North Macedonia is a country located in the Balkan Peninsula in Southeast Europe, which has achieved notable progress in both social and economic development, solidifying its reputation as a secure, steady, and prosperous nation. Real estate investments in North Macedonia are presently undergoing substantial growth and development, attracting the attention of foreign investors and individuals.
Primarily, the country is experiencing an extraordinary trend of urbanization, as more individuals migrate from rural regions to urban centers in pursuit of better employment opportunities and an improved quality of life. Consequently, urban areas, specifically Skopje, are witnessing increased housing demand.
Furthermore, North Macedonia’s strategic location at the crossroads of Europe and Asia, as well as its affordable property prices, has attracted growing interest from foreign investors, leading to a rise in real estate transactions, particularly in the commercial and tourism sectors. Below is a comprehensive overview of the key aspects of real estate in North Macedonia.
The eligibility of foreign citizens to acquire real estate in North Macedonia
Residents of member states of the European Union (EU) and the Organization for Economic Cooperation and Development (OECD) enjoy the same rights as local residents when leasing or acquiring apartments, residential buildings, construction land, or property in North Macedonia. Non-EU and non-OECD residents, on the other hand, must adhere to reciprocity terms for property ownership. Reciprocity agreements between nations allow their citizens to buy property in each other’s countries. Furthermore, non-citizens from countries outside the EU and the OECD can inherit ownership rights to real estate in the Republic of Macedonia under reciprocity conditions. Meanwhile, citizens of the member states of the EU and OECD can gain ownership rights over immovable property through inheritance in the Republic of Macedonia under the same conditions as those applicable to Macedonian citizens. It’s important to note that ownership of agricultural land is not permitted for foreign residents. However, foreign investors can obtain property rights for business-related buildings and full ownership rights over construction land by establishing a locally registered company, granting them similar privileges to domestic companies.
Applicable Taxes on Real Estate transactions in North Macedonia
If you own real estate in North Macedonia or you are currently going through investments or transactions, you should take into consideration the applicable taxes. Following we have given some of the important taxes that are imposed on property owners either individual or legal entities.
Property Tax: Real estate owners are required to pay property tax annually, covering both land and buildings (residential or commercial). The responsible party for this tax can be either an individual owner or a legal entity. The tax is calculated based on the market value of the property, determined using government-prescribed methods.
Property tax rates are proportional, ranging from 0.1% to 0.2% with some exceptions. These rates may vary depending on the property type.
Transfer Tax: Transfer tax is applicable when the ownership right to real estate is transferred, either with or without compensation, among legal entities or individuals. The individual responsible for paying the transfer tax is the seller of the real estate. However, under special circumstances outlined in the sale and purchase agreement, the buyer may also be designated as the taxpayer. The rates for transfer tax are proportionate, ranging from 2% to 4%, and are decided by municipal councils through a formal decision-making process.
Certain exemptions from transfer taxes exist for specific cases, such as the transfer of shares, the sale of securities, and the initial sale of residential premises within the first five years from the completion of their construction.
Capital Gain Tax: Capital gains represent the profit earned by a taxpayer from the sale of various assets, including real estate, securities, capital shares, shares from investment funds, and other movable or immovable properties. Capital gain is calculated as the positive difference between the selling price and the purchase price of the asset. For tax purposes, the taxable amount is determined as 90% of the realized capital gain from the sale of securities, capital shares, shares from investment funds, and immovable property where the taxpayer has resided for at least one year before the sale.
High areas for real estate investment and prices in North Macedonia
Skopje, the capital of Macedonia, offers a rich variety of options for real estate investment prospects. With opportunities ranging from residential properties in Aerodrom to commercial spaces in the Center, vacation rentals in Old Bazaar to luxury apartments in Vodno, the city caters to a diverse range of investor preferences.
Both Skopje and Ohrid have the priciest real estate in North Macedonia. The pricing of apartments is influenced by factors such as the location, construction quality, accessibility, and infrastructure.
In the central area of Skopje, the average cost of homes is approximately MKD 100,000 (US$1,768) per square meter. In contrast, house prices in other regions of Macedonia are roughly 25% lower than the national average, at MKD 75,000 (US$1,326) per square meter.
Incentives for ownership of real estate for foreign citizens in North Macedonia
The growing demand for real estate in North Macedonia from both foreign and domestic investors in the construction industry has also increased the demand for construction workers. In response to this growing demand, the Macedonian government has implemented various regulations to simplify and expedite the procedures for hiring qualified foreign individuals in the construction sector.
North Macedonia has several Investment Zones with 10 years of tax holidays for corporate profits, employment income, VAT, customs duties, and others. Investors are relieved from the obligation to pay utility taxes to the local municipality and fees for land building permits. Free connection to natural gas, water, and sewage networks is also provided. Moreover, the Government may support the growth of capital investments and income with a return of 10% of investment costs in buildings and land.
Furthermore, as an incentive, temporary residence permits in North Macedonia, lasting up to one year, may be granted to a resident of a Member State who has obtained the right to own real estate (apartment, apartment building, or house) in the country, meeting specified legal conditions and requiring an investment of at least EUR 40,000.
It’s important for individuals considering purchasing real estate to be aware of the legal and financial procedures. Consulting with a tax and legal professional can be beneficial in navigating the complexities. Our firm offers comprehensive tax services in North Macedonia, among other areas. Please contact us, and we would be delighted to arrange an introductory meeting with you.
In conclusion, the real estate sector in North Macedonia is witnessing substantial growth, and foreign citizens, particularly from EU and OECD states, enjoy favorable property rights. The country offers diverse investment opportunities, and the Macedonian government provides incentives and simplified procedures, encouraging foreign ownership and investment in real estate, further promoting economic growth and development.
