Setting up a Business

Official Name: Republic of North Macedonia

Capital: Skopje (Population of 600.000)

Other Major Cities (Population of over 100.000): Kumanovo, Bitola, Tetovo, Veles, Prilep, Stip

Population: 2,05 million

Area: 25,713 sq.km

Location:Republic of North Macedonia is located in the central Balkan peninsula in Southeast Europe. It is one of the successor states of the former Yugoslavia, from which it declared independence in 1991. It became a member of the United Nations in 1993. It shares a border with Greece to the south, Bulgaria to the east, Serbia and Kosovo to the north, and Albania to the west. The country is 80% mountainous, rising to its highest point at Mt. Korab (peak 2.764 meters).

Time Zone: GMT + 1

Political System: Parliamentary democracy

Currency: Macedonian Denar – MKD (€1 = MKD 61,5)

Country Phone Code: + 389

Country Internet domain: .mk

MACROECONOMIC STABILITY

North Macedonia’s high-potential economic and financial stability is expressed through positive key economic indicators such as a steady GDP, low inflation rate, stable currency and excellent fiscal discipline confirmed by the international financial institutions.

North Macedonia’s exports have also had a positive track record. The export growth rate was 14,3% in 2017, 16,8% in 2018, and is expected to be 9,2% in 2019.

GDP (REAL GROWTH RATES)
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
-0,4 3,4 2,3 -0,5  2,9  3,6  3,9  2,8   0,2  2,7  3,6

 

INFLATION
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
-0,8   1,6   3,9  3,3   2,8 -0,3  -0,3  -0,2  1,4  1,5  0,8
UNEMPLOYMENT RATE
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
32,2 32,1 31,4 31,0 29,0 28,0 26,1 23,7 22,4 20,7 17,1
BUDGET DEFICIT: (% of GDP)
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
-2,6 -2,4 -2,5 -3,8 -3,8 -4,2 -3,5 -2,7 -2,7 -1,8 -2,0
EXCHANGE RATE MKD/EUR
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
61,27 61,51 61,53 61,53 61,58 61,62 61,61 61,60 61,60 61,51 61,50*
FDI FLOWS (% of GDP)
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
 2,0   2,2  4,5  1,5   3,1  2,4   2,5   3,5   1,8    5,7     2.9

 

GENERAL OVERVIEW

North Macedonia prides itself on its educated, highly-qualified, and ethical workforce available to foreign investors. Educational standards at technical higher educational institutions in North Macedonia resemble those of Western countries. Workers welcome continuing education and life-long learning, successfully completing customized vocational training programs. The Government aids investors in the process of labor force training with active labor market policies.

 

DUAL VOCATIONAL TRAINING PROGRAM

In April 2017 the Delegation of German Chambers of Commerce and Industry in North Macedonia started executing the Dual Vocational Training Program “Skills Expert”. A new 4-year educational program for Mechatronic Technicians and Industrial Machinery Technicians has been implemented with partner companies in the following cities:

  • Ohrid (Kostal Group, ODW Elektrik, and LTH Castings)
  • Kavadarci (Dräxlmaier Group)
  • Bitola (Kromberg & Schubert)
  • Veles (Marquardt and Brako)
  • Prilep (Gentherm, Vitaminka, and WIK)

A similar program was realized in Skopje to meet the needs of energy company EVN AD.

Students from a local high school received internships and gained practical field work experience.

 

The Ministry of Education and Science is working on implementing a program for dual vocational education encompassing the whole territory of the Republic of North Macedonia, as well as running a campaign through high schools to attract students to choose vocational education.

 

EDUCATION GEARED FOR BUSINESS

Elementary and high school education, as well as English language learning and ICT learning, are mandatory in the North Macedonian educational system and begin in the first grade of elementary school. Two foreign languages are mandatory in high school: English and either German, French or Russian. English is also taught for two years at University level. In addition to standard high schools, many vocational high schools in each city enable students to learn various trades. There are five public and numerous private internationally recognized universities and colleges. Both, vocational schools and universities offer tailor-made training programs in an effort to meet the specific needs of companies investing in North Macedonia. In the past several years, North Macedonia on average spent 4% of its GDP on education, a percentage higher than the corresponding one in most of the OECD countries.

With 38.4% of the population under 30 years of age, North Macedonia offers a young, educated, and skilled workforce. The three year average for enrolled university students amounted to 60,278, whereas the average for university graduates totaled 10,368.

 

SALARIES

Although the average gross monthly salary at the national level in 2018 was €597, the average gross monthly salary in the manufacturing sector was €484.These amounts include the net salary, personal income tax and social contributions for pension and disability insurance, health insurance and employment insurance. The national statutory minimum salary in 2019 is €198 net and €282 gross.

