The Republic of North Macedonia operates a tax system comprised of various taxes and contributions levied on both employers and employees. Understanding these obligations is crucial for businesses operating in the country to ensure compliance and avoid penalties. The tax framework includes social security contributions, personal income tax, and other levies that fund social programs and government services. Employers act as withholding agents for employee income taxes and are responsible for remitting these taxes, along with employer contributions, to the appropriate tax authorities.
Navigating the intricacies of North Macedonia's tax system can be complex. This guide provides an overview of employer tax obligations and employee tax deductions in North Macedonia for 2025, covering key aspects such as social security contributions, income tax withholding, available deductions, compliance deadlines, and special considerations for foreign workers and companies.
Employer Social Security and Payroll Tax Obligations
Employers in North Macedonia are required to make social security contributions on behalf of their employees. These contributions fund various social programs, including pension, health insurance, and unemployment benefits. The contribution rates are calculated as a percentage of the employee's gross salary.
The social security contributions for employers in 2025 are as follows:
| Contribution Type | Rate (Employer) |
|---|---|
| Pension Insurance | 18.8% |
| Health Insurance | 7.3% |
| Unemployment Insurance | 0.5% |
| Employment Injury Insurance | 0.5% |
These rates are subject to change, and employers should consult the latest official guidelines from the Public Revenue Office (PRO) to ensure compliance. The contributions are calculated on the gross salary of the employee, up to a defined maximum base.
Income Tax Withholding Requirements
Employers in North Macedonia are responsible for withholding personal income tax (PIT) from their employees' salaries. The PIT is a progressive tax, meaning that the tax rate increases as the income increases. The tax rates and income brackets for 2025 are as follows:
| Income Bracket (MKD) | Tax Rate |
|---|---|
| 0 - 720,000 | 10% |
| Over 720,000 | 18% |
Employers must calculate the amount of income tax to withhold from each employee's salary based on these tax brackets. The withheld tax must then be remitted to the Public Revenue Office (PRO) on a monthly basis.
Employee Tax Deductions and Allowances
Employees in North Macedonia are entitled to certain tax deductions and allowances that can reduce their taxable income. These deductions can include personal allowances, deductions for dependents, and deductions for certain expenses.
As of 2025, the following deductions and allowances are available:
- Personal Allowance: A standard deduction available to all taxpayers. The amount is determined annually by the government.
- Dependent Allowance: Taxpayers can claim an additional allowance for each dependent child or spouse.
- Pension Contributions: Contributions made by employees to private pension funds are tax-deductible, up to a certain limit.
- Donations: Donations to registered charities and organizations are tax-deductible, up to a certain percentage of taxable income.
Employees must provide the necessary documentation to their employer to claim these deductions. The employer will then adjust the amount of income tax withheld accordingly.
Tax Compliance and Reporting Deadlines
Employers in North Macedonia must comply with various tax reporting deadlines throughout the year. These deadlines include the submission of monthly tax returns and the annual income tax reconciliation.
Key tax compliance and reporting deadlines for employers in 2025 include:
- Monthly Tax Returns: Employers must submit monthly tax returns (Form M-1023) to the PRO by the 15th of the following month. This return includes information on income tax withheld and social security contributions.
- Annual Income Tax Reconciliation: Employers must submit an annual income tax reconciliation (Form M-2007) by the end of February of the following year. This reconciliation summarizes the total income tax withheld from employees during the year.
- Payment Deadlines: All taxes and contributions must be paid by the deadlines specified by the PRO. Late payments may be subject to penalties and interest.
It is crucial for employers to maintain accurate records of all tax-related transactions and to adhere to the reporting deadlines to avoid penalties.
Special Tax Considerations for Foreign Workers and Companies
Foreign workers and companies operating in North Macedonia may be subject to special tax considerations. These considerations can include tax residency rules, double taxation agreements, and transfer pricing regulations.
- Tax Residency: Foreign workers who reside in North Macedonia for more than 183 days in a calendar year are generally considered tax residents and are subject to tax on their worldwide income.
- Double Taxation Agreements: North Macedonia has double taxation agreements with many countries. These agreements prevent income from being taxed twice.
- Transfer Pricing: Foreign companies operating in North Macedonia must comply with transfer pricing regulations. These regulations ensure that transactions between related parties are conducted at arm's length.
Foreign workers and companies should seek professional tax advice to ensure that they are complying with all applicable tax laws and regulations. Understanding these nuances is essential for foreign entities to navigate the North Macedonian tax landscape effectively.
