The Law on Property Taxes regulates the manner of taxation of the following types of property taxes:
1. Property tax;
2. Inheritance and gift tax; and
3. Real estate turnover tax.
- Property tax
Property tax is paid on real estate, except for property that is exempt from paying tax.
Taxpayer
A taxpayer is a legal or natural person who owns the property. In cases where the owner is unknown or unavailable, a taxpayer of property tax is a legal or natural person who is the property user. A taxpayer of property tax may also be a usufructuary, and if more than one person is a taxpayer of property tax in proportion to their ownership share. A taxpayer of property tax is a legal or natural person who is the user of real estate owned by the state and the municipality.
Tax rate
Property tax rates are proportional and range from 0.10% to 0.20%. They can be determined according to the type of property. Therefore, property tax rates for agricultural land not used for agricultural production can be increased by three to five times compared to the basic rates.
The amount of the rates is determined by decision by the municipal council, the council of municipalities in the city of Skopje and the Council of the City of Skopje in accordance with the Law on the City of Skopje.
Tax base
The basis of property tax is the market value of the real estate. The determination of the market value of the real estate is carried out by an appraiser employed by the local self-government unit, and upon request of the local self-government unit, it can also be carried out by a person who is an authorized appraiser. The market value is determined according to the Methodology for the Assessment of the Market Value of Real Estate.
Tax exemptions and reliefs
Property tax is not paid on:
• state-owned real estate used by state bodies, real estate owned by the municipality used by municipal bodies, municipal bodies in the City of Skopje and bodies of the City of Skopje, except for real estate used by natural or legal persons;
• real estate of foreign diplomatic and consular missions and of missions of international organizations, if they are owned by them, under the condition of reciprocity;
• real estate owned by the National Bank of the Republic of Macedonia;
• religious buildings in which worship, prayer and other manifestations of faith are performed, such as a temple, an amiya, a prayer house, a synagogue, a cemetery and other premises of a church, a religious community and a religious group;
• real estate that in accordance with the law has been declared cultural heritage;
• facilities for the protection of land, water and air;
• facilities of enterprises for job training, professional rehabilitation and employment of disabled people;
• land used for surface and underground mining and geological exploration;
• facilities intended for primary processing of agricultural products, namely: facilities intended for raising livestock and fish, for housing equipment for monitoring the quality and safety of primary livestock and agricultural products of an agricultural holding, for housing and maintaining agricultural machinery, attachment equipment and other transport vehicles and equipment of an agricultural holding, facilities for storage, reception, keeping and packaging of primary agricultural and livestock products and animal feed of an agricultural holding, facilities, collection centers for milk, mushrooms and medicinal plants, water tanks related to activities in agricultural production of an agricultural holding and facilities for treatment of waste from activities in agricultural production of an agricultural holding and
• agricultural land used for agricultural production.
The taxpayer of the property tax for a residential building or apartment, in which he lives with his family members, has the right to a reduction of the calculated tax in the amount of 50%.
- Inheritance and gift tax
Subject to taxation
Inheritance and gift tax is paid on real estate and the right to usufruct and use of real estate, which the heirs or recipients of gifts inherit or receive on the basis of the Law on Inheritance, or a gift agreement. It is also paid on cash, monetary claims, securities and other movable property, if the market value of the inheritance or gift agreement is higher than the amount of the annual average salary in the Republic of Macedonia in the previous year, according to data from the State Statistical Office. The value of all gifts of the same type, received during a calendar year, constitutes a single tax base. The municipal administration, the administration of the municipalities in the city of Skopje and the administration of the city of Skopje keep records of the value of gifts, on the basis of which, at the end of the year, the recipient of the gifts may be liable for tax if he or she receives more gifts of the same type during the year and in an amount exceeding the prescribed amount.
Taxpayer
Taxpayers of this tax are natural or legal persons-residents of the Republic of Macedonia, who inherit property or receive property as a gift in the country or abroad, and foreign natural and legal persons-non-residents, for the real estate and movable property that they inherit or receive as a gift on the territory of the Republic of Macedonia.
If the heir who has been accepted as an heir assigns the inheritance in favor of a person who would have inherited that inheritance even if the heir had not assigned it to him, the tax is paid by the person into whose ownership the inherited property passes, and if the heir assigns the inheritance to a specific person, who would not have inherited it if the heir had not assigned it to him, then the heir who assigned the inheritance pays inheritance tax, and the person in whose favor the inheritance is assigned pays gift tax.
Tax rate
The rates of inheritance and gift tax are proportional and vary depending on the order of inheritance.
An heir or recipient of the first order of inheritance is exempt from paying tax.
