegro

Albania

North Macedonia

Kosovo

Montenegro

Dividends

10%

N/A

15%

Interests

15%

10%

15%

Royalties

15%

10%

15%

To read more about the above Balkan Countries click here.

Why Consider Western Balkan Countries to Invest?

The withholding tax rates of dividends, interests, and royalties in Western Balkans countries are relatively low. These can be more favorable in their rates than those in other countries; hence, western Balkan countries are a good option for investors.

Various Western Balkans countries have signed double taxation treaties with various countries. These can help reduce withholding tax rates on the payments made to foreign investors, and thus make it financially worth investing. Economies within the Western Balkans are growing, with tourism, energy, and agriculture being some of the sectors showing great potential for investment. It also boasts a favorable taxation environment, making prospects for returns quite good.

If you are considering Albania, North Macedonia, Kosovo, or Montenegro to live and/or conduct your business, it is advisable to consult with a professional on investment opportunities that best suit your needs. Our firm specializes in international taxation, and our team is ready to assist with any related matters. If needed, we can connect you with top professionals to support your business activities in Albania. Please feel free to contact us.

הפוסט Comparing Withholding Taxes in the Western Balkan הופיע לראשונה ב-Nimrod Yaron Albania.

Real Estate Taxation in Balkan Countries

BananaBlitz — Tue, 29 Oct 2024 10:11:34 +0000

Real Estate Taxation in Balkan Countries: Comparing Albania, North Macedonia and Montenegro

Real estate taxation across the Balkan countries is diverse, reflecting each nation’s unique economic strategies and fiscal needs. These taxes are a significant revenue source for local governments and play a critical role in regulating property markets. Typically, taxation frameworks include recurrent property taxes, which are paid annually based on the property’s value, size, or type.

This article aims to provide an overview of real estate taxation in several Western Balkan countries, specifically Albania, North Macedonia, and Montenegro. It is designed to offer readers, including those considering relocation or investment, a comprehensive and insightful understanding of the personal income taxation and benefits available in each of these countries.

Overview of the Real Estate Taxation

Albania

Property Tax

Real estate tax is levied on buildings according to the type of activity of the business that owns the building and, therefore on the value of the building. It is calculated annually and expressed as a percentage of its value, adjusted by the usage of the building:

Residential properties: 0.05% of the value of the property is taxed.
Commercial Property: 0.2% of the value of the property.
Incomplete building sites: when construction has not been completed on the due date appearing in the license. Taxed at 30% of the standard rate depending on whether the plot is to be considered residential or commercial.

This structure ensures that different uses of property are adequately taxed, incentivizing the timely completion of construction projects and ensuring property owners pay their fair share based on what function their asset serves.

To learn more about Albania click here.

Transfer Tax

The transfer of ownership of real estate in Albania, whether land or buildings, is taxed at 15% on the capital gain earned from the sale. This tax applies to the profit made by the seller, calculated as the difference between the property’s sale price and its original purchase price or acquisition cost.

North Macedonia

Property Tax

There is an annual property tax on owner-occupied properties that depends on their assessed value, including buildings and land. The standard tax rate is proportional, typically ranging between 0.1% and 0.2%. Various exemptions and reliefs are available, depending on the circumstances.

Starting January 1, 2022, the tax rate increases to three times the standard rate in two cases:

Properties left unused by the owner or unleased for more than six months in a year.

Agricultural land is not utilized for farming activities.

These increased rates are intended to discourage underutilization of property and promote more effective land and building use.

To learn more about North Macedonia click here.

Transfer Tax

A property transfer tax ranging from 2% to 4% is levied upon the transfer of real estate in North Macedonia. This is normally paid by the seller, whether a natural or juridical person. However, it could be that upon agreement by the parties, another arrangement, which could be the payment of such tax by the buyer, should be resorted to, or it could also be divided between both parties. This is so that flexibility in the process of transfer would answer to the needs of both parties.

Montenegro

Property Tax

In Montenegro, real property tax is applied to immovable property (such as land, houses, or commercial buildings) based on its market value. The standard tax rate ranges from 0.25% to 1%, but it can go as high as 5% for specific types of properties, according to the Law on Real Estate Tax.

