Invest in Macedonia

Why Invest in Macedonia?
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During the last few years, it had become difficult for Macedonians to eat a Burek or Gravce na tavce quietly, or to go to enjoy the beautiful mountains, valleys, and lakes that bespeckle country. Political instability and unemployment had caused a lot of turmoil among the public. It seems that after the elections held last December, green shoots have begun to emerge in the Macedonian tree and the country has entered a stage of more stability and the trend of recovery of employment is already a fact.

The Former Yugoslav Republic of Macedonia is a small country (25,713 sq km and 2100300 inhabitants) located in the center of the Balkans, in a strategic area that links land routes to Europe, the Middle East, and Asia. Its capital and financial and economic center in Skopje, which currently has around 700,000 inhabitants. Despite the aforementioned political turmoil and unemployment, the economy positive growth rate of 2-4% CAGR in recent years, a developed infrastructure and important tax advantages make Macedonia a very attractive region for investors. According to the Doing Business 2016 ranking, Macedonia is the tenth economy with a more favorable environment to do business, and the second after New Zealand in ease of starting a business. Fiscal reforms seem to be paying off, as only six years ago, it was ranked 94th.

Invest in Macedonia

Investment Opportunities in Macedonia

“Macedonia is the new paradise of investment in Europe”, this was the slogan of the campaign launched by the government in 2014 to attract foreigners to invest in Macedonia. The measures carried out were:

  • Facilitate the settlement of a company (“one-stop shop system” for company registration within 4 hours).
  • Carry out a tax reform by which corporation income and personal income tax rate were fixed at of 10%.
  • Allow a total exemption on profits earned when they are reinvested in both tangible and intangible assets in the country for business development and creation of technological development zones.
  • Gains from the disposal and sale of direct investment shares may be freely transferred abroad.
  • Provide exemption of corporate tax for 10 years and a 50% reduction in income tax for 5 years for certain investments.
  • Eliminate VAT and customs taxes for raw materials and equipment.
  • Provide exemptions from tariffs for the preparation of the site.
  • Allow free connection to water networks, sewerage, heating, gas, and electricity.
  • Grant subsidies for the construction of factories up to EUR 500,000.

Macedonia has a stable macroeconomic situation. Government forecasts indicate that GDP growth will be 2.3% by 2017, inflation 1%, Government deficit 3% of GDP, debt to GDP of 40%, and its currency, the Denar, has an almost-fixed exchange rate monetary policy with EURO.

Macedonia is strategically located at the crossroads of 2 main European transport corridors. Its highly-liberalized foreign trade policy and its free access to the European Union, CEFTA, Turkey and Ukraine, a developed road and rail infrastructure and low wages costs, make Macedonia a highly-competitive industrial producer. Being an export hub for the transport and distribution of goods between Asia and Europe, in sectors such as garment, food and beverage and automotive.

The garment industry in Macedonia exports mainly to EU countries. 93% of the production is organized by the CMT system (Cut, Make & Trim). A short period of orders to delivery, ability to produce small orders at the same prices as large orders, operations’ quality and good infrastructure, and good logistics service are some of its competitive advantages.

The food and beverage industry is one of the most promising, dominated by livestock and the cultivation of vegetables, grains, and tobacco. The most exported products in 2015 were tobacco (35%), wine (15%), fresh and processed vegetables (10%) and lamb (5.7%).

Macedonia is an ideal location for the automotive industry. Its geographic proximity to the European and the Middle East markets allows it to have low costs of distribution and delivery of just-in-time products.

Software and IT-related exports are one of the fastest growing sectors, due to the growing interest of Western European and American companies to outsource IT and software related activities to the region due to its developed telecommunications infrastructure, lower labor costs (average gross salary less than EUR 500), highly skilled human capital, and tax and establishment advantages.

