Page 28 - Mazars Central and Eastern European tax guide 2023

Kosovo whenever a minimum 50% ownership or voting right test With the exception of income exempt from tax under the
exists for the transaction. Controlled transactions include
law, gross income is all income received or accrued from
all types of transactions that may affect the taxable income any source, including: wages, rent, business activity, the
of a taxpayer. use of intangible assets, interest, capital gains, lotteries
and other games of chance, pensions paid by an employer,
Taxpayers performing controlled transactions above the
Mazars Kosova sh.p.k amount of EUR 300,000 within a calendar year must or in line with the Law on Pensions in Kosovo and any other
income that increases the taxpayer’s net worth.
Rr. Ukshin Hoti, No.45/6, submit an annual controlled transactions form to the tax
Prishtina, Kosovo authorities by 31 March of the following year. Taxpayers are natural persons, resident and non-resident,
Phone: +383 38 609 029 The regulation excludes internal controlled transactions personal businesses, partnerships and companies who
www.mazars.al receive or create gross income from all sources, including
(it applies only to cross border transactions) and provides wages, business activities, rents, lottery winnings,
for certain safe harbours to prove that the arm’s length interest, dividends, capital gains, use of intangible
principle is respected. Safe harbours involve calculating property, pensions, and any other income that increases
total costs of all group members for the low value-adding the taxpayers’ net worth. The taxable period for Personal
intra-group services on an annual basis. For such services, Income Tax is the calendar year. Personal Income Tax
there is no need to prepare a transfer pricing study, but
Corporate taxes and other direct taxes Transfer pricing (TP) effective from 2017 regulates the instead a profit mark-up to a maximum 7% on costs is applicable at progressive rates (rates from 0% to 10%).
intra-companies pricing arrangement between related is allowable. The Kosovo Pension Savings Fund is responsible
Resident companies are subject to corporate income tax business entities. Controlled taxation comes into effect for administering and managing individual pension
on their worldwide income, while the object of taxation whenever a minimum 50% ownership or voting right test Personal income tax / Social security system saving accounts. This fund obliges the employee
for a non-resident taxpayer is only taxable income exists for the transaction. Controlled transactions include and the employer to contribute to financing the
generated from a source in Kosovo. The Corporate Income all types of transactions that may affect the taxable income The object of taxation for a resident taxpayer is taxable employee’s pension at the rate of 5% from the
Tax (CIT) system in Kosovo adheres to the principles of a taxpayer. income from a source in Kosovo and from a foreign employee’s salary and 5% from the employer.
of worldwide taxation. source. The object of taxation for a non-resident taxpayer
Taxpayers performing controlled transactions above the is taxable income from a source in Kosovo.
The annual turnover threshold for taxation has been amount of EUR 300,000 within a calendar year must
reduced from an annual turnover of EUR 50,000 to EUR submit an annual controlled transactions form to the tax
30,000. Resident companies and sole traders whose authorities by 31 March of the following year. Average wage
gross annual income exceeds EUR 30,000 are subject Wage related taxes in Kosovo Minimum wage in private sector
to CIT. Below the threshold, taxpayers can opt for a special The regulation excludes internal controlled transactions
quarterly payment on their gross income. (it applies only to cross border transactions) and provides in EUR in EUR
for certain safe harbours to prove that the arm’s length
The CIT rate for annual turnover is 10%. This tax is paid principle is respected. Safe harbours involve calculating 170 400
every three months depending on the annual turnover. total costs of all group members for the low value-adding Total wage cost 179 105% 420 105%
Taxable Income for the CIT period is the difference intra-group services on an annual basis. For such services,
between gross income received or accrued during the there is no need to prepare a transfer pricing study, but Vocational training contribution - 0% - 0%
tax period and the deductions allowable with respect instead a profit mark-up to a maximum 7% on costs Social contribution tax 9 5% 20 5%
to such gross income. The tax period for CIT is the calendar is allowable. Gross salary 170 100% 400 100%
year. Losses can be carried forward for six consecutive
19
Personal income tax
tax periods. VAT and other indirect taxes Employees' contributions 4 2% 20 5%
5%
9
5%

Transfer pricing (TP) effective from 2017 regulates the Net salary 158 93% 361 90%
Transfer pricing in Kosovo intra-companies pricing arrangement between related
business entities. Controlled taxation comes into effect
Arm’s length principle ü Since 2017
Documentation liability ü Since 2017 VAT options in Applicable / limits
Kosovo
APA ü Since 2017
Country-by- From FY 2017 Distance selling No
Country liability ü (with transitional rules) Call-off stock No
Master file-local file
(OECD BEPS 13) ü From FY 2018 on VAT group registration No
applicable Cash accounting – yearly
Penalty amount in EUR (approx.) No
lack of documentation ü A maximum of EUR 2,500 Import VAT deferment ü

tax shortage N.A. Supply of construction and
Local reverse charge construction-related works;
Direct or indirect control construction activities.
Related parties 50% < or common
managing director. Option for taxation Teit Gjini
Low value-added services: letting of real estate No
Safe harbours ü mark-up to a maximum 7%. supply of used real estate No Managing Partner
Mobile: +355 (0) 69 20 37 456
Level of attention paid by Tax VAT registration EUR 30,000/year E-mail: teit.gjini@mazars.al
Authority 9/10 threshold

28 Mazars Central and Eastern European tax guide 2023 Central and Eastern European tax guide 2023 Mazars 29