To read more about Montenegro, click here.

Transfer Tax

The real estate transfer tax is paid by the buyer upon purchasing a property. The tax is based on the market value of the property at the time of transfer, with a fixed rate of 3%.

Table: Real Estate Tax Rates

Albania

North Macedonia

Montenegro

Property Tax

0.05%

A building used for residential purposes

0.2%

A building used for Business purposes

Between 0.1% and 0.2%.

From 0.25% to 1%

Transfer Tax

15%

From 2% to 4%

Why Consider Western Balkan Countries to Invest in Real Estate?

Albania

Foreign individuals or companies that invest in Albania can purchase land after completing their investment according to the construction permit. The investment must be worth at least three times the value of the land, or they should have bought or built properties worth more than three times the land’s price.

State properties larger than 500 m² can be leased to third parties for a symbolic fee of 1 euro per contract. This is done by the Council of Ministers when the winning bidder from a competition proposes activities on the property from a list of approved activities deemed strategic for the country’s development.

North Macedonia

In the Republic of North Macedonia, land within free zones can be leased long-term for up to 99 years at discounted rates. Investors enjoy exemptions from local municipal utility taxes and fees associated with land building permits. Additionally, there is free access to the natural gas, water, and sewage networks. The government also offers potential support for capital investments by providing a 10% return on investment costs for new machinery, equipment, or investments in buildings and land.

Montenegro

Montenegro’s tourism sector is growing, driven by its beautiful landscapes and historical sites, as well as its emerging status as a luxury travel destination. This creates investment opportunities in hospitality and real estate development. The real estate market is also growing, offering chances to invest in properties and development projects.

If you want to read more about investment opportunities in Montenegro, click here.

If you are considering Albania, North Macedonia, or Montenegro to live and/or conduct your business, it is advisable to consult with a professional on investment opportunities that best suit your needs. Our firm specializes in international taxation, and our team is ready to assist with any related matters. If needed, we can connect you with top professionals to support your business activities in Albania. Please feel free to contact us.

הפוסט Real Estate Taxation in Balkan Countries הופיע לראשונה ב-Nimrod Yaron Albania.

Corporate Income Tax in the Western Balkans

BananaBlitz — Sun, 27 Oct 2024 13:11:58 +0000

Corporate Income Tax in the Western Balkans: Comparing Albania, Kosovo and Montenegro Tax Policies

Corporate Income Tax (hereinafter referred to as CIT) is a tax on the profits that businesses earn. It’s based on a company’s taxable income, calculated by subtracting expenses (like salaries, rent, and other operating costs) from total revenue. This profit is then taxed at rates set by each country or region. Tax rates and rules vary widely, with some countries offering different rates or incentives for certain industries or locations. Corporate income tax helps fund government services and ensures that businesses contribute to public revenue, similar to how individuals pay income tax.

This article aims to provide an overview of corporate income taxation in the Western Balkan region, specifically comparing Albania, Kosovo, and Montenegro. It is designed to offer readers, including those considering investing, a comprehensive and insightful understanding of the corporate income taxation and benefits available in each of these countries.

Overview of the Corporate Income Taxation

Albania

Albania’s corporate income tax system, with a base rate of 15% on profits after allowable expense deductions, makes it a competitive investment destination in Europe. The tax applies to various entities, including collective societies, limited partnerships, limited liability companies, joint stock companies, and other entities, including non-residents. A company is tax-resident if established or managed in Albania, especially if board meetings are held there or specific local criteria are met, such as local ownership or resident board members. A Permanent Establishment includes any fixed business location or service provision in Albania for six months or more.

To learn more about taxation in Albania, click here.

Kosovo

Kosovo’s corporate tax framework, characterized by low tax rates, is designed to attract investment. Corporate tax residency applies to entities with their main office or effective management in Kosovo, with a 10% corporate income tax rate. A Permanent Establishment is created if a business has a fixed location in Kosovo for more than six months within a 12-month period, including offices, factories, or natural resource sites. Kosovo follows worldwide taxation, taxing residents on both foreign and domestic income, while non-residents are taxed only on income generated within Kosovo. Taxable entities include corporations, public/state-owned businesses, and non-residents with a Permanent Establishment in Kosovo.