Invest in Real Estate in Macedonia

Foreign individuals and entities may invest in Macedonia on buildings and houses under reciprocity conditions and approval from the Ministry of Justice.  With regard to land, foreign natural and legal persons may own or lease (up to 99 years) land for construction, but cannot directly acquire an ownership on an agricultural land if there is not granted a special permission by the authorities. Law is pro-landlord, rental conditions can be freely negotiated, and rental contracts may be canceled if the tenant failed to pay the rent after 15 days from the payment schedule, failed to secure the landlord’s approval before subletting the property, failed to maintain the property, performs any works without consent or any situation that the landlord’s deem that the tenant is disturbing the peace

Currently, the real estate market is in a fragile situation. According to data from the State Office of Statistics, the average price per square meter is around EUR 800. Last year there was a fall in prices of 0.9% (adjusted for inflation), with the highest being in the capital Skopje, where prices fell by 1.8%, with the average price per square meter of around EUR 860. Recently, the Government has adopted measures to stimulate the demand for housing through subsidies, and forecasts indicate that demand and consequently prices will soon go up.

At present, the rental yields of the main pedestrian areas are 9.25%, with 13% in the industrial sector. Although it seems a riskier investment than in Western European cities, investments in real estate in Macedonia could generate interesting returns.

The sale tax for the transfer of immovable property and property rights is between 2% and 4% of the market value, paid by the buyer. A VAT of 18% applies to the first billing within 5 years of the construction of residential buildings.

Real Estate agent fees are usually about 2% of the value of the property, in most cases paid by the seller. Notary expenses are established by law and vary between 0.10 and 1% depending on the value of the property. Sales agreements must be prepared by an attorney. Their legal fees, usually negotiable, are around 0.10-0.50%. The registration fee for the property is around 0.10%, and in most cases, negotiable. It takes an average of 29 days to complete the procedures necessary to register a property in Macedonia.

100% of the capital gains obtained from the sale of real estate will be included in the taxable base, reducing to 70% when the seller has resided at least a year in it. The capital gains generated by a real estate transaction shall not be included in the taxable income if,

  • the taxpayer has lived at least 1 year and sells the ownership after three years of its purchase,
  • a sale is made after 5 years of purchase
  • the property is an inheritance, gift, settled between spouses or
  • due to a divorce process.

Set up a Company in Macedonia

There is no restriction on foreigners to incorporate in Macedonia and set up a 100% foreign-owned company. A government permit is not required, except in cases involving banking, insurance, and investment funds.

There are 5 forms of legal entities in Macedonia:

  • Javno Trgovsko Drushtvo, JTD (General Partnership): formed by two or more partners, liable without limits and with their entire property for the company obligations.
  • Komanditno Drushtvo, KD (Limited Partnership): formed by two or more partners, with different responsibilities, unlimited or limited according to the contribution.
  • Drushtvo so Ogranichena Odgovornost, DOO (Limited Liability Company): Minimum capital requirement of EUR 5,000 and a maximum of 50 shareholders, whose responsibility depends on their contribution.
  • Akcionersko Drushtvo, AD (Join-Stock Company): the minimum paid-in capital of EUR 25,000 divided into shares.
  • Komanditno Drushtvo so Akcii, KDADA (Limited Partnership by Stock): capital divided into shares with a minimum of three shareholders with different responsibilities, and at least one liable without limit and with his entire property for the company obligations.

Registration is done through the One Stop Shop System process, which takes about 4 hours to complete, the cost of registering a company is EUR 80 on an average.

The procedure consists of the following phases:

  • Checking company’s name in the Trade Register
  • Deed, constitution, and signature certified by a notary;
  • An opening of bank account and deposit of minimum capital
  • Registration in the Central Registry of the Republic of Macedonia;
  • Delivering the deed of incorporation, shareholder information, management structure, and other specific documents
  • Receipt of the registration certificate and statistical number with its corresponding automatic registration in the Tax Administration and Employment Agency
  • Application of the company’s seal.