 

SOCIAL CONTRIBUTIONS

Social Contributions 2008 2009               2010-2018               2019                   
Contribution for Pension and Disability Fund 21.2% 19.0% 18%                   18.4%                 18,4%
Contribution for Health Insurance Fund 9.2% 7.5% 7.3%                   7.4%                  7.4%
Contribution for Employment Fund 1.6% 1.4% 1.2%                  1.2%                    1.2%
Additional Health Insurance 0.5% 0.5% 0.5%                    0.5%                0,5%
TOTAL 32.5% 28.4% 27.0%                  27.5%           27.5%   

 

 

 

REGISTERING A COMPANY

The current Company Law is effective since 2004. The amendment to the Company Law in 2005 facilitated the start of the Central Register at the beginning of 2006, as the body authorized to perform all company registrations and maintain a trade register of all companies. This is the primary law regulating business activity in North Macedonia. It defines the types of companies, procedures and regulations for their establishment and operations. As all foreign investors are granted the same rights and privileges as Macedonian nationals, they are entitled to establish and operate all types of self-owned private companies od joint-stock companies. Foreign investors are not required to obtain special permission from state-authorized institutions, other than what is customarily required by law.

Under the Company Law, companies are formed as separate legal entities that operate independently and are distinct form their founders, shareholders and managers. Depending on the type, companies have their own rights, liabilities, names and registered offices. The law defines five forms of companies: General Partnership, Limited Partnership, Limited Liability Company, Joint Stock Company and Limited Partnership by Shares.

North Macedonia has introduced a ONE-STOP SHOP SYSTEM that enables investors to register their business after 2 hours of submitting an application. An entity can register a company in North Macedonia by visiting one office, obtaining the information from a single place, and addressing one employee. This significantly reduces administrative barriers and start-up costs.

 

WORK AND RESIDENCE PERMITS

Foreign residents can easily establish employment in the Republic of North Macedonia. Work and residence permits are subject to approval in a single permit process.

Nationals of EU member-states, as well as nationals of the state-parties to the Schengen agreement may enter the Republic of North Macedonia presenting a valid identity card issued by the competent authorities of the EU member-states or the state-parties to the Schengen agreement.

Visas shall be issued only at the embassies of consulates of the Republic of North Macedonia abroad.

 

LICENSES AND PERMITS

In addition to the registration of all business activities as stipulated by the Company Law, certain business activities must obtain additional working licenses or permits before starting their operations. For companies operating in these specific fields, the registration process is followed by a licensing process with the relevant authorities covering the matter of licenses and/or permits in their respective business area.

Employees in the Central Register are trained to direct newly registered companies to the appropriate licensing authorities.

 

 

FREE TRADE AGREEMENTS

North Macedonia is a signatory of three multilateral Free Trade Agreements:

– SAA (Stabilization and Association Agreement) with the EU member-states
– EFTA (Switzerland, Norway, Iceland and Liechtenstein)
– CEFTA (North Macedonia, Albania, Moldova, Serbia, Montenegro, Bosnia and Herzegovina, and Kosovo)

Bilateral Free Trade Agreements are signed with Turkey and Ukraine.

INVESTMENT PROTECTION TREATIES

The Republic of North Macedonia has signed investment protection treaties with the following countries: Albania, Serbia, Bulgaria, Turkey, Croatia, Bosnia and Herzegovina, Slovenia, Romania, Austria, Germany, Switzerland, Netherlands, Belgium, France, Italy, Spain, Hungary, Czech Republic, Poland, Ukraine, Sweden, Finland, Russian Federation, People’s Republic of China, Malaysia, Republic of Korea, and India.

In the process of ratification are Agreements with: Arab Republic of Egypt, Iran, and Belarus. Negotiations with the following countries are complete, and the Agreements are to be signed as soon as possible: Greece, Great Britain, Uzbekistan, Denmark, Oman, Slovak Republic, and Kuwait.

AVOIDANCE OF DOUBLE TAXATION

The Republic of North Macedonia has signed agreements for avoidance of double taxation with the following countries: Albania, Austria, Belarus, Belgium, Bulgaria, Croatia, Denmark, Egypt, Estonia, Great Britain, Hungary, Iran, Ireland, Italy, Latvia, Lithuania, Germany, Finland, France, Hungary, Morocco, Moldova, Netherlands, People’s Republic of China, Poland, Romania, Russian Federation, Slovakia, Slovenia, Ukraine, Taiwan-Republic of China, Turkey, and Qatar.r