To learn more about taxation in Kosovo, click here.

Montenegro

Montenegro, an attractive investment hub with a low corporate income tax rate of 9-15%, has streamlined its tax framework to meet EU standards, including recent amendments aligning with the EU’s Directive 2009/133/EC. Corporate tax residency is based on business establishment and profit generation within the country, with taxes filed annually by March. Taxable income includes profits from regular operations, property transfers, dividends, interest, and royalties. New changes affect CIT base calculations, capital gains valuation, and withholding tax expansion. Non-residents may benefit from reduced withholding tax on dividends, interest, and royalties through double-taxation treaties.

To learn more about taxation in Montenegro, click here.

The following table provides a summarized comparable study on income taxation in Albania, Kosovo and Montenegro:

	Albania	Kosovo	Montenegro
*Tax Base for Residents*	A resident company pays tax on their worldwide income.	A resident company in Kosovo is subject to corporate income tax on Kosovo-source and foreign-source income.	A resident company is taxed on its worldwide income.
*Tax Base for* *Non-Residents*	The income tax base for nonresident corporations is Albanian-sourced income.	A non-resident company in Kosovo is subject to corporate income tax on Kosovo-source income.	Nonresident companies are taxed on their Montenegrin source income.
*Taxable Profit*	Taxable profit for Albanian corporate tax purposes is based on income as reported in the corporation’s financial statements (prepared in accordance with accounting regulations), taking into account deductions and corrections required by the tax laws.	In Kosovo, corporate income tax is generally measured by net profit, which is the difference between the gross income received or generated and allowable deducted expenses.	The taxable base is determined from the company’s profit and loss statement, and generally, business expenses are deductible if they are aimed at earning or maintaining taxable income, directly related to the business activity, are incurred or accrued during the taxable period, and are properly documented. Deductible operating expenses typically include the normal day-to-day costs of running the business.

Taxation Rates

While the three countries share similarities in the regulation of corporate taxation, they differ in certain aspects, such as tax rates. In Albania, business income is taxed at 15%, in Kosovo at 10%, and in Montenegro CIT is levied progressively, ranging from 9 percent to 15 percent.

In the following graphic, a comparative view of taxation is presented for each of the countries:

Incentives and Exemptions

Albanian Legislator exempts certain entities from corporate income tax, including government bodies, financial institutions like the Bank of Albania, and foundations or non-banking financial institutions that support government policies through loans. Additionally, organizations engaged in religious, humanitarian, charitable, scientific, or educational activities, as well as labor organizations and chambers of commerce, are exempt. Tax periods align with calendar years, requiring corporate income tax returns to be filed by March 31 of the following year. Corporations with annual turnover under 14 million Albanian lek (ALL) are exempt, while software production and agro-tourism companies benefit from a reduced tax rate of 5%.

To learn more about tax incentives in Albania, click here.

Kosovo Legislator offers a range of tax incentives and credits to stimulate economic activity and investment. Dividends for both residents and non-residents are exempt from taxation, allowing investors to keep more earnings. Companies investing in new heavy machinery receive a 10% deduction on corporate income tax for these assets, although this benefit does not apply to those already utilizing other tax incentives. The country promotes social development by providing corporate income tax credits of up to 30% for sports sponsorships and 20% for contributions to youth and culture. Additionally, Kosovo offers a foreign tax credit to mitigate double taxation on income earned abroad.

To learn more about tax incentives in Kosovo, click here.

Montenegro Legislator offers various corporate tax deductions, including tax depreciation, business-related interest, and bad debts over 365 days with legal action. Charitable donations are deductible up to 3.5% of revenue, and salary and termination bonuses are also deductible, though entertainment and membership fees have limitations. Tax losses can be carried forward for up to five years. Corporate tax incentives include an eight-year exemption for new production businesses in underdeveloped areas, with exceptions for certain sectors. NGOs can reduce their tax base by €4,000 if profits support their objectives. The country’s strategic location and Euro currency enhance its appeal for foreign investments.

To learn more about tax incentives in Montenegro, click here.

Why Consider Western Balkan Countries?