The inheritance and gift tax for a taxpayer of the second order of inheritance is calculated at a rate of 2% to 3%, and for a taxpayer of the third order of inheritance or a taxpayer who is not related to the testator, the tax is calculated at a rate of 4% to 5%.
The amount of the rates is determined by decision by the municipal council, the council of municipalities in the city of Skopje and the Council of the City of Skopje in accordance with the Law on the City of Skopje.
Tax base
The basis of inheritance and gift tax is the market value of the inherited property, or property received as a gift, at the time of the occurrence of the tax liability, reduced by the debts and expenses that burden the property that is subject to taxation.
Tax exemptions
The inheritance and gift tax is not paid by:
• the heir, i.e. the recipient of a gift of the first order of inheritance;
• the heir, i.e. the recipient of a gift from the second line of inheritance of an inherited, i.e. received as a gift, apartment, i.e. family residential building if he lived in a common household with the testator, i.e. the donor of the gift for at least one year before the death of the testator, i.e. at the time of receiving the gift, provided that he and his family members do not have another apartment, i.e. residential building and
• the heir, i.e. the recipient of a gift from the second line of inheritance for whom agriculture is his main activity who will inherit, i.e. receive as a gift agricultural land and economic buildings, if he lived in a common household with the testator, i.e. the donor of the gift for at least one year before the death of the testator, i.e. at the time of receiving the gift.
The following are exempt from inheritance and gift tax: state bodies, municipal bodies, municipal bodies in the City of Skopje and the bodies of the City of Skopje, the National Bank of the Republic of Macedonia, Red Cross organizations, humanitarian, social, scientific, educational, cultural institutions and religious communities for the gift they received in the form of real estate or movable property, securities, cash and receivables.
- Real estate transaction tax
Subject of taxation
Real estate transaction tax is paid on the realized real estate transaction. Real estate transaction is considered the transfer with and without compensation of the right to ownership of real estate, as well as another way of acquiring real estate with and without compensation between legal entities and individuals.
Taxpayer
A taxpayer of the real estate transaction tax is a legal entity and an individual – the seller of the real estate. As an exception, a taxpayer of the real estate transaction tax may be a legal entity and an individual – the buyer of the real estate, if the real estate purchase and sale agreement stipulates that the tax is paid by the buyer.
In the case of an exchange of real estate, the taxpayer is the participant in the exchange who gives in exchange real estate of greater value.
If an ideal share of ownership of the real estate is transferred, each owner is a taxpayer separately.
If the right to ownership of real estate is transferred on the basis of a life support agreement, the taxpayer is the recipient of the real estate, i.e. his heirs.
When selling real estate in bankruptcy and enforcement proceedings, as well as when implementing mortgage agreements, the taxpayer may also be the buyer of the real estate.
Tax rate
The rates of the real estate turnover tax are proportional and range from 2% to 4%. The amount of the rates is determined by decision by the Council of the Municipality and the Council of Municipalities in the City of Skopje and the Council of the City of Skopje in accordance with the Law on the City of Skopje.
Tax base
The tax base of the real estate turnover tax is the market value of the real estate at the time of the occurrence of the obligation.
When replacing real estate, the tax base is the difference in the market values of the real estate being replaced.
When transferring an ideal share of the ownership of the real estate, the tax base is the market value of the ideal share of the real estate.
When selling real estate in bankruptcy and enforcement proceedings, the tax base is the sales price achieved through public bidding, or by direct agreement, if the real estate has not been sold after two consecutive public bidding procedures.
Tax exemptions
Real estate turnover tax is not paid:
• on the turnover of real estate in the expropriation procedure;
• when a foreign diplomatic or consular mission transfers the right to ownership of real estate, under the condition of reciprocity;
• when the right to ownership is transferred for the purpose of settling obligations based on public revenues in the forced collection procedure;
• on the turnover of real estate between state bodies, between state bodies and municipalities and between municipalities;
• on the turnover of real estate in the confiscation procedure;
• on the turnover of socially owned apartments, if the purchase and sale agreement does not stipulate who is liable for paying the tax;
• when the right of ownership of real estate is transferred to state authorities for the purpose of collecting claims in bankruptcy and enforcement proceedings;
• when the right of ownership of real estate is transferred to the provider of lifelong maintenance who, in relation to the recipient of maintenance, is in the first line of succession, and only for the part of the real estate that he would inherit according to the Law on Inheritance and without paying maintenance;
• on the first turnover of residential buildings and apartments that will be carried out within a period of up to five years after construction, on which value added tax is calculated;
• when investing real estate in the capital of commercial companies;
• on trading in securities, within the meaning of the Law on Securities and
• when the right of ownership of real estate is transferred to banks as creditors, for the purpose of collecting a monetary claim, if they sell the acquired property within a period of three years.
