Expatriate tax ebook - Macedonia

Basis of taxation

Charge to tax
Residence
Income from employment
Source of employment
Benefits (in kind)
Expatriate concessions
Relief for foreign taxes
Deductions against income

Charge to tax
A charge to Macedonian tax is dependent on whether the income arises in Macedonia, and the extent of the charge will be determined by an individual’s tax residency status.

Residence
Taxation of individuals in Macedonia is determined by their residency or the source of their earnings: Persons are considered as resident in Macedonia for Macedonian tax purposes if:

  • they have their household in Macedonia or their main abode
  • they carry on a professional activity in Macedonia unless this activity is carried on therein incidentally,
  • they have the centre of their economical interests in Macedonia
  • they have resided on the territory of Republic of Macedonia for 183 days or more with or without interruptions for one period of 12 months.

Individuals that are Macedonian resident are taxed on their worldwide income and gains. Expatriates are only taxed on their income and gains realised in the territory of Republic of Macedonia.

Income from employment
A Macedonian tax charge arises on employment income derived from duties performed in Republic of Macedonia. Assessable employment income includes all wages, salaries, overtime pay, bonuses, gratuities, perquisites, benefits etc.

Source of employment
As mentioned above, where duties are performed in Republic of Macedonia, any remuneration received in respect of these duties is treated as Macedonian sourced income and therefore subject to Macedonian income tax regardless of the expatriate's tax residence status.

Benefits (in kind)
In general where the benefit is enjoyed in the Republic of Macedonia, a Macedonian income tax charge will arise. Therefore, housing, meal allowances, provision of a car and relocation allowances will come within the charge to Macedonian income tax an addition to the individual's salary.

Expatriate concessions
A tax exemption on the allowances paid to employees seconded to the Republic of Macedonia has been implemented under specific conditions.

Relief for foreign taxes
Where income has been subject to tax twice (in the Republic of Macedonia and a foreign jurisdiction) relief can be granted by the Macedonian Revenue Authority in accordance with a signed Double Taxation Agreement (DTA).

Deductions against income
Republic of Macedonia grants a large field of tax deductions. Income tax shall not be payable on income generated on grounds of:

  • awards granted by the United Nations and other international organisations and awards granted for lifetime achievements in science, culture and sports;
  • scholarships and credits granted to pupils and students by state administration bodies and foundations in accordance with law and awards to pupils and students during compulsory practical work and training up to Denar 4,000 per month, as well as, awards to pupils and students won in competitions within the framework of the education system;
  • awards for sportsmen for achieved results in official international competitions and stipends for sportsmen;
  • Business trips allowances (costs for transportation, accommodation and meals) granted for trips of state representations and sports clubs at official championships and other international competitions; business trip allowance, fieldwork allowance (accommodation, meals) or allowance for living separately from the family granted to employees in the lowest amount determined by the general collective agreement of the economy in the Republic of Macdedonia, that is, to employees in the non-economy field in the amount determined by the regulation relatives to state administration bodies; allowances for using private vehicle for the needs of the employer in the amount of 30% of the price of fuel per litre used by the vehicle for each kilometer passed, but up to Denar 3,500 per month;
  • compensation to volunteers in accordance with the law on volunteering;
  • disability allowance, salary and pension for disabled persons;
  • child allowance and other social allowances for children determined by the law;
  • monetary compensation during unemployment, determined by law, compensation in case of death of an employee or a family member, up to the determined amount; compensation for suffered damages from catastrophes, up to the lowest amount determined by the general collective agreement of the economy in the Republic of Macedonia, that is, with regard to employees in the non-economy, in the amount determined by the regulations relative to the state administration bodies;
  • compensation for health insurance excluding salary compensation;
  • social assistance;
  • compensation for physical impairment;
  • compensation for damages on the basis of life and property insurance, if the insurance costs are covered by the insured;
  • interests from public loans; interests on bonds issued by the Republic of Macedonia and the local self-government units;
  • interests on saving deposits, current accounts and sight deposits;
  • alimony and compensations of damage on the basis of a court decision and compensation of damage caused by injury at work;
  • incomes from sale of reusable solid waste, generated by a natural person; incomes from sale of gathered medicinal herbs and wild fruits, generated by natural person;
  • monetary compensation granted to a national artist in accordance with the law on ‘National Artists of the Republic of Macedonia’ and monetary compensation granted to an artist and an expert associate in the field of protection of cultural heritage who acquired the pension right and is awarded one of the state awards
  • severance pay for retirement in the amount of two average monthly net salaries per employee paid in the Republic of Macedonia in the last three months;
  • one-time allowance as a redundancy pay due to permanent engagement of workers, under the conditions and in the manner determined by law;
  • donations received in accordance with the law on donations and sponsorships in public activities;
  • salaries of employees at the taxpayer which is a user of a technological development zone, for a period of ten years as from the beginning of carrying out the activity in the zone, that is, as from the first month when the user pays salary regardless of the number of employees at the user, under the conditions and procedure determined by the law on technological industrial development zones.


  Information about Macedonia:

  • introduction
  • facts and figures
  • basis of taxation
  • what taxes?
  • tax planning opportunities
  •  

     

    Last updated October 2013

    Please be aware that the data included in this expatriate tax e-book is correct at the time of publication. Please do not act on the information contained within this e-book without first seeking expert, professional advice.
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