Taxation of free professions and employees in Albania, Kosovo, and the Balkan countries, 2024

Taxation of free professions and employees in Albania, Kosovo, and the Balkan countries, 2024

In a look at the tax treatment for the entire Western Balkans of freelancers, we see that the highest tax rates are found in Albania and Serbia, respectively with 15% and 10% and 20% of their profit after some deductions defined as regimes special tax.

In Albania, for freelancers with an annual income of up to 14 million ALL, fixed and undeclared expenses are recognized in accounting at the rate of 30%.

The other category of businesses with annual income over ALL 14 million is obliged to declare annual expenses to the tax administration and apply the 23% tax rate on the difference between income and expenses.

The tax on the salary of employees in Albania starts from 0% for salaries up to 50 thousand ALL per month and is 8% for salaries 50,000 – 60,000 ALL per month, 13% for salaries from 60,000 to 200,000 ALL per month and 23% above 200,000 ALL per month .

As of January 1, 2023, freelancers in Serbia have the opportunity to choose between two tax models, enabling them to optimize their tax liability.

The first model is more favorable for beginning freelancers or for those for whom freelancing simply represents an additional source of income.

The second model is a more favorable choice for individuals for whom self-employment is their main source of income.

Both models are built on the recognition of specific standardized costs that reduce the tax base, with the amount and method of determining these costs differing significantly depending on the model chosen.

According to the first taxation model, the tax base consists of gross income reduced by a fixed amount of standardized costs, up to 800 euros, on a quarterly basis, on which a tax rate of 20% is applied.

According to the second taxation model, which can be chosen by independent professionals in Serbia, the tax base is on the gross income reduced by an absolute amount of standardized costs up to 490 euros, on a quarterly basis, as well as a relative amount of standardized costs of 34% of gross income. The tax rate in this model is 10%.

Tax on employees’ salaries in Serbia is at a flat rate of 10%, after deducting the non-taxable salary limit of RSD 25,000. The taxable base is the gross salary, including fringe benefits, such as company-provided accommodation and use of a company car.

In Montenegro, in North Macedonia, in Bosnia-Herzegovina, the tax rate is 10% of the profit of freelancers.

Tax on employees’ salaries in Bosnia and Herzegovina is 10%, as a flat tax rate.

Tax on employees’ salaries in North Macedonia is 10%, as a flat tax rate.

Tax on employees’ salaries in Montenegro is 0% for salaries up to 700 Euro/month, 9% for salaries of 701 – 1,000 Euro/month and 15% for salaries of 1,001 Euro/month and above.

In Kosovo, the tax rate is 9% of the profit of self-employed professionals (freelancers).

Tax on employee salaries in Kosovo is 0% for salaries up to 960 euros (EUR)/year, 4% for salaries from 960 to 3,000 euros/year, 8% for salaries from 3,000 euros to 5,400 euros/year and 10 % for salaries over 5,400 euros/year.

Consulting with a tax advisor and insurance professional can help freelancers determine the most appropriate options for their specific circumstances and income level.

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