Tax system in Macedonia

(Note: The is a google translation of our MK version on which we are currently working. Please be patient untill we proof-check it.)

The tax system in the Republic of Macedonia is regulated by the following main laws:

MK-MOD – The Tax and Benefit Model uses the first two laws that govern the tax obligations of the income of individuals (direct taxes).

  1. Personal income tax

Taxable income consists of the following types of income earned in the country and abroad:

  • personal income;
  • income from independent activity;
  • income from property and property rights;
  • royalties and industrial property rights;
  • income from capital;
  • capital gains;
  • gains from games of chance; and
  • other earnings.

Income taxpayer is any natural person resident of the Republic of Macedonia for income earned in the country and abroad.

The tax base for determining the personal income tax is a sum of all income earned in money, securities, in kind or in some other form, in the country and abroad, during the tax period, reduced by:

  • contributions from compulsory social insurance;
  • personal exemption in the amount of 84,000 denars for annual tax calculation
  • on income and
  • standardized or actual costs provided by this Law.

Income tax is paid at a rate of 10%.

1.1. Personal income

Personal incomes represent:

  • salaries and allowances on salary from employment and payment on the basis of business success the employer;
  • reimbursement costs from employment and all other allowances related to work determined by the Labor Law, General Collective Agreement for the private sector of the economy, branch collective agreements and regulations for the state administration bodies;
  • pensions;
  • the remuneration of members of the management bodies and the bodies of supervision of the trade societies;
  • the remuneration of officials, deputies, advisors, and other holders of public functions;
  • income of professional athletes (premiums, transfers, etc.);
  • compensation for top athletes
  • compensation during sick leave;
  • compensation during absence from work;
  • compensation for the work of lay judges, skilled persons and insolvency administrators who do not have the status of employees in the respective institutions or companies;
  • compensation for the members of the Macedonian Academy of Sciences and Arts;
  • salary earned by working abroad based on employment based in the country; and
  • each individually generated income on the basis of a contract for temporary or temporary provision of services to legal entities and individuals.

 

1.2. Income from independent activity

Revenue from independent activity shall be the income derived from economic activity, the provision of professional and other intellectual services, the income from agricultural activity and other activities whose permanent purpose is the realization of revenues.

A personal income taxpayer is an individual sole proprietor, as well as individuals engaged in agricultural activity, craft and persons performing services or free occupations that earn income from performing an activity that are not considered as traders.

The basis of the income tax for self-employment income is the net income, which is determined in the tax balance.

The taxpayer of income from agricultural activity whose total income in the year for which the tax is determined does not exceed the amount of 1,300,000 denars will be taxed according to the lump-sum income.

1.3. Income from property and property rights

Revenues from property and property rights include income earned by the taxpayer from lease or sublease of land, residential or business premises, garages, recreation and recreation facilities, equipment, means of transport and other types of property.

The taxpayer of the income tax for property and property rights is a natural person that generates income from property and property rights.

The basis for calculating the tax is the net income that is obtained when the one-year amount of the realized income in the year for which the tax is determined will be reduced by the standard costs in the amount of 25% of the income.

1.4. Income from copyright and industrial property rights

Under the royalties and industrial property rights, the remuneration that the taxpayer exercises from copyrights and industrial property rights shall be understood.

A taxpayer of income tax for royalties and industrial property rights is a natural person who exercises royalties and industrial property rights.

The basis for calculating the income tax for the income referred to in Article 38 of this Law is the net income that is received when the realized income will deduct the expenses that were necessary for its realization.

1.5. Income from capital

Capital revenues include:

  • dividends and other income realized with participation in the profits of legal entities and natural persons;
  • interest on loans granted to individuals and legal entities;
  • interest on bonds or other securities and
  • interest on time deposits and other deposits.

An income tax payer for income from capital is a natural person who generates such income.\

1.6. Capital gains

Capital gain is the income that the taxpayer realizes from the sale of securities, equity interest and real estate.

A taxpayer of income tax on capital gains is a natural person who generates such profits.

The basis of the income tax for capital gains is the difference between the selling price of securities, equity and real estate and purchase (purchase) prices.

Capital gain realized from the sale of real estate is entered into the tax base in the amount of the entire amount.

  1. Contributions from compulsory social security

Compulsory social insurance includes contributions for:

  • pension and disability insurance based on current payments;
  • mandatory fully funded pension insurance;
  • seniority insurance that is considered with increased duration;
  • health insurance and
  • unemployment insurance.

