- Personal income tax
Taxable income consists of the following types of income earned in the country and abroad:
- personal income;
- income from independent activity;
- income from property and property rights;
- royalties and industrial property rights;
- income from capital;
- capital gains;
- gains from games of chance;and
- other earnings.
Income taxpayer is any natural person resident of the Republic of North Macedonia for income earned in the country and abroad.
The tax base for determining the personal income tax is a sum of all income earned in money, securities, in kind or in some other form, in the country and abroad, during the tax period, reduced by:
- contributions from compulsory social insurance;
- personal exemption in the amount of 96,736 denars for annual calculationon income tax and
- standardized or actual costs provided by this Law.
Personal income tax on all types of income except the gambling income is paid at a rate of 10%. Gambling income is subject to 15% tax.
Legal provisions in standby until 31.12.2022:
- Income tax is paid at a progressive rate of 10% for the earned income up to 1.080.000 MKD per year, and of 18% for the earned income above this threshold, for any labor income earned.
- Income tax is paid at a flat rate of 15% for any capital income earned.
1.1. Personal income
Personal incomes represents:
- salaries and allowances on salary from employment;
- reimbursem*nt of costs from employment and all other allowances related to work determined by the Labor Law, General CollectiveAgreement for the private sector, branchcollective agreements and regulations for the state administration bodies;
- pensions;
- the remuneration of members of the management bodies and the bodies of supervision;
- the remuneration of officials, deputies, advisеrs, and other holders of public functions;
- income of professional sportsmen (premiums, transfers, etc.);
- compensation for top sportsmen;
- compensation during sick leave;
- compensation during absence from work;
- compensation for the work of lay judges, skilled persons and insolvency administrators who do not havethe status of employees in the respective institutions or companies;
- compensation for the members of the Macedonian Academy of Sciences and Arts;
- salary earned by working abroad based on employment based in the country;and
- each individually generated income on the basis of a contract for temporary provision of services to legal entities and individuals.
1.2. Income from independent activity
Revenue from independent activity shall be the income derived from economic activity, the provision of professional and other intellectual services, the income from agricultural activity and other activities whose permanent purpose is the realization of revenues.
A personal income taxpayer is an individual sole proprietor, as well as individuals engaged in agricultural activity, craft and persons performing services or liberal professions who earn income from performing activity and who are not considered traders.
The basis of the income tax for self-employment income is the net income, which is determined in the tax balance.
1.3. Income from property and property rights
Revenues from property and property rights include income earned by the taxpayer from lease or sublease of land, residential or business premises, garages, recreation facilities, equipment, means of transport and other types of property.
The taxpayer of the income tax for property and property rights is a natural person that generates income from property and property rights.
The basis for calculating the tax is the net income that is obtained when the one-year amount of the realized income in the year for which the tax is determined will be reduced by the standard costs in the amount of 15-20% of the income.
1.4. Income from copyright and industrial property rights
Under the royalties and industrial property rights, the remuneration that the taxpayer exercises from copyrights and industrial property rights shall be understood.
A taxpayer of income tax for royalties and industrial property rights is a natural person who exercises royalties and industrial property rights.
The basis for calculating the income tax is the net income received when the realized income is deducted for the expenses necessary for its realization.
1.5. Income from capital
Capital revenues include:
- dividends and other income realized with participation in the profits of legal entities and natural persons;
- interest on loans granted to individuals and legal entities;
- interest on bonds or other securities and
- interest on time deposits and other deposits.
An income tax payer for income from capital is a natural person who generates such income.
1.6. Capital gains
Capital gain is the income that the taxpayer realizes from the sale of securities, equity interest and real estate.
A taxpayer of income tax on capital gains is a natural person who generates such gains.
The basis of the income tax for capital gains is the difference between the selling price of securities, equity and real estate and the purchase prices.
Capital gain realized from the sale of real estate is entered into the tax base in the entire amount.
- Contributions from compulsory social security
Compulsory social insurance includes contributions for:
- pension and disability insurance based on current payments;
- mandatory fully funded pension insurance;
- seniority insurance that is considered with increased duration;
- health insurance and
- unemployment insurance.
