Investing

Kosovo: Investing

FDI in Figures

Kosovo declared its independence in 2008 and has since struggled to attract foreign investors. UNCTAD’s 2021 World Investment Report does not provide data about the country. According to the World Bank, net FDI inflows represent 3.6% of GDP in 2019 (latest data available). The Central Bank of Kosovo notes that in 2020, despite the COVID-19 pandemic, FDI in Kosovo increased by 34.2% in comparison to the previous year, reaching EUR 341.7 million. The sector of financial activities, energy, as well as mining and quarrying, saw notable growth while the real estate sector decreased by 10.1%. The financial activities sector, particularly, increased its share of FDIs to 24.7% in 2020, from 5.5% one year earlier. Central Bank data shows that whilst the value of FDIs in Kosovo has remained high, there has been a notable decrease since 2007. Real estate and leasing activities are the largest recipients of FDI, followed by financial services and energy. The food, IT, infrastructure and energy sectors are experiencing growth and are likely to attract new FDI in the future. The majority of FDI comes from Switzerland, Germany, Turkey, United Kingdom and Albania.

The Kosovar law does not require FDI to be screened, reviewed, or approved, and the national laws do not discriminate against foreign investors. The country’s laws do not discriminate against foreign investors. However, foreign investors are discouraged, among others, by high levels of corruption, slow judicial procedures, lack of intellectual property rights protection, competition from unlicensed vendors and irregularities in procedures for public procurement. Nonetheless, the Kosovar government’s pro-business stance, the country’s strategic location, rich natural resources, young educated workforce, a flat 10% corporate tax rate and temporary exemptions on Value Added Tax (VAT) payments for new exporters have helped attract some foreign investors and businesses. The latest Doing Business report published by the World Bank ranked Kosovo 57th out of 190 economies, which represents a loss of thirteen spots compared to the previous edition. However, Kosovo has one of the highest scores in the region, being second only to Croatia, which ranks 51st.

Country Comparison For the Protection of Investors

	Kosovo	Sub-Saharan Africa	United States	Germany
Index of Transaction Transparency*	9.0	5.5	7.0	5.0
Index of Manager’s Responsibility**	6.0	3.5	9.0	5.0
Index of Shareholders’ Power***	5.0	5.5	9.0	5.0

Source: Doing Business - Latest available data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.

Tax Rates

Value Added Tax (VAT): 18% (standard rate).
A reduced rate of 8% applies to water, except bottled water; electricity, central heating, waste collection and other waste treatment; grains such as barley, corn, maize varieties, oats, rye, rice and wheat; products made from grain for human consumption; oils made from grains or oilseeds for use in cooking for human consumption; dairy and dairy products for human consumption; salt appropriate for human consumption; eggs for consumption; lending of books from libraries, including brochures, leaflets and similar printed materials; children’s picture books; drawing and coloring books; music printed texts and manuscripts; and maps, hydrographic charts and similar materials; textbooks and serial publications; information technology equipment; supply of medicines, pharmaceutical products, instruments, and medical and surgical devices; medical equipment, ambulances, aids and other medical devices to facilitate activity or treat a disability for exclusive use by the disabled, including the repair of such goods and supply with children’s vehicle seats.
The following items are exempt: hospital services and medical care; education; health insurance, life insurance, reinsurance and related services performed by insurance brokers and agents; financial services; welfare services; betting, lotteries and other forms of gambling; supply of land or land on which a building or house stands; the supply of houses, apartments or other accommodations used for residential purpose, including garages and basements; leasing of immovable property.
Export of goods; international transport; supplies under diplomatic and consular arrangements; the supply of goods or services to international and inter-governmental bodies; supply of gold to the Central Bank of Kosovo; and related supply of services by intermediaries taking part in the above transactions are zero-rated.
Company Tax
Withholding Taxes: Dividends: 0%, Interests: 10%, Royalties: 10%.
Social Security Contributions Paid By Employers: 5% (however, the voluntary contribution can go up to 15%)
Other Domestic Resources: Tax Administration of Kosovo; Overview of Kosovo's tax measures in response to Covid-19; Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.

	Kosovo	Sub-Saharan Africa	United States	Germany
Number of Payments of Taxes per Year	10.0	36.6	10.6	9.0
Time Taken For Administrative Formalities (Hours)	153.5	284.8	175.0	218.0
Total Share of Taxes (% of Profit)	15.2	47.3	36.6	48.8

Setting Up a Company	Kosovo	Sub-Saharan Africa
Procedures (number)	3.00	7.51
Time (days)	4.50	21.30

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Personal income tax	Progressive rates from 0 to 10%
EUR 0 - 960	0%
EUR 960 - 3,000	4%
EUR 3,000 - 5,400	8%
Over EUR 5,400	10%

Kosovo: Investing

FDI in Figures

Country Comparison For the Protection of Investors

Tax Rates

Individual Taxes

Country Comparison For Corporate Taxation

Investment Opportunities

Business Setup Procedures