When a foreign company or individual decides where to invest, the first calculation is almost always a tax one: how much of the profit remains after the state takes its share. North Macedonia has long positioned itself with one of the most competitive tax frameworks in Europe, built on flat and low rates, simple computation and a wide network of international treaties. This guide summarizes the taxes a foreign investor actually pays, without marketing promises and without rates that exist only on paper.
What are the main taxes paid by a foreign investor's company?
A company registered in North Macedonia pays the same taxes as any domestic one: corporate income tax of 10%, VAT at the standard rate of 18% (with a reduced rate of 5% for certain goods and services), personal income tax and social contributions on employees' salaries. The foreign origin of the owners introduces no additional or higher taxes: the law treats domestic and foreign investors equally.
How much is the corporate income tax and how is it calculated?
Corporate income tax is 10%, paid on the tax base, meaning the profit determined in the annual financial statements adjusted according to tax rules. The flat 10% rate applies to the smallest company and to a large investor alike, with no progressive brackets. What requires attention in companies with foreign owners are transactions with related parties: if the Macedonian company does business with its parent or sister companies abroad, prices must comply with market conditions, and above a certain volume of such transactions transfer pricing documentation is prepared.
What applies when profit is distributed to the foreign owner?
Dividends and profit shares that a domestic company pays out to a foreign owner, whether a legal or natural person, are as a rule subject to a 10% withholding tax, which the payer withholds and remits. If a double taxation avoidance treaty exists between North Macedonia and the recipient's country, the more favourable treaty rate applies, provided the recipient supplies a tax residence certificate from its own country. Where more was paid than the treaty provides, the difference can be refunded.
| Tax | Rate | Note |
|---|---|---|
| Corporate income tax | 10% | flat rate for all companies |
| Personal income tax | 10% | flat rate for salaries and most types of income |
| VAT | 18% standard, 5% reduced | the reduced rate applies to goods and services defined by law |
| Dividend withholding tax for foreigners | 10% | reduction possible through a double taxation treaty |
When does a foreign company pay tax without a registered branch?
There is a clear rule here as well: through the concept of permanent establishment. If a foreign company carries out activity in North Macedonia through a fixed place of business, a construction site, an installation project or an authorised representative who concludes contracts in its name, the state treats that part of the activity as a permanent establishment and taxes the profit attributable to it. This is a frequent mistake among foreign contractors working on projects in the country without registration: the tax obligation does not depend on whether the company has opened a branch, but on how the work is actually performed.
What do the double taxation treaties offer?
North Macedonia has concluded treaties with a large number of countries, including most European Union member states and regional partners. These treaties decide which state taxes what, most often reduce withholding tax rates on dividends, interest and royalties, and prevent the same income from being taxed twice. For the investor this means the overall tax burden is planned on both sides of the border, with documents on both sides: a residence certificate, properly recorded payments and contracts that reflect the real economic substance.
What should be checked before the first transaction?
Before operations begin, the practical list is short, but each item carries consequences if skipped:
- VAT registration: mandatory once turnover exceeds the statutory threshold, and in many cases worthwhile voluntarily, from the very start;
- e-invoicing: from 1 October 2026 an invoice without Public Revenue Office validation is no longer a valid tax document, which also affects collection contracts (more in Mandatory E-Invoicing from 1 October 2026);
- transfer pricing: contracts with related foreign parties should have market prices and appropriate documentation;
- double taxation treaty: check whether one exists with the investor's country and what evidence it requires for the lower rate;
- investment structure: direct participation, a branch or a new domestic company, because the choice affects taxation on distribution and on exit from the investment.
The tax framework in North Macedonia is simple in its numbers, but the calculation for a specific investment depends on the investor's country, the ownership structure and the type of income. It is precisely there, before registration and before the first payment, that proper planning delivers the most.
Planning an investment in North Macedonia?
The tax calculation depends on the investor's country, the company structure and the way profit will be distributed. All three are determined before registration, not after it.
We prepare a complete legal and structural analysis before company formation, related-party contracts and the documentation for applying double taxation treaties.
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Source: Corporate Income Tax Law, Value Added Tax Law and Personal Income Tax Law (as amended).
This text provides general legal information and does not constitute legal advice for a specific case. For advice tailored to your situation, please consult an attorney.