Investors can consider Albania, Kosovo, and Montenegro for establishing a business due to their favorable tax regimes and investment incentives. Albania offers a corporate income tax rate of 15% and exemptions for small businesses and certain sectors, along with tax-deductible operating expenses. Kosovo stands out with its zero taxation on dividends and a 10% deduction on new heavy machinery investments, alongside credits for cultural contributions, making it attractive for socially responsible investors. Montenegro features one of Europe’s lowest tax rates at 9%, with additional incentives for new production businesses in underdeveloped areas and reduced rates for agriculture and software companies. Each country has unique exemptions and credits that support different sectors, making the region appealing for diverse investment strategies. The strategic locations of these countries, coupled with their efforts toward EU integration, enhance their potential as business hubs in Southeast Europe.

If you are considering Albania, Kosovo, or Montenegro to live and/or conduct your business, it is advisable to consult with a professional on investment opportunities that best suit your needs. Our firm specializes in international taxation, and our team is ready to assist with any related matters. If needed, we can connect you with top professionals to support your business activities in Albania. Please feel free to contact us.

הפוסט Corporate Income Tax in the Western Balkans הופיע לראשונה ב-Nimrod Yaron Albania.

Supporting Strategic Investments in Bosnia and Herzegovina

BananaBlitz — Wed, 23 Oct 2024 10:45:02 +0000

Supporting Strategic Investments in Bosnia and Herzegovina: Incentive Policies Overview

Strategic investment incentives in Bosnia and Herzegovina aim to attract foreign and domestic investors through financial benefits in reliefs, providing regulatory support for various industries such as manufacturing, energy, information technology, tourism, and agriculture. These industries have the potential to encourage economic growth and job opening. The government of Bosnia and Herzegovina, hence, has developed a tax framework involving custom duties exemptions, reduced corporate income tax, and grants for capital investments in underdeveloped areas. This is further supported by Bosnia’s favorable trade agreements, skilled workforce, and proximity to the European Union.

Numbers to Look At

Bosnia and Herzegovina offers a liberal trade regime and boasts one of the lowest and most simplified tax structures in the region, with a 17 percent VAT and a 10 percent flat income tax. From 2010 to 2023, the country attracted approximately $7.38 billion in foreign direct investment (FDI), with Austria, Croatia, Serbia, Slovenia, and Germany ranking as the top investors. The following table provides a comparative overview of the FDIs in the last decade, in USD value:

Source: World Bank

Encouraging Investments in Bosnia and Herzegovina

The Law on the Policy of Foreign Direct Investments of Bosnia and Herzegovina ensures equal treatment for foreign investors, granting them the same rights and obligations as residents. It allows investors to open bank accounts in any commercial bank using domestic or convertible currencies and to hire foreign nationals, following local labor and immigration laws. Investors can freely transfer profits abroad without restrictions and own real estate with the same property rights as local entities. The law protects foreign investors from nationalization or expropriation, allowing such actions only in the public interest with prompt and fair compensation. Furthermore, investor rights cannot be overridden by future regulations, and if new laws offer more favorable conditions, investors can choose which legal framework will govern their investments.

The Foreign Investment Promotion Agency of Bosnia and Herzegovina (FIPA), an ad-hoc agency established to promote foreign investments in the country, serves as a bridge facilitating the connection between public and private sectors, providing customized and thorough information on the potential investment policies.

Free Trade Zones in Bosnia and Herzegovina

Free trade zones in Bosnia and Herzegovina are part of the customs territory, and at the same time, they are legal entities. According to the Law on Free Trade Zones, these may be founded by one or more domestic or foreign legal entities or individuals. Businesses within the zones have tax exemptions on VAT and import duties on equipment used for production.

Investment, profit repatriation, and the mobility of capital are free in the zones. The setting up of a Free trade zone is approved provided a feasibility study shows that at least 50% of the goods produced within the zone will be exported within 12 months.

To read more about taxation in Bosnia and Herzegovina, click here.