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Banking in Macedonia

The Macedonian banking sector is relatively small, comprised of 17 commercial banks, 11 of which are foreign-owned, 12 savings houses and a representative office of an Austrian bank.  The sector has a stable situation due to a growing capitalization in recent years and an increase in the liquidity level. The currency exchange risk is low, the Denar has an almost-fixed exchange rate monetary policy with the EURO.

Most banks welcome non-residents to open a bank account with minimal deposit requirements and accounts may be in foreign currencies as USD, EUR or GBP. Physically presence is usually required but internet banking is widely available.

Currently, the interest rates applied to fixed deposits are up to 3%.

Macedonia banking sector stands out for his high level of anonymity and confidentiality. Regarding automatic exchange of bank information between countries, Macedonia has not committed to implementing OECD’s Automatic Exchange of Information (AEOI) and has not signed any Tax Information Exchange Agreement (TIEAs), nor indicated a deadline to sign it.

Although there is no intergovernmental agreement (IGA) between Macedonia and the United States to report on the financial accounts of US taxpayers or foreign entities in which US taxpayers have a substantial ownership interest in Macedonia, some banking and financial entities operating in Macedonia have reached an agreement with the IRS to participate in the US Foreign Account Tax Compliance (FATCA) on an individual basis.

Taxes in Macedonia

Corporate Income Tax

A company is a resident of Macedonia if it is established under Macedonian Law. A resident company is subject to Corporate Income Tax on its worldwide income. Foreign entities or Permanent Establishments of foreign companies carrying business activities in Macedonia are subject to CIT on their Macedonian-source income.

Tax Rates
Corporate Income Tax standard rate is 10%.

Dividends and Capital Gains
Distribution of dividends between resident companies is tax-exempt. Dividends received from foreign companies are usually taxable, but a tax credit up to Macedonia CIT amount is usually available for foreign tax paid. Capital Gains are treated as business ordinary income and subject to CIT standard rate.

Withholding taxes
Payments on dividends, interests, royalties and services fees to non-residents are subject to a withholding tax of 10%.  There are no withholding taxes on payments made by P.E. to its parent company. Macedonia has signed tax treaties with more than 60 countries that may reduce or eliminate withholding tax rates. Check Macedonia’s tax treaties here.

Tax Incentives
Macedonia has several Free-Economic Areas, where a 10 year tax holiday is available.

Losses may be carried forward up to 3 years.

Transfer Pricing
Documentation is required to prove that a transaction between related entities is in compliance with the arm’s length principle.

Thin Capitalization
Shareholder’s loans interest expenses may not be deductible provided that the shareholder holds 25% or more of the capital of the company.

Controlled Foreign Companies
There are no CFC rules in Macedonia.

Accounting and Auditing
All large and medium-sized entities required by law as banks, insurance companies, listed companies and entities whose financial statements are included in a consolidated financial statement must issue financial statements at the end of each year.

The financial statements of certain entities are subject to an external audit, medium and large limited liability companies and joint-stock companies, listed companies and entities with consolidated financial statements.

Personal Income Tax

Tax Residency
An individual is considered to be a tax resident in Macedonia if s/he has a permanent residence in the territory or resides in Macedonia for more than 183 days in a period of 12 months. Tax residents are taxed on all of their worldwide revenues, while non-tax resident individuals are only subject to income from the country.

Taxable Income
Employment in Macedonia, Employment abroad with a Macedonian employer, Income from services rendered, Income received by members of the board of directors, Supervision of legal persons, Pension, Income from independent activities (business activity, professional services), Income from property rights, Royalties, Capital gains, Profit sharing, Interest on loans granted to legal persons or individuals, Interest on bonds and securities, Capital gains generated from the disposal of securities, Equity and real estate and Any other income that is not exempt.

Tax Rates
Flat rate of 10%.

