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Hiring in Kosovo

Kosovo, officially known as the Republic of Kosovo, is a partially recognized state in Southeastern Europe. Pristina is the capital and the largest city of Kosovo. Euro is the official currency of Kosovo. Agriculture is the major sector of Kosovo. Its main trading partners are Turkey, China, Germany, Albania, Italy and Switzerland. Global PEO or Employer of Record (EOR) play a pivotal role in providing companies with services related to hiring employees, and ensuring compliance with Kosovo’s legal and tax regulations. Employment regulations including probation, holidays and termination are covered by the Labor Code. The Labor Code stipulates that employees are entitled to 4 weeks of annual leave. Resident taxpayers are taxed on foreign and Kosovo-source income. Non-resident taxpayers are taxed only on their Kosovo-source income. Global PEO’s or Employer of Record (EOR) facilitate companies by ensuring compliance with Kosovo’s Labor Code and tax laws.

statutory labor requirements

Probation Period

  • Probation can last no more than six (6) months.

Annual Leave

  • Employees are entitled to 4 weeks of annual leave

Public Holidays

  1. New Year’s Day (1st January)
  2. Orthodox Christmas (7th January)
  3. Independence Day (17th February)
  4. Catholic Easter Monday (5th April)
  5. Constitution Day (9th April)
  6. Labor Day (1st May)
  7. Orthodox Easter Day (2nd May)
  8. Orthodox Easter Monday (3rd May)
  9. Europe Day (10th May)
  10. Eid ul Fitr (13th May)
  11. Eid ul Adha (20th July)
  12. Catholic Christmas (25th December)

Maternity Leave

  • An employed woman is entitled to maternity leave of up to twelve (12) months.

Paternity Leave

  • The father of the child may assume the rights of the mother if the mother dies or abandons the child before the end of the maternity leave

Sick Leave

  • An employee is entitled to compensation for sick leave on full pay for up to 20 working days in one year.

Work Hours

  • According to Article 20 of the Law on Labor, the statutory working week in Kosovo is 40 hours

Overtime

  • In extraordinary cases, an employer is legally permitted to request that an employee work extended working hours for a maximum of eight hours per week if necessary, for example due to a temporary increase in the volume of work.

Notice Period

  • The length of the notice varies depending on the timeline of employment and if the contract was for a fixed or indefinite term
  • In cases of definite-term contract, the notice must be given 30 days before, whereas for employees that have indefinite-term contract, the following notice periods are applicable: -
    • Between six months and two years of employment, 30 calendar days
    • Between two and 10 years of employment, 45 calendar days
    • Above 10 years of employment, 60 calendar days

Severance

  • No severance pay for individual dismissals
  • In case of a collective dismissal, the employer is obliged to make a severance payment to its employees who have an indefinite contract.
  • The amount varies and depends on their period of employment with the company: 
    • between two (2) and four (4) years of service, one (1) month’s salary; 
    • between five (5) and nine (9) years of service, two (2) months’ salary; 
    • between ten (10) and nineteen (19) years of service, three (3) months’ salary;
    • between twenty (20) and twenty-nine (29) years of service, six (6) months’ salary; and 
    • from thirty (30) years of service, seven (7) months’ salary.

13th / 14th Month Pay

  • No
  • There is no statutory requirement to pay the 13th or the 14th month salary.
  • There is no evidence that bonuses are customary.

income tax

  • Taxpayers for personal income tax (PIT) purposes are considered resident and non-resident individuals, personal business enterprises, partnerships, or associations.
  • Resident taxpayers are taxed on foreign and Kosovo-source income. 
  • Non-resident taxpayers are taxed only on their Kosovo-source income.
  • Progressive tax rates ranging from 0% to 10% are applied to gross income in the following manner:
    • 0% for salaries up to 960 euros (EUR)/year.
    • 4% for salaries between EUR 960 and EUR 3,000/year.
    • 8% for salaries between EUR 3,000 and EUR 5,400/year.
  • 10% for salaries above EUR 5,400/year.

Income Tax Rate

Income

Tax Rate (%)

Salaries up to 960 euros (EUR)/year

0%

Salaries between EUR 960 and EUR 3,000/year

4%

Salaries between EUR 3,000 and EUR 5,400/year.

