A comprehensive guide for non-resident taxpayers in Kosovo: registration, tax obligations, and fiscal representation

December 5, 2024

Are you a non-resident taxpayer in Kosovo? Navigating tax compliance can be challenging, especially when dealing with registration requirements and fiscal representation. This guide offers clear insights into your obligations, the registration process, and the legal protections available to ensure compliance in Kosovo.

Who qualifies as a non-resident taxpayer?

You are considered a non-resident taxpayer if:

• You earn income in Kosovo but do not meet the criteria for fiscal residency.
• You do not have a permanent physical presence or manage primary business operations in Kosovo.

Examples of non-resident taxpayers include:

• International businesses: Companies providing services or selling products in Kosovo without a registered office or branch.
• Foreign investors: Individuals earning income from real estate, interest, dividends, or rent in Kosovo.
• Professionals: Consultants or specialists offering temporary services in Kosovo.

How is residency determined under Kosovo law?

According to Article 1.40 of the Law No. 08/L-257 on Tax Procedure Administration, a taxpayer is considered a resident if they meet any of the following criteria:

1. They have their primary, habitual, or main residence in Kosovo.
2. They stay in Kosovo for at least 183 days during a tax period.
3. Their center of vital interests (personal, financial, or social relations) is in Kosovo.
4. They are a Kosovo citizen working abroad as an official or employee of the Republic of Kosovo.

A business or legal entity is considered a resident if:

• It is established under Kosovo law, or
• It has its effective place of management in Kosovo.

Non-resident taxpayers are those who do not meet these criteria but generate income within Kosovo.

Do you need to register with the Tax Administration of Kosovo (TAK)?

Yes, you must register with TAK if you:

• Earn taxable income in Kosovo.
• Offer services or manage projects within Kosovo.
• Invest in real estate or other ventures in Kosovo.

Is registration with KBRA mandatory?

Registration with the Kosovo Business Registration Agency (KBRA) is only required if you establish a permanent office, branch, or legal entity in Kosovo. If your activities are temporary or limited in scope, KBRA registration is not necessary.

Can you open a bank account in Kosovo?

Yes, you can open a bank account in Kosovo to manage financial transactions. However, this requires:

1. Registration with TAK.
2. Obtaining a fiscal number issued by TAK.

What is a fiscal representative, and why do you need one?

Under Kosovo’s Tax Procedures Law no. 08/L-257, all non-resident taxpayers are required to appoint a fiscal representative residing in Kosovo. A fiscal representative acts as a liaison with the authorities and is responsible for:

• Registering the taxpayer with TAK.
• Filing accurate tax returns and ensuring timely payments.
• Maintaining detailed records and documentation.
• Communicating with TAK and other institutions on behalf of the taxpayer.

While Vokshi & Lata does not act as a fiscal representative, our team of legal experts can provide guidance on appointing a reliable representative and ensuring compliance with Kosovo’s tax laws. We assist non-resident taxpayers with drafting agreements, clarifying legal obligations, and resolving disputes related to fiscal representation.

What happens if taxes remain unpaid?

Kosovo law places liability for unpaid taxes on fiscal representatives. This means that TAK can recover debts directly from the representative’s assets if the taxpayer defaults on their obligations.

Protecting yourself and your fiscal representative

To ensure smooth tax compliance and minimize risks:

• Draft a clear contract: We help define the fiscal representative’s role and include provisions for financial guarantees.
• Provide security measures: Our team can advise on setting up bank deposits or insurance to cover potential tax obligations.
• Maintain open communication: We ensure that all parties are aligned on deadlines, payments, and documentation.

Why is this important for you?

Failing to comply with tax laws in Kosovo can result in penalties, legal challenges, or reputational damage. By appointing a trusted fiscal representative and adhering to clear guidelines, you can safeguard your financial interests and focus on your business activities.

Contact us for professional legal assistance

At Vokshi & Lata, we offer comprehensive legal support for non-resident taxpayers in Kosovo. Whether you need help understanding tax laws, appointing a fiscal representative, or resolving disputes, our expert team is here to assist. Contact us today to learn more about our legal services tailored to your needs.

Author: Florin Lata