Capital Gains
Capital Gains from the sale of immovable property, securities, and equity participation are taxed at 10% on the 70% of the gain. Tax on capital gains obtained from the sale of securities will not be applicable until December 31, 2018.  Interest generated by demand, term and current bank deposits is exempt from taxation, in addition to interest on securities issued by institutions.

It may be deducted to income from employment an annual personal allowance of MKD 89,472.

Other Taxes

Social Security Contributions
The employer must make a 27% contribution on behalf of its employees.

Value-Added Tax
The standard rate is 18%. A 5% may apply to certain products and services.

Real Property Tax
There is a local tax of between 0.10%-0.20% on the ownership of a real property.

Transfer Tax
Local tax from 2% to 4% on the transfer value of the property.

Inheritance and Gift taxes
From 2% to 5%.

Visa and Residence Permit in Macedonia

invest in macedoniaA foreign national who wishes to visit the country needs to obtain a visa unless he or she is citizens of the European Union, United States, Canada, New Zealand, Japan, and Switzerland, who are allowed to stay of up to 90 days visa-free.

The Foreigners Law covers three categories of Macedonian visa: transit (B), short stay (C) and long stay (D). The transit visa (B) allows its holders to stay in the country for a maximum of 5 days. The short-stay visa (C) allows a stay with single or multiple entries up to 3 months, for a period of six months. The long-term visa is issued to a foreigner who wishes to obtain a temporary residence permit in Macedonia for work, study, scientific research, medical treatment, family reunification or humanitarian work. There are three types of residence permits: up to 3 months, temporary permits and permanent permits.

Temporary Residence Permits are issued by the Ministry of Interior, in the cases mentioned above, in addition to foreigners of an EU member state or of the OECD, who have acquired a residential property, a building, apartment or house with a value greater than EUR 40,000. The Temporary Residence Permit is extendable if the requirements of its issuance persist at the time of the extension, as long as the holder has resided in Macedonia a quarter of the period for which the permit was issued.

Permanent Residence Permits are issued once a person has resided in the country with a Temporary Residence Permit for 5 years or more, as long as the applicant has not been absent for a continuous period of 6 months or for a discontinuous period of 10 months. Foreign nationals who have obtained a Permanent Residence Permit have all the rights and obligations that are granted or imposed on Macedonian citizens.

With regard to work permits, there are three categories, Personal Work Permit, Employment Work Permit, and Work Permit.

The Personal Work Permit is issued to foreigners who intend to start a commercial activity in Macedonia, for a fixed period of 1 to 3 years or indefinite, at the request of the interested party. The Employment Work Permit is issued for a maximum period of one year. The Work Permits are issued for job purposes and its duration may vary.

For a business trip, meetings, business contacts, provision of services, including preparation of the company to penetrate the market, it is not necessary to have a Work Permit.

Citizenship by Residency
Foreigners who have continuously stayed in Macedonia for a minimum of eight years can qualify for citizenship. A full list of countries with Citizenship by Residency from 2 years to 30 years
Dual Citizenship
Macedonia allows dual citizenship. Such citizens are regarded exclusively as Macedonian while in the country. A full list of countries with Dual Citizenship.


Macedonia is definitely a business-friendly country. A one-stop-shop system to register a company in 4 hours, income taxes both personal and corporate at a flat rate of 10% and banking privacy. In addition to its strategic location, with free EU market access, low labor costs and a growing economy makes set up a company and invest in Macedonia an internationalization option to consider.

We can help you, whether to immigrate, incorporate, open a bank account or invest in real estate in Macedonia. Reach out us or check how we can help you. You can also join our PT Society, our Do-it-yourself center, where you will find all the key information to internationalize your life, your business, and your personal finances.

NOTICE:The contents of this article are not to be considered as a legal opinion or tax advice and should not be relied upon as such. Far Horizon Capital Inc does not hold itself out as a legal or tax advisor. If you wish to receive a legal opinion or tax advice on the matter(s) in this article please contact our offices and we will refer you to an appropriate legal practitioner. Use of our website is subject to our terms and conditions.

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