In addition to the above changes to the CIT law, most of which are also applicable for PIT, the below are additional changes made to PIT provisions in the new PIT law:

Definitions

[Addition] The definition of Employer is further expanded to include diplomatic, consular and liaison offices of foreign states in Kosovo when they agree to take on the responsibilities of an employer in Kosovo; and religious communities as foreseen by Law on Freedom of Religion in Kosovo.

Gross income

[Amendment] Gross income includes capital gains resulting from sale of a capital asset, including movable and immovable property and securities.

The previous PIT law instead foresaw capital gains resulting from an increase or a decrease in the value of shares.

Exempt income

[Addition] Income exempt from PIT further includes:

  • Wages of persons with disabilities as foreseen under relevant laws
  • Assets received by way of inheritance if a) heir is a spouse, biological or adopted child or parent of the deceased; or b) heir is a person other than the abovementioned and the inheritance value does not exceed EUR 5,000
  • Training expenses incurred by an employer for an employee related to his or her job
  • Income received, including that in cash or in kind, by a non-business natural persons as a result of expropriation by the state
  • Mandatory contributions paid by the employer for health insurance for the
  • employee, as defined by the relevant legislation on health insurance
  • Compensation benefits received from final court decisions and court costs compensation
  • Income in the form of remuneration from state institutions for achievements in science, sports and culture
  • Income received as a result of financial compensation to former political prisoners and other similar compensations
  • Income received from grants, subsidies and donations in accordance with the terms and conditions

[Amendment] Expenses above EUR 1,000 per employee per tax period will no longer be considered as taxable income for the employee.

Income from wages

[Amendment] Per-diems will also be treated as taxable income from wages, in addition to bonuses, commissions and other forms of compensation an employer or someone on his or her behalf pays to employees beyond their salary.

Benefits given to foreign employees to facilitate their living in Kosovo, such as housing and school tuition, will no longer be tax exempt.

Withholding tax on interest, royalties and rent

[Addition] Each business natural person, partnership or grouping of persons paying rent must withhold 9% of tax on gross income at the time of payment or crediting.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.