DOWNLOAD
Hiring in North macedonia
North Macedonia, officially known as the Republic of North Macedonia, is a country in Southeast Europe. Skopje is the capital and the largest city of North Macedonia. Macedonian and Albanian are the official languages. Macedonian Denar is the official currency. Macedonia has a developed economy, whereby leading automotive companies have established their factories in North Macedonia. Its key trading partners are Germany, Greece, Russia, Bulgaria and Italy. Global PEO or Employer of Record (EOR) play a pivotal role in providing companies with services related to hiring employees, and ensuring compliance with North Macedonia’s legal and tax regulations. Labor Code stipulates that employees are entitled to 20 to 26 days of annual leave. Residents are taxed on their worldwide income; non-residents are taxed on North Macedonian-source income only. Global PEO’s or Employer of Record (EOR) facilitate companies by ensuring compliance with North Macedonia’s Labor Code and tax laws.
statutory labor requirements
Probation Period
- Probationary period is up to 4 months
Annual Leave
- Employees are generally entitled to 20 to 26 days of paid annual leave, and up to an additional seven for marriage, bereavement, or professional examinations.
Public Holidays
- New Year's Day (1st January)
- Orthodox Christmas Day (7th January)
- Orthodox Easter Monday (20th April)
- Labor Day (1st May)
- Eid al-Fitr
- Saints Cyril and Methodius Day (24th May)
- Republic Day (2nd August)
- Independence Day (8t September)
- People's Uprising against Fascism Day (11th October)
- Day of the Macedonian Revolutionary Struggle (Republic of Macedonia) (23rd October)
- St. Kliment Ohridski's Day (8th December)
Maternity Leave
- Female employees are generally entitled to 9 months of paid maternity leave
Paternity Leave
- Fathers may take up to seven days of paid paternity leave if the mother does not take her maternity leave.
Sick Leave
- In case of an employee's inability to work due to illness or injury, the employer is entitled to pay salary remuneration for the first 30 days of illness.
Work Hours
- The general work week in Macedonia is 40 hours, with five, eight-hour days.
Overtime
- Overtime work may not exceed 8 hours weekly and 190 hours annually.
Notice Period
- When an infinite duration agreement is signed between the employer and the employee, the employer has the right to terminate the employment (providing a written notice of at least 30 days) only when there are justifiable grounds for terminations.
- Employees may terminate employment at any time provided that they submit a written notice at least one month before.
Severance
Employers are generally supposed to find terminated employees new employment, pay for training, or provide a severance payment of one month’s salary for each two years’ service, up to 12 months’ of wages.
13th / 14th Month Pay
- No
- There is no statutory requirement to pay the 13th or 14th month salary.
- However if an employee works for 150 hours annually and has not been absent for more than 21 days in a year, they will be entitled to a bonus.
income tax
- Taxation of individuals’ income in North Macedonia is based on their residence status.
- Macedonian tax residents are taxed on their worldwide income.
- Non-residents are taxed on their income derived in the Macedonian territory.
- As of 1 January 2020 until 31 December 2022, 10% flat tax rate is applicable on individual's income from work, self-employment income, income from royalties and industrial property rights, income from sale of own agricultural products, rental income, income from capital, capital gains, insurance income, as well as other taxable income not categorized separately in the legislation.
- The applicable tax rate on the gains realized from games of chance is 15%.
- The taxation of interest on time saving deposits and capital gains realized from sale of securities and shares released from investment funds is postponed until 1 January 2023.
- As of 1 January 2023 the tax rates per category of income will be as follows:
|
Type of income |
Annual tax base |
Tax rate |
|
Up to gross MKD 1,080,000 |
10% |
|
Above gross MKD 1,080,000 |
18% on the difference above MKD 1,080,000 |
|
|
Regardless of the amount of realized income |
0%/10%15% |
|
The difference between the value of the property and the proved amount of funds for its acquisition. |
70% |
deductible expenses
- Compulsory health, pension, unemployment, and other related contributions borne by individuals are tax deductible in full.
- The PIT Law prescribes an annual personal tax exemption on an employee’s personal income, which is in the amount of MKD 98,736 for 2020.
immigration
- Under North Macedonian law, foreign nationals may request a temporary visa for touristic, business, personal and other purposes.
- The duration of the temporary visa is usually up to one year
- The reciprocity principle in international relations is considered in evaluating applications for work and residence permits.
- Apart from reciprocity criteria, only domestic economic problems may cause difficulties in the obtaining of work and residence permits.
- North Macedonian law provides for the following types of working visas:
-
- Self-employment visas, which are issued for a period of one year or three years or as permanent visas.
- Permanent visas may be issued to members of families in the RNM, foreign citizens from humanitarian programs or foreign individuals granted asylum.
- Employment visas, which are issued for up to one year.
- Work permits, which have a duration that depends on the nature of the work.
|
Type of Visa/Permit |
Documentation |
Validity |
Eligibility |
|
Tourist Visa |
|
Up to 1 year |
|
|
Business Visa |
|
Up to 1 year |
|
|
Employment Visa |
|
Up to 1 year |
|
value added tax
- The standard VAT rate is 18%.
- This rate applies to overall turnover and imports of goods and services.
