Navigating the complexities of employment taxation is a critical aspect of operating in any country, and North Macedonia presents a structured system for both employers and employees. Understanding the obligations for employers regarding social security contributions and payroll taxes, as well as the requirements for withholding personal income tax from employee salaries, is essential for compliance. Similarly, employees need to be aware of applicable deductions and allowances that can impact their final tax liability.
The tax framework in North Macedonia is designed to fund social welfare programs and government services. Employers play a key role in this system by calculating, withholding, and remitting various taxes and contributions on behalf of their employees. Adhering to the specific rates, thresholds, and deadlines set by the tax authorities is mandatory to ensure smooth operations and avoid penalties.
Employer Social Security and Payroll Tax Obligations
Employers in North Macedonia are responsible for calculating and remitting social security contributions based on their employees' gross salaries. These contributions cover various benefits, including pension, health insurance, and unemployment. The contributions are calculated on a base that is generally the gross salary, subject to minimum and maximum thresholds.
The standard employer contribution rates for social security are typically structured as follows (rates are subject to change and should be verified against the latest regulations for 2025):
| Contribution Type | Employer Rate |
|---|---|
| Pension and Disability | % |
| Health Insurance | % |
| Unemployment Insurance | % |
| Health Insurance (Injury) | % |
Note: Specific percentage rates for 2025 should be confirmed with the latest official sources as they may be subject to legislative changes.
These contributions are usually calculated on the gross salary, with a defined minimum base (often linked to the minimum wage) and a maximum base (a multiple of the average gross wage). Employers must ensure contributions are calculated correctly within these thresholds.
Income Tax Withholding Requirements
Employers are also required to withhold Personal Income Tax (PIT) from their employees' gross salaries. This is a pay-as-you-earn system where the employer acts as the tax collector. The PIT rate in North Macedonia is a flat rate applied to the taxable income.
Taxable income is generally calculated as the gross salary less mandatory social security contributions paid by the employee (which are also withheld by the employer).
The standard flat PIT rate is typically % (this rate is subject to change and should be verified against the latest regulations for 2025).
Note: Specific percentage rates for 2025 should be confirmed with the latest official sources as they may be subject to legislative changes.
The employer calculates the monthly PIT liability for each employee based on their taxable income and the applicable rate and remits the withheld amount to the tax authorities.
Employee Tax Deductions and Allowances
While the primary PIT system uses a flat rate on taxable income (gross salary minus mandatory employee social security contributions), employees may be entitled to certain deductions or allowances that further reduce their taxable base or final tax liability.
Common deductions or allowances that may apply include:
- Personal Allowance: A basic personal allowance is typically granted to all residents, reducing the amount of income subject to tax.
- Dependents: Additional allowances may be available for supporting dependents.
- Specific Expenses: Deductions might be permitted for certain types of expenses, although the scope is generally limited under the flat tax system.
The specifics and amounts of these deductions and allowances are defined by tax law and can change annually. Employees typically need to provide relevant information to their employer or declare them through their annual tax return process if required.
Tax Compliance and Reporting Deadlines
Employers in North Macedonia have strict deadlines for reporting and remitting withheld taxes and social security contributions. Compliance involves accurate calculation, timely payment, and submission of required declarations to the Public Revenue Office (PRO).
Key compliance activities and typical deadlines include:
- Monthly Reporting and Payment: Employers must calculate and pay social security contributions and withheld PIT on a monthly basis. The deadline is usually by the 15th of the following month for the previous month's payroll.
- Annual Reporting: Employers are required to submit an annual report summarizing the income paid and taxes/contributions withheld for each employee during the previous calendar year. This report is typically due by a specific date in the early part of the year (e.g., February or March) following the tax year.
- Employee Tax Slips: Employers must provide employees with annual tax slips detailing their gross income, withheld contributions, and PIT, enabling employees to file their own annual tax returns if required.
Staying informed about the exact deadlines and required forms is crucial for compliance.
Special Tax Considerations for Foreign Workers and Companies
Foreign individuals working in North Macedonia and foreign companies operating within the country may face specific tax considerations.
- Tax Residency: The tax obligations of foreign workers depend heavily on their tax residency status in North Macedonia. Individuals who are considered tax residents are generally taxed on their worldwide income, while non-residents are typically taxed only on income sourced within North Macedonia. Residency is usually determined by factors like physical presence (e.g., residing for more than 183 days in a calendar year) or having a permanent home in the country.
- Permanent Establishment (PE): A foreign company may become subject to corporate income tax in North Macedonia if it establishes a permanent establishment (PE) in the country. A PE typically includes a fixed place of business through which the business of the enterprise is wholly or partly carried on. Employing staff locally can contribute to the creation of a PE, depending on the nature of their activities.
- Double Taxation Treaties: North Macedonia has entered into double taxation treaties with numerous countries. These treaties aim to prevent the same income from being taxed in two different jurisdictions and may provide relief or reduced tax rates for certain types of income, including employment income or business profits. The provisions of a relevant treaty can override domestic tax law in certain situations.
- Employer of Record (EOR): Foreign companies employing workers in North Macedonia without establishing a local entity or PE can utilize an Employer of Record service. The EOR acts as the legal employer for tax and compliance purposes, handling payroll, tax withholding, social security contributions, and adherence to local labor laws, thereby mitigating the foreign company's risk and compliance burden.
Understanding these specific rules and how they interact with international agreements is vital for foreign entities and individuals operating in North Macedonia.
