Indirect tax - Kosovo

Value Added Tax (VAT) is the main type of indirect taxation in the Republic of Kosovo.

It is a tax on consumption which is applied in different phases of the production, delivery and trade with goods and services, and in the end it is carried forward from the last consumer. It is also applied to goods, and certain services, entering the country. Although VAT in the end is carried forward from the last consumer by being included in the price paid, the responsibility for charging, collecting and paying it to the tax authority at each stage of the process rests with the taxable person making the supply.

Taxpayer is any natural or legal person who is, or is required to be registered for VAT, and who in Kosovo independently carries out any economic activity in a regular or non-regular manner, whatever the purpose or results of that economic activity.

A taxpayer will charge VAT (output tax) on its sales, and will deduct VAT (input tax) on its purchases (including any VAT paid at importation). The difference between the output tax and the deductible input tax in each tax period will be the amount of VAT payable by the business to the tax authority. Where the input tax exceeds the output tax, a refund can be claimed.

VAT shall be charged on supply of goods and services made for consideration within the territory of Kosovo by a taxpayer and on the importation of goods in Kosovo.

Currently there two VAT rates applicable which are 8% and 18%. In addition, some goods and services are exempted with credit right and some others are exempted with no credit right.

Taxpayer that make exempt supplies with no credit right are unable to claim all of the input tax that they incur, so the VAT paid to suppliers will be a ‘real’ cost, while taxpayer that is exempted with credit right is entitled to claim all the input tax which is used for taxable supplies.

Most goods imported into the Republic of Kosovo are subject to VAT. The tax will have to be paid by the importer at the time of importation. Where the importation is for business purposes, it may be possible to reclaim the tax (subject to certain rules).

Every person who meets all conditions of the definition of taxpayer is required to register for VAT from the moment when total supplies in one calendar year, exceeds a total turnover of €30,000.

The month in which the total turnover is exceeded counts for one calendar year calculation. Only that proportion of the supply which results in surpassing the turnover will be taken into consideration for purposes of VAT.

When calculating the turnover, the payer shall consider the total amount of all supplies during the calendar year. Supplies shall be deemed any supplies of any goods and services at any rate, including those exempt, with or without right to deduct.

When a person is registered for VAT purposes, Tax Authorities shall issue such taxpayer a registration certificate containing his information. A physical person conducting the same or different economic activities and has several places of economic activity within Kosovo, shall be identified by one individual and unique VAT registration number.

A natural person conducting the same or different economic activities and has several places of economic activity within Kosovo, shall be identified by one individual and unique VAT registration number. A partnership and grouping of persons shall be identified by one single VAT registration.

Every person who has not notified and has not been registered in due time shall be registered in a compulsory way by tax authorities with retroactive effect as of the date of exceeding the threshold. Furthermore, a penalty may be imposed by the tax authority if a taxpayer fails to register at the correct time.

The normal VAT registration limit does not apply to taxpayers who are not established in the Republic of Kosovo. The taxpayer not established in Kosovo are subject to VAT registration, from the beginning of their economic
activity in Kosovo, regardless of the turnover.

Not applicable.

Taxpayer not established in Kosovo which is engaged in economic activity in Kosovo shall appoint a tax representative except for those cases that the receiver of the taxable supplies is liable to report and pay VAT.
The taxpayer shall be registered under his own name and the name of his tax representative within 5 days after the appointment as tax representative and prior to the starting of economic activity in Kosovo.

A taxpayer shall submit a VAT return and remit the related payment not later than the 20th of the calendar month following the end of each tax period.

Administrative penalty for late VAT return is 5% of due tax for each month or part of the month that is late, with a maximum administrative penalty of 25% of tax due. While, administrative penalty of late payment is 1% of tax due for each month or part of the month that payment is late, up to maximum 12 months. Furthermore, an interest for late payment at rate of 0.65% per month is also applicable.

Yes. Purchase and sales books must be uploaded with VAT declaration.

Penalties are applicable also to the taxpayer who makes supplies without being registered for VAT. Such penalties are provided below:
• 15% of the VAT due on those supplies if failure to register is due to negligence of person making taxable supplies of less than €10,000
• 25% of the VAT due on those supplies if failure to register is due to negligence of person making taxable sales of €10,000 or more.
In addition , a taxpayer who fails to issue a VAT invoice, or who issues an incorrect invoice that results in an apparent decrease in the amount of VAT due or an apparent increase in the amount of credit claimable shall be liable to an administrative penalty of:
• 15% of the apparent decrease or increase in the amount of VAT due where the failure to issue a VAT invoice or the issue of an incorrect invoice was due to the negligence of the taxable person
• 25% of the apparent decrease or increase in the amount of VAT due where the failure to issue a VAT invoice or the issuance of an incorrect invoice was due to the carelessness of the taxable person.

Not applicable.

A taxpayer who issues an invoice to a taxpayer shall indicate the following data on the invoice:

• the date of issue
• a sequential number enabling the identification of the invoice
• the VAT registration number as well as the fiscal number of the taxpayer under which he supplies the goods or services
• the VAT registration number as well as fiscal number of the customer or the purchaser, if the customer or the purchaser is liable to pay VAT on goods or services supplied to him • the full name and address of the taxpayer and his customer
• the quantity and nature of goods supplied, or the extent and nature of the services performed
• the date on which the supply of goods or of services was made or completed, or the date of receipt of the payment on account, in so far as that date can be determined and differs from the date of the issue of the invoice
• the taxable amount on which VAT is charged for each individual rate or for which the individual exemption applies, the unit price exclusive of VAT for the goods or services, and any price reductions and discounts not included in the unit price
• the VAT rate applied
• the amount of VAT, except where a special arrangement is applied
• in the case a taxpayer supplies goods or services for which a VAT exemption is prescribed, the invoice must indicate the provision of the Law that stipulates such exemption

• if a taxpayer supplies goods or services where the customer is liable for payment of VAT, reference to the applicable provision of the Law shall be mentioned
• a taxpayer who charges VAT on the margin scheme must state on the invoice the provision of the Law pursuant to which VAT on the price difference is charged
• where one of the special arrangements applicable to second-hand goods, works of art, collectors’ items and antiques is applied, reference must be made to the relevant articles of these arrangements
• where the taxpayer who issues the invoice is liable to pay
• VAT as a tax representative, the fiscal number and the VAT registration number and his full name and address are obligatory details to be mentioned.

The VAT return is submitted through the e-system (EDI) for VAT of Tax Administration of Kosovo, separately for each tax payer. The VAT return is submitted in prescribed format as per the sub legal acts adopted by the Ministry of Finance of Kosovo.