Reading Mode

Why Invest in North Macedonia?
flagtheory Macedonia invest incorporate immigrate

North Macedonia is a small country covering just 25,713 sq km and with 2.1 million 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 a population of around 700,000.

North Macedonia has not had an easy recent history. Following the breakup of Yugoslavia in the mid 1990s, the country has struggled with a range of different social, political, and economic problems, and also suffered from outbreaks of separatist violence in 2001. However, the last few years have given cause for hope, and optimism is in the air.

The tide began to turn in 2017, with an election that broke two years of political stalemate. And since the election of pro-European president Stevo Pendaroski in May 2019, the country appears to be on the brink of resolving long-standing disputes over its name with neighboring Greece, and has paved the political path for moving forward towards building a closer relationship with the European Union.

More on the name of the country: the country’s official name following independence in 1991 was changed to Macedonia. However, this created quite an intense amount of opposition and consternation in neighboring Greece, which rejected the use of that name, because Greece itself has a province named Macedonia along its border with the country, and feared that the Former Yugoslav Republic’s use of the name would lead to territorial claims on its own region of Macedonia going into the future. So Greece has consistently blocked Macedonia’s attempts to join NATO and the European Community, until the issue is resolved, and Macedonia has had to carry the rather undignified and long-winded name of ‘Former Yugoslav Republic of Macedonia (FYROM)’ as its official title.

In early 2019, the decades-old deadlock began to loosen. Following a landmark agreement with the government of Greece, it was agreed that FYROM would change its name to North Macedonia as a concession. While not fully ratified by the Greek parliament yet, observers have pointed to this development as an important step in the right direction towards normalizing relations between the two countries, and facilitating North Macedonia’s development and integration with the European community.

The positive sentiment has been reflected in the country’s economic indicators too. Over the last few years, the economy has demonstrated a positive GDP growth rate of between 2-4%, spurred by a boost in infrastructure projects, and important tax reforms. Added to the optimist political climate, North Macedonia is looking like a very attractive option for investors interested in tapping into a region that has remained one of Europe’s backwaters for decades.

According to the Doing Business 2019 report, North Macedonia is ranked 10th globally in terms of being a favorable environment to do business, which is impressive when considering it sits in the top 10 alongside developed economies such as New Zealand, Singapore, the UK and US.

Invest in Macedonia

Investment Opportunities in North Macedonia

“Macedonia is the new paradise of investment in Europe”, was the slogan of the campaign launched by the government in 2014, with the intention of attracting foreigners to invest in the country. 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 the corporate and personal income tax rates were fixed at 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 the creation of technological development zones.
  • Gains from the disposal and sale of direct investment shares may be freely transferred abroad.
  • Provide exemption from 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.

North Macedonia has a stable macroeconomic situation. Government forecasts indicate that GDP growth will continue along the 2-4% range moving into the early 2020s, if global economic dynamics remain favorable. Its inflation rate is expected to hit around 2.40% by 2020. The government deficit is about 3% of GDP, with a debt to GDP ratio of roughly 40%, and its currency, the Denar, has an almost-fixed exchange rate monetary policy with Euro.

North 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, and developed road and rail infrastructure and low wages costs, make NorthMacedonia a highly-competitive industrial producer. It is also an export hub for the transport and distribution of goods between Asia and Europe, in sectors such as garments, food and beverages and automotive parts and vehicles.

The garment industry in North Macedonia exports mainly to EU countries. 93% of production is mobilized around the Cut, Make & Trim (CMT) system. 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 active and important in the country, 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%).

North 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 in outsourcing IT and software related activities to the region due to its developed telecommunications infrastructure, lower labor costs (average gross salaries of around EUR 600 per month), highly skilled human capital, and tax and establishment advantages.

Invest in Real Estate in North Macedonia

Foreign individuals and entities may invest in North Macedonia on buildings and houses under reciprocity conditions and following 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 ownership of agricultural land without being granted special permission by the authorities.

The law is pro-landlord and rental conditions can be freely negotiated. Rental contracts may be canceled if the tenant fails to pay the rent 15 days after the payment schedule, fails to secure the landlord’s approval before subletting the property, fails to maintain the property properly, performs any works without consent or creates a situation that the landlord deems to be disturbing the peace

Currently, the real estate market remains relatively stagnant. According to data from the State Office of Statistics, the average price per square meter is around EUR 900. Prices in the capital Skopje are slightly higher, around EUR 1,100. However, properties have not increased in value in any substantive sense since around 2008. 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, if economic growth can be maintained and foreign investment increases.

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 North Macedonia can still generate interesting returns, particularly for investors seeking cheaper entry prices.

The sales 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 rate 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 North Macedonia.

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

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

Set up a Company in North Macedonia

There are no restrictions on foreigners incorporating in North Macedonia and setting 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 North Macedonia:

  • Javno Trgovsko Drushtvo, JTD (General Partnership): formed by two or more partners, liable without limits and with their entire property used for 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 level of responsibility depends on their contribution.
  • Akcionersko Drushtvo, AD (Join-Stock Company): a 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 their entire property used for 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 around EUR 80 on an average.

