Personal Income tax

Personal income tax is payable by North Macedonian resident individuals on their worldwide income, excluding the tax-exempt income. Non-resident individuals are required to pay tax on North Macedonian-sourced income only. A person is considered a North Macedonian tax resident if he/she stays continuously or intermittently on the territory of North Macedonia for 183 days or more within any 12-month period.

The tax-exempt income consists of certain employment related expenses, awards, scholarships granted by the Government, damages, alimony, certain types of interest etc. and are exhaustively listed in the Law on Personal Income Tax.

 The taxable income comprises of the following types of revenues: income from work; income from independent activity; income from copyright and related rights; income from the sale of own agricultural products; income from industrial property rights;  rental income and sublease;  income from capital; capital gains; gains from games of chance;  insurance income and Another income.

The tax base for determining the income tax is the sum of the gross income realized on all grounds (in money, securities, in kind or some other type), in the country and abroad during the tax period, reduced by:

1. contributions from compulsory social insurance;

2. Tax reduction (for 2024 it is 114.480 mkd, and

3. the standardized or actual costs stipulated by this Law.

Personal income tax 

The flat rate of 10% is applied to all income except capital gains

Income from salary

According to the Law on Minimum Wage in the Republic of Northern Macedonia, the minimum gross salary is 502 Euros. Salaries are computed and paid at least once a month. Social contributions and personal taxes are withheld by the employer along with the payment of salaries to employees. 

Income property and property rights

A statutory deduction of 10% of gross rent for unfurnished and 25% for furnished premises is given to account for income-generating expenses.  Alternatively, taxpayers can opt for itemized deduction instead of availing the standard deduction. 

Personal income tax is calculated at a rate of 10% of the gross amount minus deduction.

Income from copyrights and industrial property right

Based on the type of the original work different statutory deductions are given from 20 % for forms of performance art related to popular music up to 50% for sculptors. Alternatively, taxpayers can also opt for itemized deductions instead of availing the standard deduction. The basis for calculating the income tax is the realized gross income reduced by the amount of the determined costs with tax rates of 10%.

Capital gains for individuals

These refer to the gains from sales of securities, shares of capital, and real estate, i.e. the difference between their sales price and purchase price. The tax base is 90% of the earned capital gains. Capital gains are subject to 15% tax payable in advance. Capital gains (100%) from the sale of immovable property sold before the expiration of five years from the date of acquisition are taxed by the rate of 10% if the taxpayer did not live in space.

Gains from games of chance for individuals

They refer to:

• Income from games of chance and other prize games (TV quizzes, competitions, etc...) are taxable income, the tax is payable on the total gain at a 10% tax rate. The tax is not paid in case the single realized gain is under MKD 5,000 (c. euro 81,0); and
• Income from games of chance from casinos, betting, and slot machine clubs is taxable income. 

Another incomes

Other income, such as online e-commerce, income from marketing, internet services, unused financial assistance, unused donated funds, shortfalls in trade, and other income (other personal earnings) of employees are taxed at a rate of 10%. The basis for calculating income tax - another income is gross income. As an exception, the basis for calculating the income tax for the income from the sale of useful solid waste is the gross income reduced by the standardized costs in the amount of 50%.

Withholding tax

Legal entities resident in Macedonia, registered for carrying out an activity, as well as a foreign legal entity having a branch in Macedonia are obliged, when paying certain types of income to a foreign legal entity, to withhold tax and to pay the tax withheld to the revenue authorities simultaneously with the payment of the income. Withholding tax is applied to the following outbound payments:  dividends, interest, royalties, income from entertainment or sporting activities in Macedonia; income from management, consulting, financial services, services related to research and development, income from insurance or reinsurance premiums, income from telecommunication services between Macedonia and a foreign country and income from the lease of immovable property in Macedonia.

Tax shall not be withheld on the following payments: transfer of the profit of the permanent establishment/branch of a foreign legal entity in Macedonia, for which profit tax has been previously paid (no branch remittance tax), revenue from interest on debt instruments issued and/or guaranteed by the Macedonian Government, the National Bank of Macedonia and banks or other financial institutions acting as a representative of the Macedonian Government, income from interest on deposits in a bank located in Macedonia and income from intermediation or consulting regarding government securities on the international financial market.

The withholding tax rate is 10% and is levied on the gross income, subject to the application of a double tax treaty.