Tax representative for VAT purposes

With amendments to the Value Added Tax Act published in Official Gazette 199/23, a new Article 9-b was introduced through which the concept of tax representative was finally implemented in Macedonia. Starting from the 1.1.2024, a foreign entity who has no seat, no subsidiary on Macedonian territory, and who is selling goods and services in the country in transactions which are subject to taxation with value added tax under this law, is obliged to register for value added tax purposes and appoint a tax representative.

Is there a minimum turnover limit to which the obligation to calculate and pay VAT is not applicable to a foreign entity who has no seat, nor a subsidiary on Macedonian territory, and who is selling goods and services in the country?

The short answer to this question is “No”. A foreign person should register for value added tax purposes before the start of his business activities here and before starting to generate taxable turnover in the country. In other words, in this case the minimum legal turnover threshold of 2.000.000 denars relating to Macedonian entities carrying out turnover does not apply.

Appointment of a tax representative

A foreign entity can only appoint one tax representative. The appointment of a tax representative shall be made by submitting a registration application for value added tax purposes together with the necessary documents to the competent tax authority (Public Revenue Office).

In addition, the following documentation shall be provided to the registration application for value added tax purposes:

• a written agreement to appoint a tax representative certified by a notary, containing at least the following information: name and seat of the foreign person, name, i.e. name and surname of the person designated as a tax representative, seat or residence of the person designated as a tax representative, the tax number for value added tax purposes assigned by the competent tax authority of the person designated as a tax representative;
• proof of residence of a foreign person in the country where he has a real seat or subsidiary, from where the service is genuinely performed;
• proof of a seat or residence of the person designated as a tax representative on the territory of Macedonia and
• proof that no bankruptcy or liquidation proceedings have been initiated for the person appointed as a tax representative – for a legal person or proof that the person appointed as a tax representative is not legally convicted of a crime – for a natural person.

For the registration of a foreign person for the purposes of value added tax and the appointment of a tax representative, a formal legal act, a “Decision” is made by the competent tax authority (the Public Revenue Office).

Procedure for registration of a foreign person and appointment of a tax representative

In accordance with the Regulations published by the Ministry of Finance in Official Gazette 286/2023, the registration application for value added tax purposes is submitted to the competent tax authority of the model “VAT-01/SL-DZ” printed on white paper in A-4 format.

Tax representative‘s revocation or a cessation of the sale of goods and services in Macedonia

In the event that tax representation ceases for any reason, a foreign person appoints another tax representative by submitting a new application. In the event of a cessation of the sale of goods and services, the foreign person should report a revocation of registration in the registration application for value added tax purposes. A formal legal act, a “Decision” is made to change the tax representative, i.e. to revoke the registration, by the competent tax authority (the Public Revenue Office).

Who can be a tax representative?

The tax representative may be appointed if:

• is registered for value added tax purposes at least 12 months before the submission of the application for the appointment of a tax representative,
• on the day of submission of the application for the appointment of a tax representative there are no dues and unpaid tax liabilities and
• if it is a legal person not to have initiated bankruptcy or liquidation proceedings or if it is a natural person not to be criminally convicted of a crime.

Obligations and responsibilities of the tax representative?

The tax representative is obliged to calculate the tax, to file a tax report, to pay the tax and to pay interest in the event of late payment of tax, and to keep accounting records as per the legally defined obligations on behalf of the foreign person. The tax advocate jointly guarantees the value added tax owed by the foreign person.

Submission of VAT reports

VAT reporting is done on a quarterly basis, with a submission deadline on the 25th day of the month following each quarter.

Principle of work and pricing model for our services

We are pleased to find that Konto Profit DOOEL Skopje unequivocally meets the legal conditions for tax representative registration for VAT purposes and consequently our knowledge and expertise can be exploited by non-resident persons who make taxable turnover with VAT in Macedonia. The principle of work is as follows:

• periodic records are provided by the client, similar to that standard form in Macedonian practice, for all sales made to natural persons Macedonian residents with information on transaction dates, transaction amount and other related details, which also contains a sum (total value) of the turnover carried out;
• a signed statement by the client’s responsible person is submitted, ensuring that the data records provided are accurate, relevant, complete and objective under full moral, material and criminal responsibility;
• on the basis of the records delivered, within 2 working days we make a preliminary calculation of the VAT obligation and we deliver it to the customer;
• after the client accepts the calculation, he transfers the amount of VAT to be paid to our bank account, together with the price agreed for our service;
• we comply with the legal obligations to record events, submit a VAT form and pay the amount of VAT on behalf of the client.

The price of our services is expressed as % of the value of the VAT obligation to be calculated, but for a total VAT due of up to 75.000 euros it cannot be less than 600 euros per submission nor higher than 3.500 euros per submission (reporting is done on a quarterly basis).

The one time fee for VAT registration is 650 euros.

For a specific offer and definition of specific co-operation conditions, do not hesitate not to contact [email protected] or Viber/WhatsApp/Telegram on 00 389 70 22 11 65.