Employing individuals in North Macedonia involves navigating a clear set of tax and social contribution obligations for employers. The system requires employers to correctly calculate, withhold, and remit various amounts to the relevant state institutions on behalf of their employees. Understanding these responsibilities is crucial for compliance and smooth operations within the Macedonian legal framework. This includes managing personal income tax withholding, social security contributions, and adhering to specific reporting timelines.
The tax system in North Macedonia, particularly concerning employment, is designed to ensure contributions to social funds and collect income tax at the source. Employers act as withholding agents for personal income tax and are directly responsible for paying their share of social contributions, calculated based on the employee's gross salary. Compliance involves accurate record-keeping, timely filing of declarations, and prompt payment of due amounts.
Employer Social Security and Payroll Tax Obligations
Employers in North Macedonia are required to contribute to several social security funds based on their employees' gross salaries. These contributions cover pension, health, and unemployment insurance. The basis for calculation is the employee's gross salary, subject to statutory minimum and maximum bases.
For 2025, the standard employer contribution rates are expected to be:
| Contribution Type | Rate (%) |
|---|---|
| Pension and Disability | 18.8% |
| Health Insurance | 7.3% |
| Unemployment Insurance | 1.2% |
| Total Employer Rate | 27.3% |
These rates are applied to the employee's gross salary. There are minimum and maximum bases for these contributions, which are typically linked to the average gross salary in the country. The minimum base is usually the minimum gross salary, while the maximum base is a multiple of the average gross salary. Employers must ensure contributions are calculated and paid within these limits.
Income Tax Withholding Requirements
Employers are responsible for calculating and withholding Personal Income Tax (PIT) from their employees' gross salaries. This tax is levied on the employee's income, but the employer facilitates its collection.
North Macedonia applies a progressive PIT rate structure. For 2025, the rates are expected to be:
- 10% on annual income up to a certain threshold.
- 18% on annual income exceeding that threshold.
The threshold for the higher 18% rate is typically set annually. Employers calculate the monthly PIT withholding based on the employee's monthly gross salary, taking into account any applicable personal allowances. The calculation involves determining the taxable base by subtracting mandatory social contributions and personal allowances from the gross salary, and then applying the relevant tax rate(s).
Employee Tax Deductions and Allowances
Employees in North Macedonia are entitled to certain deductions and allowances that reduce their taxable income for PIT purposes. The most significant is the personal allowance.
For 2025, employees are generally entitled to a monthly personal allowance. This fixed amount is deducted from the gross salary (after social contributions) before calculating the PIT. The purpose of this allowance is to reduce the tax burden on lower incomes.
Other potential deductions or allowances might exist for specific circumstances, such as certain types of expenses (e.g., related to health or education) or for dependents, though the personal allowance is the primary mechanism for reducing the taxable base for most employees. Employers must correctly apply the personal allowance when calculating monthly PIT withholding.
Tax Compliance and Reporting Deadlines
Employers have strict obligations regarding the reporting and payment of withheld PIT and employer social contributions. Compliance involves monthly declarations and timely remittances.
The primary monthly reporting requirement is typically the submission of a declaration detailing employee salaries, withheld PIT, and calculated social contributions. This declaration, often referred to as the MIF form or similar, must be submitted electronically to the Public Revenue Office (PRO).
Key deadlines for employers in 2025 are expected to be:
- Monthly Reporting and Payment: The declaration and payment of PIT and social contributions for a given month are generally due by the 15th day of the following month.
- Annual Reporting: Employers are also required to submit an annual report summarizing the total income paid, PIT withheld, and social contributions for each employee during the previous calendar year. The deadline for this annual report is typically March 31st of the following year.
Adherence to these deadlines is critical to avoid penalties, interest, and other compliance issues.
Special Tax Considerations for Foreign Workers and Companies
Employing foreign workers or operating as a foreign company in North Macedonia introduces specific tax considerations.
- Foreign Workers: Non-resident individuals working in North Macedonia are generally subject to PIT on their income sourced within the country. The employer is responsible for withholding PIT from their salary, similar to resident employees, but specific rules regarding tax residency and applicable double tax treaties may apply. If a foreign worker becomes a tax resident (typically by residing in North Macedonia for more than 183 days in a 12-month period), they are taxed on their worldwide income.
- Foreign Companies: A foreign company employing staff in North Macedonia may trigger the creation of a permanent establishment (PE) for tax purposes, depending on the nature and duration of its activities. If a PE is established, the foreign company becomes subject to corporate income tax in North Macedonia on the profits attributable to that PE. Employing staff locally often contributes to the determination of a PE. Foreign companies without a PE but employing staff remotely may still have employer obligations for PIT and social contributions, often requiring registration as an employer.
Double tax treaties that North Macedonia has with various countries can impact the tax obligations for foreign workers and companies, potentially providing relief from double taxation. It is essential to consider the provisions of any relevant treaty.
