Legal Framework for Business and Investment in Kosovo
Kosovo has established an appealing business environment by offering various incentives to investors, including favorable tax regimes compared to other EU countries, bilateral double-taxation agreements, and a skilled and cost-effective labor force. The country has also prioritized foreign trade liberalization, evident in its participation in five trade agreements, including EFTA, CEFTA, and the Stabilization and Association Agreement (SAA) with EU member-states, Turkey, and Ukraine. Additionally, Kosovo has signed agreements for the avoidance of double taxation and investment protection with several European nations.
Investment Laws
To bolster the investment climate in Kosovo and ensure equitable treatment for both local and foreign investors, the nation has enacted two key pieces of legislation: the Law on Foreign Investment and the Law on Strategic Investments. These laws aim to streamline bureaucratic procedures for larger-scale investments categorized as "strategic investments." Foreign investors benefit from equal treatment, protection and security of their investments, and freedom to transfer income. Kosovo also provides support through incentives such as tax breaks and subsidies to attract foreign investments. However, certain sectors, like the production of weaponry and narcotics, require government approval for investment.
Corporate Law
Foreign investors seeking to establish a business presence in Kosovo have the option to incorporate a branch or representative office of their companies. The process for setting up a business presence is generally swift, typically completed within one working day. Kosovo offers five forms of business entities: Individual Business, General Partnership, Limited Partnership, Limited Liability Company, or Joint Stock Company.
Tax Regime
Kosovo follows a tax policy focused on simple regulations to ensure a broad tax base and prevent tax evasion. The Value Added Tax (VAT) rate in Kosovo is among the lowest in the region, applying to importers and businesses with an annual turnover exceeding EUR 30,000. The Corporate Income Tax (CIT) rate is set at 10% for legal entities, non-governmental organizations, and non-residents with permanent establishments in Kosovo. Personal Income Tax (PIT) is progressive, ranging up to 10% for natural persons receiving income from Kosovo sources and foreign incomes of Kosovar citizens.
Free Trade Regime
As a member of CEFTA, Kosovo enjoys free trade with Albania, North Macedonia, Croatia, Bosnia-Herzegovina, and Turkey. Additionally, the Stabilization and Association Agreement facilitates trade with the EU. The country has also signed double taxation treaties with several nations, including Albania, Macedonia, Slovenia, Turkey, the United Arab Emirates, and the United Kingdom.
Labour Law and Visa Regime
Kosovo's Labour Law aligns with international labor standards and applies equally to domestic and foreign investments. Employment contracts can be for an unspecified period, a specified period, or specific tasks. The procedure for obtaining residency and work permits is regulated by the Law on Foreigners issued by the Ministry of Labour and Social Welfare. For business purposes, Kosovo grants visa-free entry to EU member countries and many signatories of the Schengen Agreement, as well as visa-free entry to several other countries.
Public Procurement
Kosovo's Law on Public Procurement ensures the fair and transparent process of providing finance, construction, reconstruction, operation, or maintenance of infrastructure and public facilities. The law also regulates public-private partnerships, providing a framework for long-term cooperation between public and private entities to deliver services of public interest.
In conclusion, the Republic of Kosovo offers a favorable legal framework for foreign investors, with investment laws, corporate regulations, tax policies, and trade agreements designed to create a conducive and attractive environment for business growth and development.