Tax Incentives for Foreign Investors in the Federation of Bosnia and Herzegovina

There are several incentives in the Federation of Bosnia and Herzegovina aimed at foreign investors. Under the Law on Corporate Income Tax, for instance, companies that invest over 50% of their annual profit in the purchase of equipment for production are allowed a 30% reduction in income tax in the year they made such an investment. In addition, every company that invests at least €10 million within five successive years, with a minimum investment of €2 million for the first year, receives a deduction of 50% of their income tax for the year such investment is made.

Employers may also deduct the doubling of gross wages for new employees if the employee agreement was for at least 12 months full-time and the employee has not worked for them or affiliated companies during the previous five years.

To read more about Bosnia and Herzegovina click here.

Tax Incentives for Investment in the Republic of Srpska

In the Republic of Srpska, several tax incentives are available to encourage investment. Companies that invest in property, plant, or equipment for registered manufacturing activities can reduce their tax base by the amount of the investment. Employees in the textile, clothing, and leather sectors earning below the previous year’s average gross salary benefit from a reduced contribution base, calculated as 25% of the average gross salary from the previous year. Additionally, the region has abolished the dividend tax and introduced favorable rules for taxing income from foreign sources. Qualified investors can also receive tax benefits on their annual income under specific conditions.

If you are interested in investing in Bosnia and Herzegovina, it is advisable to consult with a professional on investment opportunities that best suit your needs. Our firm specializes in international taxation, and our team is ready to assist with any related matters. If needed, we can connect you with top professionals to support your business activities in Bosnia and Herzegovina. Please feel free to contact us.

הפוסט Supporting Strategic Investments in Bosnia and Herzegovina הופיע לראשונה ב-Nimrod Yaron Albania.

Strategic Investments in Montenegro

BananaBlitz — Sun, 20 Oct 2024 15:30:06 +0000

Montenegro, strategically located in the Western Balkans, provides advantageous investment opportunities for foreign investors. The development strategy, a key policy of the country, aims to attract foreign direct investments through a competitive and business-friendly environment. Accordingly, Montenegro aims to position itself as a major business hub in Southeast Europe, drawing companies and investors worldwide.

No Restrictions for Foreign Investments

Montenegro has been attracting many foreign investors in several promising sectors likewise tourism, energy, real estate, and infrastructure. Important to note, that Montenegro works on providing a business environment characterized by favorable regulations and financial incentives. Its business-friendly environment is supported by competitive tax rates and legal reforms that allow for smoother processes when opening and running a business. For instance, setting up a business in Montenegro is quite straightforward.

Foreign investors enjoy the same rights and conditions as local investors when establishing a company or making investments. For all foreign natural and legal entities, the state allows investments into the country without restrictions.

Numbers to Look At

Within the timeframe December 2006 to December 2023, the country received a total of €13.8 billion in Foreign Direct Investments, according to the Central Bank of Montenegro. From 2019 to 2023, Foreign Direct Investment (FDI) inflows reached €4.38 billion. Of this total, €859.9 million was directed toward domestic companies and banks, €1.7 billion represented intercompany debt inflows, €1.48 billion was invested in the real estate sector, and €296.9 million was allocated to other sectors.

The Montenegrin Investment Agency (MIA) noted that the primary investors came from Switzerland, Russia, Serbia, Germany, Italy, the USA, and other countries.

Reasons to Invest in Montenegro

Montenegro has great potential in renewable energy, offering opportunities for investors to develop green energy projects. Infrastructure development also occupies an important place in the country’s focus, offering new perspectives for investment in construction and transport.

Investing in Montenegro can therefore provide diversification in an investment portfolio. There is also a chance for strong returns, due to its growing economy and multiple sectors offering opportunities. Montenegro provides easier access to investments and simplified business registration, making it more attractive for entrepreneurs. It offers entry into a market of over 20 million consumers and greater integration into EU and global trade networks. Additionally, the country promotes the use of innovation and digital technologies, fostering a modern and competitive business environment.

To read more about Montenegro click here.

Investment Incentives in Montenegro

New businesses operating in economically underdeveloped areas are exempt from paying corporate income tax for their first eight years.

The Value Added Tax (VAT) law allows for a VAT exemption on products and services used for building and equipping catering facilities that are rated five stars or higher.