The procedure consists of the following phases:

  • Checking the company’s name in the Trade Register
  • Deed, constitution, and signature certified by a notary;
  • Opening a bank account and deposit of minimum capital
  • Registration in the Central Registry of the Republic of North 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.

Invest in macedonia consultation Call
Click to get On Phone Consultation

Banking in North Macedonia

The North Macedonian banking sector is relatively small, and is comprised of 16 commercial banks, 11 of which are foreign-owned, 2 savings houses and a representative office of an Austrian bank.  The sector is generally considered to be in a stable condition due to a growing capitalization over recent years, and an increase in liquidity. The currency exchange risk is low, as 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 such as USD, EUR or GBP. Physical presence for opening an account is usually required, but internet banking is widely available.

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

The North Macedonian banking sector is also notable for its high level of anonymity and confidentiality. With regards to the automatic exchange of banking information between countries, Macedonia has not committed to implementing the OECD’s Automatic Exchange of Information (AEOI) and has not signed any Tax Information Exchange Agreements (TIEAs), nor indicated a commitment or deadline for doing so.

Although there is no intergovernmental agreement (IGA) between North 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 the country, some banking and financial entities operating in North Macedonia have reached an agreement with the IRS to participate in the US Foreign Account Tax Compliance (FATCA) law on an individual basis.

Taxes in North Macedonia

Corporate Income Tax

A company is a resident of North Macedonia if established as such under North 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 North Macedonia are subject to CIT on their North Macedonian-source income.

Tax Rates
The Corporate Income Tax standard rate is 10%.

Dividends and Capital Gains
Distribution of dividends by resident companies is tax-exempt. Dividends received from foreign companies are usually taxable, but a tax credit up to the CIT amount is usually available for foreign tax paid. Capital Gains are treated as ordinary business income and subject to the 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 a Permanent Establishment (PE) to its parent company. North Macedonia has signed tax treaties with more than 60 countries that may reduce or eliminate withholding tax rates. Check North Macedonia’s tax treaties here.

Tax Incentives
North 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 loan 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 North 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 he or she has a permanent residence in the territory or resides in North Macedonia for more than 183 days in a period of 12 months. Tax residents are taxed on all of their worldwide revenue, while non-tax resident individuals are only subject to income from the country.

Taxable Income
Employment in North Macedonia, Employment abroad with a North Macedonian employer, Income from services rendered, Income received by members of the board of directors, Supervision of legal persons, Pensions, 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 70% of the gain. Tax on capital gains obtained from the sale of securities came into force on 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.

An annual personal allowance of MKD 89,472 may be deducted on income from employment.

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% rate may apply to certain products and services.

Real Property Tax
There is a local tax rate 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%.

Visas and Residence Permits in North Macedonia

invest in macedoniaA foreign national who wishes to visit the country needs to obtain a visa, unless he or she is a citizen of the European Union, the United States, Canada, New Zealand, Japan, or Switzerland, in which case they will be allowed to stay in the country for up to 90 days visa-free.

The Foreigners Law covers three categories of Macedonian visas: 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 for up to 3 months, for a period of six months. The long-term visa is issued to foreigners who wish to obtain a temporary residence permit in North 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.  Additionally,  foreigners of an EU member state or of the OECD who have acquired a residential property, building, apartment or house with a value greater than EUR 40,000 are also eligible. The Temporary Residence Permit is extendable if the requirements of its issuance persist at the time of the extension, and as long as the holder has resided in North Macedonia for 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, and 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 North 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 North Macedonia, for a fixed period of 1 to 3 years or indefinitely, at the request of the interested party. The Employment Work Permit is issued for a maximum period of one year. Work Permits are issued for job purposes and their duration may vary.

For business trips, meetings, business contacts, and provision of services, including the preparation of a company to penetrate the market, having a Work Permit is not necessary.

Citizenship by Residency
Foreigners who have continuously stayed in North 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 North Macedonian while in the country. A full list of countries with Dual Citizenship.


North Macedonia is undoubtedly a business-friendly country. With a one-stop-shop system to register a company in 4 hours, corporate and personal income taxes maintained at a flat rate of 10%, and high levels of banking privacy make it an option to consider for a wide range of individuals and companies. In addition, a strategic location, with free EU market access, low labor costs and a growing economy make setting up a company and investing in North Macedonia an internationalization option to consider.

Whether you want to immigrate, incorporate a company, open a bank account or invest in real estate in Macedonia, we can help you. Feel free to reach out to us if you would like a paid consultation call, or explore the different ways that we can help you realize your internationalization strategy. You can also sign up for our free newsletter to keep up to date with regular, detailed explanations of international structuring, investment and citizenship-related developments and concepts, enroll in our FT Master Course, or visit Do-it-yourself center, where you will find all the key information to internationalize your life, your business, and your personal finances.