North Macedonia operates a tax system that includes obligations for both employers and employees regarding income and social security contributions. Employers play a crucial role in this system, being responsible for calculating, withholding, and remitting various taxes and contributions on behalf of their employees. Understanding these requirements is essential for compliant operation within the country.
The primary employment-related taxes and contributions in North Macedonia include Personal Income Tax (PIT) and mandatory social security contributions covering pension, health, and unemployment insurance. These are calculated based on the employee's gross salary, with specific rates and rules governing their application and payment.
Employer Social Security and Payroll Tax Obligations
Employers in North Macedonia are required to calculate and pay mandatory social security contributions for their employees. These contributions are calculated on the employee's gross salary and are paid entirely by the employer. The rates expected to apply for 2025 are as follows:
| Contribution Type | Rate (Applied to Gross Salary) |
|---|---|
| Pension and Disability Insurance | 18.8% |
| Health Insurance | 7.3% |
| Unemployment Insurance | 1.2% |
| Total Social Contributions | 27.3% |
There are minimum and maximum bases for calculating these contributions. The minimum base is typically the average gross salary in North Macedonia from the previous year, adjusted annually. The maximum base is set at four times the average gross gross salary from the previous year. Contributions are calculated on the employee's gross salary, but must fall within these minimum and maximum thresholds.
Income Tax Withholding Requirements
Employers are also responsible for withholding Personal Income Tax (PIT) from their employees' salaries. The standard PIT rate in North Macedonia is a flat 10%.
The base for calculating PIT is the employee's gross salary reduced by the mandatory social security contributions paid by the employer on behalf of the employee and the statutory personal allowance.
Calculation steps:
- Determine the employee's gross salary.
- Calculate the total mandatory social contributions (27.3% of gross salary, subject to min/max base).
- Subtract the total social contributions and the monthly personal allowance from the gross salary to arrive at the taxable income base.
- Apply the 10% PIT rate to the taxable income base.
- Withhold this amount from the employee's net salary payment.
Employee Tax Deductions and Allowances
While employers handle the withholding, employees benefit from certain deductions and allowances that reduce their taxable income base. The most significant is the personal allowance.
For 2025, resident individuals are entitled to an annual personal allowance. This allowance is typically applied monthly by the employer when calculating the PIT withholding. The annual amount is divided by 12 to get the monthly deduction. The specific amount of the personal allowance is determined annually by law.
Other potential deductions might exist for specific circumstances, such as certain types of expenses or contributions, but the personal allowance is the primary deduction applied monthly by the employer.
Tax Compliance and Reporting Deadlines
Employers in North Macedonia must adhere to strict compliance and reporting requirements. The main monthly obligation is the submission of the MPIN form (Monthly Report on Paid Salaries, Allowances, and Contributions) to the Public Revenue Office (PRO).
- Monthly Reporting: The MPIN form must be submitted electronically by the 15th day of the month following the month in which the salary was paid. This form details the gross salaries, calculated social contributions, personal allowance, taxable income base, and withheld PIT for each employee.
- Payment Deadline: The calculated social contributions and withheld PIT must be paid to the relevant state accounts by the same deadline as the MPIN submission – the 15th day of the month following the payment period.
- Annual Reporting: Employers are also required to provide employees with annual statements of their income, withheld tax, and paid contributions. The PRO also receives annual information summaries from employers.
Timely submission and payment are critical to avoid penalties, which can include fines and interest on late payments.
Special Tax Considerations for Foreign Workers and Companies
Employing foreign workers or operating as a foreign company in North Macedonia introduces specific tax considerations:
- Tax Residency: An individual's tax obligations depend on their residency status. Residents are taxed on their worldwide income, while non-residents are generally taxed only on income sourced in North Macedonia. Residency is typically determined by physical presence (more than 183 days in a calendar year) or having a domicile in North Macedonia.
- Tax Treaties: North Macedonia has signed double tax treaties with numerous countries. These treaties can provide relief from double taxation by granting preferential tax rates or exemptions for certain types of income, including employment income, for residents of treaty countries.
- Registration: Foreign companies employing individuals in North Macedonia, even without a permanent establishment, may have registration requirements for payroll and tax purposes. Engaging an Employer of Record (EOR) is a common solution for foreign companies to ensure compliance with local employment and tax laws without needing to establish a local entity.
- Social Contributions for Foreigners: Generally, foreign employees working in North Macedonia are subject to mandatory social security contributions unless an international social security agreement between North Macedonia and the employee's home country provides for an exemption (e.g., based on a certificate of coverage).
Navigating these specific rules requires careful attention to ensure full compliance for both the employer and the foreign employee.