A taxpayer starting a business in an economically underdeveloped area who hires someone for an indefinite period or at least five years will not have to pay income tax for that employee for four years from the hiring date. This exemption is subject to the conditions outlined in the Law on Income Tax of Natural Persons.

The Law of Value Added Tax prescribes VAT exemption on the supply of products and services for the construction and equipping of an energy facility for the production of electricity with an installed capacity exceeding 10 MW.

Startups and spinoffs do not have to pay employer contributions for their employees. This exemption applies to workers in scientific research institutions, those involved in scientific research or innovation activities, and freelancers doing innovative work for foreign companies.

If you want to read more about incentives in Montenegro click here.

If you are interested in investing in Montenegro, it is advisable to consult with a professional on investment opportunities that best suit your needs. Our firm specializes in international taxation, and our team is ready to assist with any related matters. If needed, we can connect you with top professionals to support your business activities in Montenegro. Please feel free to contact us.

הפוסט Strategic Investments in Montenegro הופיע לראשונה ב-Nimrod Yaron Albania.

Personal Income Tax in the Western Balkans

BananaBlitz — Sun, 06 Oct 2024 14:47:15 +0000

Personal Income Tax in the Western Balkans: Comparing Albania, Kosovo and Montenegro Tax Policies

Personal Income Tax (hereinafter referred to as PIT) is a tax that governments impose on individuals’ incomes, which include wages, salaries, and all other types of income generated from investments and other sources. Tax rates vary by country and reflect each nation’s unique economic and financial policies.

This article aims to provide an overview of personal income taxation in several Western Balkan countries, specifically Albania, Kosovo, and Montenegro. It is designed to offer readers, including those considering relocation or investment, a comprehensive and insightful understanding of the personal income taxation and benefits available in each of these countries.

Overview of the Personal Income Taxation

Albania

The country uses a comprehensive approach to personal income tax, designed to address the tax obligations of both resident and non-resident individuals effectively. Resident individuals in the Republic of Albania are taxed on all income, regardless of where it is earned, both within and outside Albania. Non-resident individuals, however, are taxed only on income earned within Albania. Taxable income in Albania includes a variety of sources, including, but not limited to, wages and labor-related compensations, profits from corporate shares or partnerships, earnings from bank interests or bonds, revenues from copyright or intellectual property, and incomes derived from leases, loans, or similar agreements. Additional sources include income from real estate sales, gambling, and casinos, and profits from share or stock sales.

To learn more about taxation in Albania, click here.

Kosovo

The tax system in Kosovo is designed to be straightforward, aiming to cover a broad tax base and offer low taxes that attract foreign investors seeking tax advantages. Personal income taxation applies to several types of income, such as wages, rental income, earnings from intangible assets, specific interest types (like loans, savings accounts, and bonds), replacement income, capital gains, lottery winnings, and pensions. Employment income includes not just wages but also bonuses, per-diems, insurance premiums, debt forgiveness, payment of personal expenses by the employer, and benefits in kind over a certain threshold.

To learn more about taxation in Kosovo, click here.

Montenegro

The taxation of individual income in Montenegro depends on residency status. Residents are responsible for taxes on their global income from any source, while non-residents are taxed on income linked to a fixed base/permanent establishment in Montenegro. In Montenegro, there is an additional tax called a local surtax that you pay on top of your regular income tax. This surtax goes to the municipality where you live in Montenegro. Most municipalities charge a 13% surtax rate, but in Podgorica and Cetinje, it is set at 15%. The surtax amount is calculated based on your income tax.

To learn more about taxation in Montenegro, click here.

The following table provides a summarized comparable study on income taxation in Albania, Kosovo and Montenegro:

	Albania	Kosovo	Montenegro
*Tax Base for Residents*	Residents pay tax on their worldwide income.	A resident individual is subject to tax on his or her Kosovo-source and foreign-source taxable income.	Residents are subject to tax on their worldwide income.
*Tax Base for* *Non-Residents*	Nonresidents pay tax only on Albanian-sourced income.	A nonresident individual is subject to tax on his or her Kosovo-source taxable income.	Non-residents are subject to Montenegrin tax on income sourced in Montenegro.
*Income Sources*	Income derived from employment is subject to a progressive rate structure, while other income is subject to tax at a flat rate (either by self-assessment or through withholding).	Taxable income for a tax period is the difference between *(a)* gross income received or accrued during the tax period; and *(b)* the deductions allowable under the LPIT with respect to such gross income.	Resident individuals are subject to tax on their worldwide income, including capital gain.
*Tax Rates*	Click here to learn more about how PIT is levied in Albania.	Click here to learn more about how PIT is levied in Kosovo.	Click here to learn more about how PIT is levied in Montenegro.

