Income tax in Macedonia
July 31, 2017
Residents are liable to pay taxes on their worldwide income. Individuals who have a permanent dwelling or are present in the country for more than 183 days in a year are considered residents.
There are two categories of income in Macedonia: (1) “personal income” – employment income, and (2) “other income” – income that is not taxed under any other categories but is not exempt from taxation.
Residents in Macedonia are liable to pay income tax at a flat rate of 10%. In computing the tax liability, expenses incurred in the generation of income are deductible.
Taxable income includes: (1) personal earnings (salaries and bonuses), (2) income from agricultural activities, (3) income from individual business and professional activities, (4) real estate income, (5) royalties, (6) capital income, (7) income from games of chance, and (8) other income.
The personal allowance is MKD87,312 (€1,408) for the year 2014, and MKD87,840 (€1,417) for the year 2015. Other allowances are available for residents with regard to particular types of income.
Rental income is taxed at a flat rate of 10%. Income-generating expenses and depreciation costs are deductible when calculating taxable rental income.
A statutory deduction of 25% of gross rent is given to account for income-generating expenses. Alternatively, taxpayers can opt for itemized deduction instead of availing the standard deduction.
Capital gains from the sale of real estate property are taxed as ordinary income at the 10% rate. Capital gains are calculated as selling price less acquisition costs and incidental transaction costs. The tax is then levied on 70% of the calculated capital gain.
Capital gains realized on real estate property after an ownership period of 3 years are exempt from taxation.
Real Estate Tax
Real estate tax is levied on the market value of the property. The rates are determined by the municipalities and range from 0.10% to 0.20%. The owner of the property is generally liable to pay the tax, but in the case of a rental agreement, the tenant is the one liable.
Corporate income and capital gains are taxed at a flat rate of 10%. Expenses incurred in the generation of income are deductible when calculating the taxable income.
Capital gains are calculated as selling price less acquisition costs and incidental transaction costs. The tax is then levied on 70% of the calculated capital gains.