2.1. Contribution for compulsory pension and disability insurance
The payer of pension and disability insurance contribution is:
- A worker in a working relationship with a legal entity, a self-employed person, an institution, another legal entity that performs a public service activity, a state body and a body of the units of local self-governmentand the City of Skopje;
- executive member of a board of directors in a company, a member of a management board in a company, or a manager in a company if it is not insured on the basis ofemployment and self-employment
- A citizen of the Republic of North Macedonia who is employed on the territory of the Republic of North Macedonia with foreign and international bodies, organizations and institutions, in foreign diplomatic and consular missions, in the personal service of foreign diplomatic and consular missions or is in the personal service of foreigners,ratified by the Republic of North Macedonia is not otherwise determined;
- A citizen of the Republic of North Macedonia who is employed in a foreign country, carries on business in the Republic of Macedoniaabroad or is sent to work abroad, if during that time it is not mandatory insured atforeign insurance holder, if an international agreement ratified by the Republic of NorthMacedonia is not otherwise determined;
- A citizen of the Republic of North Macedonia employed abroad in the country in which he is compulsoryinsured, but in which the rights to pension and disability insurance can not be exercisedor can not use them outside that state;
- Self-employed person;
- Bearer of the family agricultural holding of the first, second and third category according toLaw on Agriculture and Rural Development;
- A religious official;
- Temporarily unemployed person while receiving cash compensation from insurance in case ofunemployment, according to law;
- Disability of labor during the use of the right to professional rehabilitation in accordance withby law;
- A freelance artist who obtained such a status according to the criteria, in an appropriate procedure andwith an appropriate act of the Minister of Culture;
- A top athlete who has acquired such a status according to the criteria, in an appropriate procedure and withan appropriate act of the Agency for Youth and Sports;
- A foreigner who is on the territory of the Republic of North Macedonia in a working relationship or in the service offoreign natural and legal persons, international organizations and institutions or foreigndiplomatic and consular missions, if ratified by an international agreementthe Republic of North Macedonia is not otherwise defined.
2.2. Contributions for compulsoryhealthinsurance
The payer of contribution for compulsory health insurance is:
- A worker in a working relationship with a legal entity, a self-employed person, an institution, another legal entity that performs a public service activity, a state body and a body of the units of local self-governmentand the City of Skopje;
- executive member of a board of directors in a company, a member of a management board in a company, or a manager in a company if it is not insured on the basis ofemployment and self-employment
- worker whose temporary employment is suspended due to unpaid parental leave;
- A citizen of the Republic of Macedonia who is employed by foreign and international bodies, organizations and institutions, at foreign diplomatic and consular missions in the personal service of foreign diplomatic and consular missions or is in the personal service of foreigners, if by internationala treaty ratified by the Republic of Macedonia is not otherwise determined;
- Self-employed person;
- Bearer of the family agricultural holding of the second and third category in accordance with the Law onagriculture and rural development;
- A religious official;
- Temporarily unemployed person while receiving cash compensation from insurance in case ofunemployment.
- A citizen of the Republic of North Macedonia employed abroad, if during that time is not obligatory insured with a foreign insurance holder according to the law of the country where he is employed, or according to an international agreement, and had a residence on the territory of the Republic of North Macedonia immediately before the establishment of the employment relationship in abroad–forfamily members who live in the Republic of North Macedonia;
- Beneficiary of pension and salary compensation according to the regulations on pension and disabilityinsurance,
- A citizen of the Republic of Macedonia who receives a pension or disability from a foreign countryholder of insurance from a country with which the Republic of North Macedonia has not signed
- Social security contract Republic of North Macedonia has concluded
- Social Security Agreement, which does not regulate the possibility of exercising the rightof health insurance while staying in the territory of the Republic;
- A person entitled to permanent financial assistance;a person with recognized refugee status;person under subsidiary protection;a person placed in a foster family;person placed in a facility forsocial protection (for institutional and non-institutional protection);
- beneficiary of financial assistance for assistance and care by another person;a person who, by the age of 18, had the status of a child without parents and without parental care, up to 26 years of age, and uses social financial assistance;
- facevictim of domestic violence for which a measure of protection is undertaken in accordance with the Law on Family and a person covered by organized independent living with support if they can not be secured on another basis.
- A foreigner who is on the territory of the Republic of North Macedonia in a working relationship or service of foreign natural and legal persons, international organizations and institutions or foreign diplomatic and consular representation if by an international agreement ratified byRepublic of North Macedonia is not otherwise defined;
- A foreigner who is on education or professional development in the Republic if withan international agreement ratified by the Republic of North Macedonia is not otherwise determined;
- A person serving a prison sentence, a person who is in detention (if not insured on another basis), and a juvenile who is on the execution of an educational measure a reference ineducational-correctional home, or institution;
- Participant in the National Liberation War and participant in the People’s Liberation Movement in the Aegean part of Macedonia, war invalids and members of the families of the fallen fighters and the dead participants in the National Liberation War, as well as the civil invalids of the Second World War, the persons persecuted and imprisoned for the ideas of the independence of Macedonia and its statehood, to which this quality has been determined by special regulations and family members and parents of persons-citizens of the Republic of Macedonia, killed in the wars during the breakup of the SFRY.
- Citizens of the Republic of North Macedonia who are not defined as bonds for payment ofcontribution for compulsory health insurance according to one of the items 1 to 14 of this article.
2.3. Contribution forcompulsory insurance against unemployment
A payer of the compulsory insurance contribution in the case of unemployment is:
- A worker in a working relationship with a legal entity, a self-employed person, an institution, another legal entity that performs a public service activity, a state body and a body of the units of local self-governmentand the City of Skopje;
- A citizen of the Republic of North Macedonia who is employed on the territory of the Republic of North Macedonia with foreign and international bodies, organizations and institutions, with foreign diplomatic or consular missions or is in the personal service of foreign diplomatic or consular representation or is in the personal service of a foreigner, ratified byRepublic of North Macedonia is not otherwise defined;
- A foreigner who in the Republic of Macedonia is in employment or service of foreign legal entities, international organizations and institutionsand foreign diplomatic and consular missions if an international agreement ratifiedRepublic of North Macedonia is not otherwise defined;
- An employee who receives a salary compensation during a temporary work-related disabilityaccording to the law.