 

2.1. Contribution for compulsory pension and disability insurance

The obligatory pension and disability insurance contribution payer is:

  • A worker in a working relationship with a legal entity, a self-employed person, an institution, another legal entity that performs a public service activity, a state body and a body of the units of local self-government and the City of Skopje;
  • executive member of a board of directors in a company, a member of a management board in a company, or a manager in a company if it is not insured on the basis ofemployment and self-employment
  • A citizen of the Republic of Macedonia who is employed on the territory of the Republic of Macedonia with foreign and international bodies, organizations and institutions, in foreign diplomatic and consular missions, in the personal service of foreign diplomatic and consular missions or is in the personal service of foreigners, ratified by the Republic of Macedonia is not otherwise determined;
  • A citizen of the Republic of Macedonia who is employed in a foreign country, carries on business in the Republic of Macedonia abroad or is sent to work abroad, if during that time it is not mandatory insured at foreign insurance holder, if an international agreement ratified by the Republic Macedonia is not otherwise determined;
  • A citizen of the Republic of Macedonia employed abroad in the country in which he is compulsory insured, but in which the rights to pension and disability insurance can not be exercised or can not use them outside that state;
  • Self-employed person;
  • Bearer of the family agricultural holding of the first, second and third category according to Law on Agriculture and Rural Development;
  • A religious official;
  • Temporarily unemployed person while receiving cash compensation from insurance in case of unemployment, according to law;
  • Disability of labor during the use of the right to professional rehabilitation in accordance with by law;
  • A freelance artist who obtained such a status according to the criteria, in an appropriate procedure and with an appropriate act of the Minister of Culture;
  • A top athlete who has acquired such a status according to the criteria, in an appropriate procedure and with an appropriate act of the Agency for Youth and Sports;
  • A foreigner who is on the territory of the Republic of Macedonia in a working relationship or in the service of foreign natural and legal persons, international organizations and institutions or foreign diplomatic and consular missions, if ratified by an international agreement The Republic of Macedonia is not otherwise defined.

 

2.2. Contributions for compulsory health insurance

The obligor for payment of the contribution for compulsory health insurance is:

  • A worker in a working relationship with a legal entity, a self-employed person, an institution, another legal entity that performs a public service activity, a state body and a body of the units of local self-government and the City of Skopje;
  • executive member of a board of directors in a company, a member of a management board in a company, or a manager in a company if it is not insured on the basis ofemployment and self-employment
  • worker whose temporary employment is suspended due to unpaid parental leave;
  • A citizen of the Republic of Macedonia who is employed by foreign and international bodies, organizations and institutions, at foreign diplomatic and consular missions in the personal service of foreign diplomatic and consular missions or is in the personal service of foreigners, if by international a treaty ratified by the Republic of Macedonia is not otherwise determined;
  • Self-employed person;
  • Bearer of the family agricultural holding of the second and third category in accordance with the Law on agriculture and rural development;
  • A religious official;
  • Temporarily unemployed person while receiving cash compensation from insurance in case of unemployment.
  • A citizen of the Republic of Macedonia employed abroad, if during that time is not obligatory insured with a foreign insurance holder according to the law of the country where he is employed, or according to an international agreement, and had a residence on the territory of the Republic of Macedonia immediately before the establishment of the employment relationship in abroad  for family members who live in the Republic of Macedonia;
  • Beneficiary of pension and salary compensation according to the regulations on pension and disability insurance,
  • A citizen of the Republic of Macedonia who receives a pension or disability from a foreign country holder of insurance from a country with which the Republic of Macedonia has not signed / taken over
  • Social security contract or Republic of Macedonia has concluded / taken over
  • Social Security Agreement, which does not regulate the possibility of exercising the right of health insurance while staying in the territory of the Republic;
  • A person entitled to permanent financial assistance; a person with recognized refugee status; person under subsidiary protection; a person placed in a foster family; person placed in a facility for social protection (for institutional and non-institutional protection);
  • beneficiary of financial assistance for assistance and care by another person; a person who, by the age of 18, had the status of a child without parents and without parental care, up to 26 years of age, and uses social financial assistance;
  • face victim of domestic violence for which a measure of protection is undertaken in accordance with the Law on Family and a person covered by organized independent living with support if they can not be secured on another basis.
  • A foreigner who is on the territory of the Republic of Macedonia in a working relationship or service of foreign natural and legal persons, international organizations and institutions or foreign diplomatic and consular representation if by an international agreement ratified by Republic of Macedonia is not otherwise defined;
  • A foreigner who is on education or professional development in the Republic if with an international agreement ratified by the Republic of Macedonia is not otherwise determined;
  • A person serving a prison sentence, a person who is in detention (if not insured on another basis), and a juvenile who is on the execution of an educational measure a reference in educational-correctional home, or institution;
  • Participant in the National Liberation War and participant in the People’s Liberation Movement in the Aegean part of Macedonia, war invalids and members of the families of the fallen fighters and the dead participants in the National Liberation War, as well as the civil invalids of the Second World War, the persons persecuted and imprisoned for the ideas of the independence of Macedonia and its statehood, to which this quality has been determined by special regulations and family members and parents of personscitizens of the Republic of Macedonia, killed in the wars during the breakup of the SFRY.
  • Citizens of the Republic of Macedonia who are not defined as bonds for payment of contribution for compulsory health insurance according to one of the items 1 to 14 of this article.