Personal Income Tax Rates

While the three countries share similarities in the regulation of personal taxation, they differ in certain aspects, such as tax rates. In Albania, personal income is taxed up to 23%, in Kosovo up to 10%, and in Montenegro up to 15%.

In the following graphic, a comparative view of taxation is presented for each of the countries:

Incentives and Exemptions

Albanian Legislator provides several tax exemption policies for the subjects. The following are some of the main exemption policies provided in Albania:

Donations and inheritances received between legal heirs in the first and second degrees, as well as donations and inheritances between siblings.
Donations and inheritances not covered under point (a) are exempt up to 5,000,000 ALL per taxpayer for immovable property and up to 1,000,000 ALL for movable property.
The transfer of ownership rights to legal heirs, whether through donation or relinquishment, is exempt when the property originates from co-ownership.

To learn more about tax incentives in Albania, click here.

Kosovo Legislator provides several tax exemption policies for the subjects. The following are some of the main exemption policies provided in Kosovo:

Wages of foreign diplomats, consular representatives, and embassy staff; wages of employees in international governmental and non-governmental organizations registered in Kosovo; wages of foreign workers in donor agencies, humanitarian aid providers, KFOR, and EULEX;
Compensation for property damage;
Life insurance payouts after death; wages of individuals with special needs as per relevant laws;
Rewards for achievements in science, sports, and culture; and income from grants, subsidies, and donations earned under specific conditions.

To learn more about tax incentives in Kosovo, click here.

Montenegro Legislator provides several tax exemption policies for the subjects. The following are some of the main exemption policies provided in Montenegro:

A self-employed individual starting a business in an underdeveloped region is exempt from taxes for eight years from the date of establishment. However, this tax exemption is limited to EUR 200,000 over the eight years.
Certain compensation receipts are not subject to taxation, such as daily allowances, severance payments, scholarships, compensations for damages, jubilee awards, etc.

To learn more about tax incentives in Montenegro, click here.

Why Consider Western Balkan Countries?

Each of these Balkan countries has its own distinct economic and financial system, contributing to a growing business environment. To attract investments, they offer different investment incentives, benefits, and regulatory advantages for both local and foreign investors. Kosovo has relatively lower personal income tax rates compared to neighboring countries, making it a more attractive destination for individuals and businesses seeking favorable tax conditions.

On the other hand, Albania’s strategic location and legal and administrative reforms have been key factors driving significant transformations in its business in recent years. Its proximity to major European markets, coupled with economic reforms, has attracted a growing number of foreign investors and expatriates. Many are choosing Albania not only for its advantageous geographic position but also for its favorable business environment conditions, including a low tax rate, diverse investment opportunities across various sectors, and a streamlined process for obtaining residence permits. These factors have made Albania an increasingly appealing destination for those looking to live and invest in a dynamic, evolving market.

Montenegro offers low personal income tax rates, as highlighted above. Similar to Kosovo and Albania, Montenegro is actively working towards improving its investment climate and encouraging a favorable environment for business growth. The country is making steady progress in enhancing its economic policies and infrastructure, aiming to attract foreign investments and drive sustainable development.

הפוסט Personal Income Tax in the Western Balkans הופיע לראשונה ב-Nimrod Yaron Albania.

Digital Nomads Taxation in Albania

BananaBlitz — Wed, 02 Oct 2024 08:51:44 +0000

The development of Communication and Technology, characterized by connectivity, mobility, and the digitization of the global workforce, has brought forth significant innovation to the job market but not only. Since the early 2000s, and especially following the Covid-19 pandemic, a new category of professionals has emerged: Digital Nomads. They have revolutionized the traditional concept of office setup, by choosing instead to travel around the world and of course, bring the work with them. Equipped with a reliable laptop, and good internet connection, digital nomads are defining the work-life balance concept vis-à-vis modern working methods.

