Tax residency in Kosovo for digital nomads probably isn’t really on your radar. However, it might be something that is worth looking into. I’ll give you some insight in the advantages and attention points if you think about setting up tax residency in Kosovo.
Living in Kosovo
Kosovo is not part of the European Union or the Schengen Area. Therefore, even passport holders of a European country need to assess first if they can live in Kosovo. Mostly you don’t need a visa if you only stay in the country for 15 days. If you want to stay longer you will need to apply for a visa or for a residence permit.
You can apply for a temporary residence permit which has a validity of one year. You can renew the temporary residence permit after it ends. After five years, you can apply for permanent residence.
Kosovar tax rules
Tax residency in Kosovo
You become a tax resident in Kosovo if you spend more than 183 days in the country. Because of the lifestyle, most digital nomads don’t want to spend that many time in one country. However, you can also become a tax resident in Kosovo by having your principal residence in the country. This means that if you have a place available there which you consider your home base, you can still qualify as a tax resident of Kosovo.
Tax residency in Kosovo for digital nomads: tax rates
Basically, the tax rate in Kosovo amounts to 10% if you make more than €5.400 per year. Under that rate there are some smaller progressive percentages but we’ll ignore these for now.
Kosovo does not tax dividends. Therefore, you have to optimize your tax burden via Kosovo is you have a lot of investment income.
Kosovo does not charge a wealth tax either.
Tax residency in Kosovo for digital nomads: social contributions
Apart from income taxes, you also need to account for social contributions. Compulsory social contributions amount to 10% in total as well. Both the employer and the employee pay 5% each.
In addition, both the employer and the employee can opt to contribute an additional 15% each (30% in total) as a pension contribution.
VAT
If you have a turnover of more than €30.000 you need to register and administer for VAT. Kosovo’s VAT rules align with the rules that apply within the European Union.
Setting up a company in Kosovo
Another option to benefit from Kosovo’s interesting tax rules is to set up a company. The corporate tax rate is 10% percent as well, just like the personal income tax rate.
We already discussed there is no tax on dividends in Kosovo. Accordingly, Kosovo also does not levy any withholding tax on dividends to residents.
Tax residency in Kosovo for digital nomads: conclusion
We can consider Kosovo as an unknown gem in the world of taxation for digital nomads. Therefore, tax residency in Kosovo for digital nomads is something to keep in mind if looking at your options.
