The withholding tax is made on revenues paid in the Republic of Macedonia or abroad to the foreign legal entities, and which are not realized in the frames of the business of the permanent establishment of the foreign legal entity on the territory of the Republic of Macedonia, provided it is not otherwise determined by the International Agreements for avoiding double taxation.
Revenues on which there is withholding tax:
- Revenue from dividends;
- Revenue from an interest of resident;
- Revenue from interest of non-resident who has permanent establishment in the Republic of Macedonia, if the interest is at the expense of the permanent establishment;
- Revenue from royalties paid by a resident;
- Revenue from royalties paid by non-resident with permanent establishment in the Republic of Macedonia, if the royalties is at the expense of the permanent establishment;
- Revenue from entertainment or sports activities that are performed in the Republic of Macedonia;
- Revenue from conducting management, consulting, financial services, research and development services, if the revenue is paid by a resident or is at the expense of the permanent establishment in the Republic of Macedonia;
- Revenue from insurance premiums for insurance or reinsurance of risks in the Republic of Macedonia;
- Revenue from telecommunication services between the Republic of Macedonia and a foreign country; and
- Revenue from rental property in the Republic of Macedonia.
The withholding tax is done by:
- Domestic legal entities
- Domestic natural persons – registered for performing activity and
- Foreign legal entity or natural person-nonresident with permanent establishment in the Republic of Macedonia.
The withholding tax rate of the revenues gained by the foreign legal entity since 2008 and onwards is 10%.
If the recipient of the revenues is a resident of a country with which the Republic of Macedonia has signed an Agreement for avoiding double taxation regarding the taxes of income and capital, the taxation and the applied tax rate cannot be higher than the tax rate applied for the revenue determined in the Agreement.
Applying of the tax rate from the international agreements is accomplished in prescribed forms for relief or exemption (Form ZD-O/DI; ZD-O/KA; ZD-O/AP; ZD-O/DP).
If a foreign legal entity realizes income in the Republic of Macedonia and for which according to the international agreement for avoiding double taxation it is applied 0% tax rate, instead of the forms ZD-O/DI; ZD-O/KA; ZD-O/AP; ZD-O/DP, it can be submitted a completed form "ZD-DO" with a Certificate of residency attached, issued by the competent tax authority abroad.
Prior to the payment of the income subject to the withholding tax, the Request for relief or exemption for the specific type of income is submitted to the competent Regional Office of PRO in three copies fully completed and certified by the competent tax authority of the foreign country, in terms of confirming the residential status of the recipient of the income.
The persons who have an obligation to withhold the tax, before making the payment to the foreign legal entity, it is necessary from the competent Regional Office of the Public Revenue Office to require a "Tax Identification Number" for the foreign legal entity - the recipient of the income.
The entities obliged to make withholding tax, once per year submit to the Public Revenue Office a Report about the paid withholding tax on the form “DD-I“. This form is submitted until 15 February in the following year.
If a foreign legal entity submits a Request for tax refund (Form ZD-V/DI; ZD-V/KA; ZD-V/AP; ZD-V/DP) due to the more paid tax, in relation to the tax which under the provisions of the agreements for avoiding double taxation should be paid, the PRO will return the overpaid withholding tax.
The refunding is made in local currency, in the amount of the overpaid withholding tax.
The amount is returned to the account indicated in the Request.