- A lower (i.e. preferential) rate of 5% applies to supplies of certain goods and services.
|
VAT |
|
|
Standard Rate |
18% |
|
Reduced Rate |
5% |
withholding tax
Dividends
- Dividends paid to a resident company are exempt from withholding tax
- Dividends paid to a nonresident company are subject to a 10% withholding tax, unless the rate is reduced under a tax treaty
- Dividends paid to a resident or nonresident individual are not subject to withholding tax, but are subject to personal income tax at a 10% rate
Interest
- Interest paid to a resident company is exempt from withholding tax
- Interest paid to a nonresident company is subject to a 10% withholding tax, unless the rate is reduced under a tax treaty
- Interest paid to a resident or nonresident individual is not subject to withholding tax, but is subject to personal income tax at a 10% rate
Royalties
- Royalties paid to a resident company are exempt from withholding tax
- Royalties paid to a nonresident company are subject to a 10% withholding tax, unless the rate is reduced under a tax treaty
- Royalties paid to a resident or nonresident individual are not subject to withholding tax, but are subject to personal income tax at a 10% rate
Fees for Technical Services
- Fees for technical services paid to a resident company are exempt from withholding tax
- Fees for certain services, management consulting, financial, R&D, and telecommunications services, paid to a nonresident company are subject to a 10% withholding tax, unless the rate is reduced under a tax treaty
- Fees paid to a resident or nonresident individual are not subject to withholding tax, but are subject to personal income tax at a 10% rate
|
Type of Payment |
Residents |
Nonresidents |
||
|
Company |
Individual |
Company |
Individual |
|
|
Dividends |
0% |
0% |
10% |
0% |
|
Interest |
0% |
0% |
10% |
0% |
|
Royalties |
0% |
0% |
10% |
0% |
|
Fees for technical services |
0% |
0% |
10% |
0% |
termination
Justifiable grounds include:
- The employee not fulfilling working obligations/duties (even after a written warning);
- The employee violating the work discipline/order (even after written warning);
- The employee disregarding employer’s working hours;
- The employee fails to request leave of absence or notify about sick leave or misuses sick leave;
- The employee is in breach of confidentiality agreement; and
- Economic, technological, or structural transformations of the employer’s organization.
- When an infinite duration agreement is signed between the employer and the employee, the employer has the right to terminate the employment (providing a written notice of at least 30 days) only when there are justifiable grounds for terminations.
- Employees may terminate employment at any time provided that they submit a written notice at least one month before.
Employers are generally supposed to find terminated employees new employment, pay for training, or provide a severance payment of one month’s salary for each two years’ service, up to 12 months’ of wages.
statutory benefits
- These are mandatory benefits as postulated by law
- These include probationary period, annual leave, public holidays, sick leave, maternity leave, paternity 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 |
|
Paternity Leave |
|
Sick Leave |
|
Overtime Pay |
|
Notice Period |
|
Severance Pay |
|
Social Security Benefits |
payments and invoicing
- The tax year is the calendar year.
- As per the new PIT Law, taxpayers are no longer required to prepare and file the annual tax return (form PDD-GDP).
- Instead, the PRO undertook the obligation to prepare the annual tax return based on the electronic fillings made during the year by the companies and the taxpayers elaborated in description of Payment of tax below.
- The PRO would deliver to each taxpayer the draft annual tax return for the calendar year by 30 April of the following year.
- Within the next month (until 31 May), the taxpayer should confirm the correctness of the data included in the draft return or make appropriate corrections.
- If the taxpayer neither confirms nor corrects the prepared return by the PRO, the draft tax return would be deemed as final.
- In case the PRO cannot confirm the corrected annual tax return by the taxpayer, the tax would be determined by way of a Tax Assessment Form issued by the tax authorities.
- Individuals who realize business income and keep accounting records submit annual accounts and annual tax return by 15 March of the following year for the previous calendar year.
- Under the new PIT Law, all taxable income should be reported and PIT paid in advance. Before payment of any taxable income to individuals, taxpayers that are domestic companies and domestic taxpayers that keep accounting records are obligated to calculate, withhold, and pay PIT on behalf of the individuals.
- These taxpayers should electronically file a calculation for the income payable to the individual and the PIT due to the PRO for approval.
- The PRO confirms the calculation, following which the payment of income and PIT could be made at the banks.
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 North Macedonia ranked 17th 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 % |
Employees are entitled to severance pay equal to one month's pay after completion of one year of employment (8.33% of annual salary) |
| Vacations % | Employees are normally entitled to 20 days of annual holiday leave each year (5.49% of annual salary) |
| Notice % |
Employees are entitled to a 1 month of notice period for one year of service or more (8.33%) |
| 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 22.15% |
employer accruals
Additional information (Country Accruals)
| Description | Uses US guidelines |
Employer Accruals Additional information
| Employment Accruals | ||
| Annual Leave | Employees are generally entitled to 20 to 26 days of paid annual leave, | This equals 7.12% (26/365 days) of annual income |
| Maternity Leave | Female employees are generally entitled to 9 months of paid maternity leave. | This equals 75% (9/12 months) of annual income |
| Paternity Leave | Fathers may take up to seven days of paid paternity leave if the mother does not take her maternity leave. | This equals 1.92% (7/365 days) of annual income |
| Sick Leave | In case of an employee's inability to work due to illness or injury, the employer is entitled to pay salary remuneration for the first 30 days of illness. | This equals 8.22% (30/365 days) of annual income |
| Severance | Employers are generally supposed to find terminated employees new employment, pay for training, or provide a severance payment of one month’s salary for each two years’ service, up to 12 months’ of wages. | This equals 8.33% (1/12 months) of annual income |
| Social Security | Employers are obligated to calculate, withhold from employees’ gross salary, and pay into the accounts of respective funds the compulsory social contributions and PIT. The current level of the compulsory social contributions on gross salary is as follows: • Pension and disability insurance: 18.8%. • Health insurance: 7.5%. • Employment insurance: 1.2%. • Additional health insurance: 0.5%. |
Thos equals 28% of annual income |