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Basis for calculation and payment of contributions is:
- Salary, additional income from employment determined by the law regulating the employeesrelationship, collective agreement and employment contract, for a person in employment;
- financial compensation of an executive member of a board of directors in a company, a member of theboard of directors in a trade company or manager in a trade company;
- Salary for part-time work, i.e. hours spent at work, and additional income from employment determined in the law regulating labor relations, collective agreement and employment contract for a part-time worker;
- Average salary in the Republic, published in January in the current year according to the State Statistical Office, theunemployedpersoniscointhe previous onecalendaryearexercisedoarrivalbiggerfromyear oldamountonminimalbasefor the calculation and payment of contributions.
- The monthly advance of the net income, i.e. the lump-sum net income on whichtax is paid in accordance with the Personal Income Tax Law for a self-employed person.
- Average salary of the employee realized in the year prior to the termination of the compulsory insurance, in line with the average annual increase of the salaries in the Republic, for the personswho have joined the extended pension and disability insurance, in accordance with the law.
- Average salary of the worker realized in the year before referral to work abroad, adjusted for the average monthly increase in the salaries of the employer or the average salary
- Average salary of the employee realized in the year prior to referral to work abroad, adjusted for average monthly increase in the salaries of the employer and the salary received abroad or the average salary in the Republic;
- The pension, that is, the compensation according to the regulations of the pension and disability
- insurance, for a beneficiary of a domestic pension;
- Salary compensation during temporary disability for work due to illness and injury and absence from work due to pregnancy, breastfeeding and maternity, for a user of moneycompensation;
- Compensation for part-time care and storage of a more severely handicapped child, foruser of compensation;
- Salary compensation during professional rehabilitation, for a user of compensation;
- Compensation in case of unemployment, for unemployed persons beneficiaries of moneycompensation during temporary unemployment;
- 20%averagepaidmonthlyfeebyworkerincountryforcarrieronfamilyagriculturaleconomyfromfirstandsecondcategoryaccording towithLawforagriculture and rural development.
- average salary in the Republic published in the current month for:
- citizen of the Republic of North Macedonia employed abroad, if during that time is not obligatory insured with a foreign insurance holder according to the law of the country where he is employed, or under an international agreement, and had a residence in the territory of the Republic of North Macedonia immediately before the establishment of the employment relationship abroad, and
- Macedonian citizen who receives a pension or disability benefits from foreign holders of insurance against a country with which Macedonia has not signed / undertaken Agreement on Social Security or the Republic of North Macedonia has concluded / undertaken Agreement on Social Security, which is not regulated possibility of achieving the right tohealth insurance while staying in the territory of the Republic;
- 50%of theaveragepaida monthlysalaryperemployeeinthe RepublicpublishedinJanuaryin the current year:
- religious official,
- party beneficiary of financial assistance;
- a person with refugee status;
- person under subsidiary protection;
- person placed in foster care;
- person placed in an institution forsocial protection (institutional and non-institutional care);
- beneficiary of financialcompensation for assistance and care of another person;
- person under 18 years of age had the status of a child without parents and parental care, up to 26 years, and used socialassistance;
- victim of domestic violence who are taking measure of protection under the Law on family and person covered by organized independent living with support and can notbe insured on another basis.
- a person serving a prison sentence, a person who is detained, if not insured on other grounds, and a minor who is pursuing an educational measure at an educational home or establishment,
- self-employed until the end of the first calendar year that began with the performance ofactivities.
- bearer of the family farm in a third category under the Law onAgriculture and Rural Development.
The basis for the calculation and payment of contributions, or basic insurance for the current year can not be lower than 50% of the average salary per employee in North Macedonia published in January in the current year.
For self-employed person who performs professional and other intellectual service basis for calculation and payment of contributions, or basic insurance for the current year can not be lower than the average salary per employee in Macedonia published in January in the current year.
Highest monthly basis for calculation and payment of contributions on income from employment of a taxpayer for calculation and payment of contributions is the amount of sixteen monthly salaries.
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Rates on calculated and paid contributions:
- 18.8%ofmandatorypensionanddisabilityinsurance;
- 4%rateoncontributionfordisabilityandphysicallydamagecausedbyinjuryonworkor occupational disease;
- 7.5%forcompulsoryhealthinsurance;
- 13%formandatoryhealthinsurancefortaxpayeruseronhomepensionthatthe contribution paid by the amount of the pension;
- 0.5%rateonadditionalcontributionformandatoryhealthinsuranceforcaseoninjury at work and occupational diseases and
- 1.2%ofmandatorycontributionforinsurance againstunemployment.
