In the early 1990s, North Macedonia changed its economic system and updated its tax system. The new system is based on principles like private property rights, economic independence, and fair taxation, ensuring no special treatment for certain sectors.
This article provides an overview of the personal income tax implications in North Macedonia, offering insights on the particularities of the taxation rules.
Residency for tax purposes in North Macedonia
Individuals are considered tax residents of North Macedonia if they stay in the country for 183 days or more within any 12-month period. Personal income tax is levied on both residents and non-residents in North Macedonia. Residents are taxed on their income from all over the world, while non-residents are only taxed on income earned in North Macedonia.
Tax Rates on Personal Income
In North Macedonia, personal income includes all income from employment and can come in forms like cash, vouchers, receipts, shares, goods, or any other form of monetary value.
Residents of the Republic of North Macedonia are liable for personal income tax on both domestic and foreign income. The taxable amount includes all forms of income, minus social insurance contributions, a personal exemption, and allowable costs. Except gambling income, personal income tax is levied at 10%, while gambling income is taxed at 15%.
Personal income includes various sources:
- Salaries and allowances from employment.
- Reimbursements of work-related costs and other allowances as per labor laws and agreements.
- Pension payments.
- Compensation for members of management and supervisory bodies.
- Payments to officials, deputies, advisors, and others in public roles.
- Earnings of professional athletes, including premiums and transfers.
- Compensation for elite athletes.
- Payments during sick leave or absence from work.
- Compensation for work as lay judges, skilled individuals, or insolvency administrators.
- Payments for members of academic institutions like the Macedonian Academy of Sciences and Arts.
- Income earned abroad based on employment originating in the country.
- Any income generated individually through temporary service contracts with legal entities or individuals.
Starting January 1, 2023, capital gains from the sale of securities and shares issued by an investment fund will be taxed at 0% if the taxpayer has held them for more than two years.
Reporting and Calculating the Personal Income Tax in North Macedonia
According to the Personal Income Tax Law, the Public Revenue Office prepares and sends draft annual tax returns by April 30th. Taxpayers must review or modify these drafts by May 31st, while Individuals with business income must file their reports by March 15th of the following year.
For salary payments, bonuses, and other income, the taxpayer must calculate the monthly tax separately for each recipient and submit the details electronically to the Public Revenue Office by the 10th of the following month using the MPIN form.
Additionally, for certain types of income, like labor compensation exceeding legal limits, payments to public officials, professional athlete earnings, has to prepare an electronic tax calculation for each recipient. This must be sent to the Public Revenue Office for approval before paying the tax and issuing the net income. The payer also needs to give the taxpayer a copy of the tax calculation for each payment.
If you are considering moving, and in North Macedonia, consulting with experts is crucial. 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 in North Macedonia to support you. Please feel free to contact us.