Several countries across the globe, acknowledging the rise of digital nomadism, have introduced new visa regimes and implemented legislation specifically addressing the taxation of digital nomads. Albania is among these nations, and this article will analyze the country’s taxation structure concerning digital nomads.

Tax Resident in Albania

To be considered a tax resident in Albania, the law mandates the condition of spending more than 183 days in the country. However, having a permanent home in Albania, even with less time spent, can also lead to tax residency.

By means of Law 25/2022, as amended, individuals who work remotely in the territory of the Republic of Albania using digital devices will not be classified as tax residents in the Republic of Albania for 12 months. This implies that such employees will be exempted from taxes for a year.

Furthermore, to ensure a cohesive experience for all parties, Albania has established a State Agency for the Support and Development of Startups and Facilitators, tasked with managing the implementation of financial support measures for startups.

Digital Nomad Tax Rates

According to the taxation law, small businesses, including here freelancers, with an annual turnover of less than ALL 14 million are currently exempt from income taxes. However, Albanian law provides specific rules when it comes to freelancing; currently, if 80% of the income comes from one client or 90% comes from two clients, the person will not qualify as a freelancer and instead will be treated as an employee and taxed accordingly. However, this provision does not apply if the digital nomad is employed or offering services to a non-resident legal entity or an entity that does not have a permanent establishment in Albania. Dividends are subject to an 8% tax rate, while other investment income is taxed at a rate of 15%.

To learn more about the taxation policies and related matters in Albania, click here.

How to Apply for the Digital Nomad Visa in Albania?

The Digital Nomad Visa for Albania is applied under the D Visa Type, also known as the Long-Stay Visa. It is issued either as a stamp or electronically for foreign citizens planning to stay in Albania for over 90 days within 180 days. This visa is necessary when a residence permit requires a visa and applies to various categories of applicants.

This type of visa is issued online, and it is a condition for the applicant to be outside of the territory of the Republic of Albania after payment of the visa fee. The online application for the visa can be done at the following link.

The applicant is expected to provide the following set of documents, and upload them into the system:

A visa application form that can be filled out online for free. Once completed, the system will generate and download it.
A recent photo of the applicant, measuring 47 mm x 36 mm.
A photocopy of a valid passport.
A valid employment or service contract with a foreign employer or client, allowing the applicant to work remotely using information technology equipment.
Proof of accommodation in Albania.
A document proving the applicant’s professional or business activity related to the visa application.
A residence permit from home country that is valid for at least 15 months, with at least 3 months remaining beyond the visa period that is being applied for.
A full bank statement showing the applicant’s account transactions over the past 12 months.

Additional Relevant Information

An important consideration for digital nomads residing in Albania is health insurance coverage during their stay. In addition to private insurance options, self-employed individuals in Albania can contribute to social and health insurance at a rate of 27.9%. This allows them to access public healthcare services in the country free of charge. Social and health insurance contributions are paid quarterly, by the 20th of the first month following the end of each calendar quarter.

Also, as a resident of Albania, the digital nomad will be subjected to the standard Value Added Tax (VAT). Currently, VAT is levied at 20%, and covers all domestic goods, services, and imported goods by taxable persons. If a resident engages in economic activity independently, will be considered a taxable person, regardless of the location or purpose. The taxable value includes everything that constitutes the corresponding value that the supplier of the good or service receives or will receive from the buyer, customer, or a third party, in exchange for the supply, including subsidies directly related to the price of these supplies, except VAT. If the rules governing the regime of the digital nomads in Albania allow, certain expenses related to the VAT can be recognized for tax credit purposes.

If you are considering residing in Albania as a digital nomad, it is recommended to evaluate all the legal and financial aspects with legal and/or financial advisors. Our firm specializes in international taxation, and our team is ready to assist with any related matters. If needed, we can connect you with top professionals to support your business activities in Albania. Please feel free to contact us.

הפוסט Digital Nomads Taxation in Albania הופיע לראשונה ב-Nimrod Yaron Albania.