 

2.3. Contribution for compulsory insurance against unemployment

A bond for payment of the compulsory insurance contribution in the event of unemployment is:

  • A worker in a working relationship with a legal entity, a self-employed person, an institution, another legal entity that performs a public service activity, a state body and a body of the units of local self-government and the City of Skopje;
  • A citizen of the Republic of Macedonia who is employed on the territory of the Republic of Macedonia with foreign and international bodies, organizations and institutions, with foreign diplomatic or consular missions or is in the personal service of foreign diplomatic or consular representation or is in the personal service of a foreigner, ratified byRepublic of Macedonia is not otherwise defined;
  • A foreigner who in the Republic of Macedonia is in employment or service of foreign legal entities, international organizations and institutions and foreign diplomatic and consular missions if an international agreement ratified Republic of Macedonia is not otherwise defined;
  • An employee who receives a salary compensation during a temporary work-related disability according to the law.

***

Basis for calculation and payment of contributions is:

  • Salary, additional income from employment determined by the law regulating the employees relationship, collective agreement and employment contract, for a person in employment;
  • financial compensation of an executive member of a board of directors in a company, a member of the board of directors in a trade company or manager in a trade company;
  • Salary for part-time work, ie hours spent at work, and additional income from employment determined in the law regulating labor relations, collective agreement and employment contract for a part-time worker;
  • Average salary in the Republic, published in January in the current year according to the State Statistical Office, the unemployed person is co in the previous one calendaryear exercised o arrival bigger from year old amount on minimal base for the calculation and payment of contributions.
  • The monthly advance of the net income, ie the lump-sum net income on which tax is paid in accordance with the Personal Income Tax Law for a self-employed person.
  • Average salary of the employee realized in the year prior to the termination of the compulsory insurance, in line with the average annual increase of the salaries in the Republic, for the persons who have joined the extended pension and disability insurance, in accordance with the law.
  • Average salary of the worker realized in the year before referral to work abroad, adjusted for the average monthly increase in the salaries of the employer or the average salary in Republic /
  • Average salary of the employee realized in the year prior to referral to work abroad, adjusted for average monthly increase in the salaries of the employer and the salary received abroad or the average salary in the Republic;
  • The pension, that is, the compensation according to the regulations of the pension and disability
  • insurance, for a beneficiary of a domestic pension;
  • Salary compensation during temporary disability for work due to illness and injury and absence from work due to pregnancy, breastfeeding and maternity, for a user of moneycompensation;
  • Compensation for part-time care and storage of a more severely handicapped child, for user of compensation;
  • Salary compensation during professional rehabilitation, for a user of compensation;
  • Compensation in case of unemployment, for unemployed persons beneficiaries of money compensation during temporary unemployment;
  • 20% average paid monthly fee by worker in The Republic for carrier on family agricultural economy from first and second category according to with Law for agriculture and rural development.
  • average salary in the Republic published in the current month for:
    • citizen of the Republic of Macedonia employed abroad, if during that time is not obligatory insured with a foreign insurance holder according to the law of the country where he is employed, or under an international agreement, and had a residence in the territory of the Republic of Macedonia immediately before the establishment of the employment relationship in странство – за членовите на family living in the country and
    • Macedonian citizen who receives a pension or disability benefits from foreign holders of insurance against a country with which Macedonia has not signed / undertaken Agreement on Social Security or the Republic of Macedonia has concluded / undertaken Agreement on Social Security, which is not regulated possibility of achieving the right to health insurance while staying in the territory of the Republic;
  • 50% of the average paid a monthly salary per employee in the Republic published in January in the current year:
    • religious official,
    • party beneficiary of financial assistance;
    • a person with refugee status;
    • person under subsidiary protection;
    • person placed in foster care;
    • person placed in an institution for social protection (institutional and non-institutional care);
    • beneficiary of financial compensation for assistance and care of another person;
    • person under 18 years of age had the status of a child without parents and parental care, up to 26 years, and used social assistance;
    • victim of domestic violence who are taking measure of protection under the Law on family and person covered by organized independent living with support and can not be insured on another basis.
    • a person serving a prison sentence, a person who is detained, if not insured on other grounds, and a minor who is pursuing an educational measure at an educational -popraven home or establishment,
    • self-employed until the end of the first calendar year that began with the performance of activities.
    • bearer of the family farm in a third category under the Law on Agriculture and Rural Development.

The basis for the calculation and payment of contributions, or basic insurance for the current year can not be lower than 50% of the average salary per employee in Macedonia published in January in the current year.

For self-employed person who performs professional and other intellectual service basis for calculation and payment of contributions, or basic insurance for the current year can not be lower than the average salary per employee in Macedonia published in January in the current year.

Highest monthly basis for calculation and payment of contributions on income from employment of a taxpayer for calculation and payment of contributions is the amount of twelve monthly salaries.

***

Rates on calculated and paid contributions:

  • 18 of mandatory pension and disability insurance ;
  • 4% rate on contribution for disability and physically damage caused by injury on work or occupational disease;
  • 7.3% for compulsory health insurance ;
  • 13% for mandatory health insurance for taxpayer user on home pension that the contribution paid by the amount of the pension;
  • 0.5% rate on additional contribution for mandatory health insurance for case on injury at work and occupational diseases and
  • 1.2% of mandatory contribution for insurance against unemployment .

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