Kosovo: Investing

FDI in Figures

Kosovo declared its independence in 2008 and has since struggled to attract foreign investors. UNCTAD’s 2022 World Investment Report does not provide data about the country. According to the World Bank, net FDI inflows represented 5.3% of GDP in 2021 (latest data available). The Central Bank of Kosovo notes that as of the end of 2022, the total FDI stock stood at EUR 6.4 billion. The main investing countries are Germany (16.6%), Switzerland (14.8%), Turkey (8.3%), and the U.S. (7.1%). Overall, the EU accounts for 38.7% of total investment. 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.

Kosovo is situated at the crossroads of major transportation routes between Europe and Asia, representing an opportunity for businesses to expand their reach and tap into new markets. The Kosovar law does not require FDI to be screened, reviewed, or approved, and the national laws do not discriminate against foreign investors. Moreover, the country has a young and well-educated workforce. 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 Kosovo Investment and Enterprise Support Agency (KIESA) is responsible for promoting Kosovo as an investment destination and providing information and assistance to foreign investors, and the country has implemented a framework for public-private partnerships (PPPs) to encourage private sector investment in public infrastructure projects. Overall, Kosovo ranks 78th out of 176 countries in the 2023 Index of Economic Freedom and 84th out of 180 in the latest Corruption Perception Index.

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