8%

Salaries above EUR 5,400/year.

10%

deductible expenses

  • There are no standard deductions in Kosovo.
  • There are no personal allowances in Kosovo.
  • Contributions made by a taxpayer in the form of donations or sponsorship for humanitarian, health, education, religious, scientific, cultural, environmental protection, and sports in accordance with the PIT law are considered as contributions given for public interest and are allowed as a deduction up to a maximum of 10% of taxable income computed before these contributions are deducted.
  • An additional 10% deduction may be applicable if prescribed so by other laws pertaining to sponsorships of certain activities.

Deductible Expenses

  • Contributions made by a taxpayer in the form of donations or sponsorship for humanitarian, health, education, religious, scientific, cultural, environmental protection, and sports in accordance with the PIT law are considered as contributions given for public interest and are allowed as a deduction up to a maximum of 10% of taxable income computed before these contributions are deducted.
  • An additional 10% deduction may be applicable if prescribed so by other laws pertaining to sponsorships of certain activities

 immigration

  • The government in Kosovo has designated several countries, including the United States, visa-exempt. 
  • Foreign nationals from these countries are free to travel to Kosovo without a visa and stay there for up to 90 days within a period of 180 days. 
  • Foreigners from other countries will need to obtain an entry visa from the nearest embassy or consulate of Kosovo.
  • The general requirements to get a visa for Kosovo entrance include:
    • A duly completed and signed application form
    • A passport that is valid for at least six months after the applicant’s planned date of arrival in Kosovo
    • A passport photo that was taken within the last month
    • Evidence that the applicant has travel medical insurance coverage for their time in Kosovo
    • Proof that the applicant has sufficient financial means to support themselves in Kosovo
    • Evidence that the applicant has accommodations in Kosovo
    • Proof of payment of the visa fee
  • To obtain a temporary residence permit, foreign nationals will need to provide proof of insurance and accommodations in Kosovo. 
  • They’ll also need to submit an official police background check from their country of residence.
  • The requirements to obtain a Kosovo work permit include:
    • A temporary residence permit or valid visa
    • Details regarding the applicant’s professional position and qualifications
    • An employment contract with a business in Kosovo
    • A certificate of business registration for the employer

Type of Visa/Permit

Documentation

Validity

Eligibility

Tourist Visa

  • A duly completed and signed application form
  • A passport that is valid for at least six months after the applicant’s planned date of arrival in Kosovo
  • A passport photo that was taken within the last month
  • Evidence that the applicant has travel medical insurance coverage for their time in Kosovo
  • Proof that the applicant has sufficient financial means to support themselves in Kosovo
  • Evidence that the applicant has accommodations in Kosovo
  • Proof of payment of the visa fee

90 days

  • Foreign individuals seeking to visit Kosovo for tourism purposes must obtain a tourist visa

Work Permit

  • A temporary residence permit or valid visa
  • Details regarding the applicant’s professional position and qualifications
  • An employment contract with a business in Kosovo
  • A certificate of business registration for the employer

3 years

  • Foreign individuals seeking employment in Kosovo must obtain a work permit

  value added tax

  • The VAT law and system in Kosovo is based on the European Union (EU) Directive for VAT
  • VAT is levied on:
  • supplies of goods or services with place of supply in Kosovo, and
  • importation of goods
  • The standard VAT rate is 18%.
  • A reduced rate of 8% applies to certain goods and services

VAT Rates

Standard VAT Rate

18%

Reduced Rates

8%

 

withholding tax

Dividends

  • Kosovo does not levy withholding tax on dividends

Interest

  • Interest payments are subject to a 10% withholding tax

Royalties

  • Royalties are subject to 10% withholding tax

Fees for Technical Services

  • Payments made to nonresident individuals or entities for services performed in Kosovo are subject to a 5% withholding tax if the nonresident does not have a PE in Kosovo
  • Payments made to resident individuals are subject to a 10% withholding tax
Type of Payment

Residents

Nonresidents

 

Company

Individual

Company

Individual

Dividends

0%

0%

0%

0%

Interest

10%

10%

10%

10%

Royalties

10%

10%

10%

10%

Fees for technical services

0%

10%

5%

5%

termination

The employer is entitled to terminate the employment contract of an employee in cases where:

    • such termination is justified for economic, technical or organizational reasons; 
    • the employee is no longer able to perform the job; the employee has committed serious cases of misconduct; 
    • the employee’s performance of work duties is unsatisfactory; the employee is guilty of repeating a minor misconduct or breach of obligations; or 
    • the employee’s performance remains unsatisfactory in spite of a written warning. 
  • Upon dismissal, the employee is entitled to receive his/her salary until the last day of work and also be compensated for unused annual leave.
  • An employer who wants to terminate an employment relationship must respect the notification period as prescribed by Law. 
  • In addition, the employer must serve the employee with a written decision for the termination of the employment contract, such decision shall include grounds for the dismissal.

statutory benefits

  • These are mandatory benefits as postulated by law
  • These include probationary period, annual leave, public holidays, sick leave, maternity leave, overtime pay, notice period, and severance pay
  • Statutory benefits also include social security benefits

Statutory Benefits

Probationary Period

Annual Leave

Public Holidays

Maternity Leave

Sick Leave

Notice Period

Severance Pay

Social Security Benefits

 payments and invoicing 

  • The tax period for PIT purposes is the calendar year. 
  • However, withholding taxes on wages and pension contributions are made on a monthly basis (i.e. upon payment).
  • PIT returns are filed annually, and the deadline to submit them is 31 March of the following year.
  • Each employer is responsible for withholding the tax and pension contribution from taxable salaries paid to employees, including payments to non-business individuals, for professional, technical, management, and financial services, payments for service contracts, payment for actors, musicians, athletes, and dependent agents.
  • Employers are required to submit payroll records, together with pension contribution liabilities, and make the respective payment to the Tax Administration of Kosovo by the 15th day of the following month.

 ease of doing business 

  • The ease of doing business index is an index created by Simeon Djankov, an economist at the Central and Eastern Europe sector of the World Bank Group.
  • Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.
  • According to the World Bank France ranked 57th in the World in 2019 in terms of ease of doing business.

 employee accruals

   
Christmas Bonus%

0%

Christmas Bonus Over Vacations %

0%

Severance per Year %

No statutory requirement for individual dismissal

Vacations % Employees are normally entitled to 20 days of annual holiday leave each year (5.49% of annual salary)
Notice %

Employees are entitled to 30 days of notice period for one year of service or more (8.24%)

Christmas Bonus Over Notifications% 0%
Vacations Plus% 0%
Total percentage of Salary (yearly) The total employment accruals as a percentage of salary per anum are equal to 13.82%

employer accruals

Additional information (Country Accruals)

   
Social security contributions 5.00%
Pension 15.00%
Vacations 8.77%
Description
Both employer and employee are subject to compulsory pension contributions in Kosovo. The total compulsory contribution is 10%, where 5% represents the employee’s share (withheld from gross wages) and 5% the employer’s share. Employers and employees may contribute additional pension contribution up to 30% (15%+15%).

Employer Accruals Additional information

    Employment Accruals
Annual Leave Employees are entitled to 4 weeks of annual leave This equals 7.69% (4/52 weeks) of annual income
Maternity Leave An employed woman is entitled to maternity leave of up to twelve (12) months. This equals 100% (12/12 months) of annual income
Sick Leave An employee is entitled to compensation for sick leave on full pay for up to 20 working days in one year This equals 5.47% (20/365 days) of annual income
Severance No severance pay for individual dismissals
In case of a collective dismissal, the employer is obliged to make a severance payment to its employees who have an indefinite contract.
The amount varies and depends on their period of employment with the company:
• between two (2) and four (4) years of service, one (1) month’s salary;
• between five (5) and nine (9) years of service, two (2) months’ salary;
• between ten (10) and nineteen (19) years of service, three (3) months’ salary;
• between twenty (20) and twenty-nine (29) years of service, six (6) months’ salary; and
• from thirty (30) years of service, seven (7) months’ salary.
This equals 8.33% (1/12 months) of annual income
Social Security Employers contribution is as follows: - Social Security 5%; Pension Contribution 15% This equals 20% of annual income

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