Freelancing in Kosovo: registration and tax

Developers, designers, translators, marketers and consultants: more and more people in Kosovo work for clients in Germany, Switzerland, the US or anywhere else. Many start without registering, until the bank asks where the payments come from or a client asks for an invoice.

Why registering is worth it#

• Invoices. Serious clients, especially companies, want an invoice from a registered business.
• Your bank. Regular payments from abroad into a personal account raise questions. With a registered business, the source of funds is clear.
• Pension and credit. Declared income counts when you apply for a loan or lease.
• Protection. If your income is ever checked, back taxes with fines and interest cost far more than regular filing.

The form: usually an Individual Business#

For most freelancers, an Individual Business (B.I.) is the natural choice: quick to register, little admin, no capital required. The steps are in Registering an individual business.

An SH.P.K. makes sense if:

• you work with partners or hire people;
• you take on large contracts where limited liability matters;
• profits are high enough that corporate tax works out better.

The full comparison is in Individual business or SH.P.K.?.

Pick your NACE code carefully, e.g. computer programming (62.01), design (74.10) or translation (74.30). See NACE codes.

Income tax#

As a B.I. with a small turnover, you usually have two options:

1. The small-business regime: a percentage of gross turnover, filed quarterly. No full bookkeeping, but you pay even when your costs are high. For professional services, the rate is usually higher than for trade or production.
2. Tax on actual profit, i.e. revenue minus documented expenses, with bookkeeping. Worth it when you have significant costs.

For freelancers with few expenses, the small-business regime is often simpler, but not always cheaper. Run the numbers with an accountant.

VAT and foreign clients#

For services to businesses outside Kosovo, VAT is usually due where the client is, not in Kosovo. So your invoice usually carries no Kosovo VAT and states why.

However:

• the rules differ when the client is an individual rather than a business;
• some services have special rules;
• you need to track your turnover against the VAT registration threshold.

The basics are in NUI, fiscal number and VAT, and what an invoice needs is in What an invoice must contain.

Getting paid from abroad#

• Open a bank account in the business's name. See Business bank account.
• Ask your bank about international transfer fees and the exchange rate if you're paid in dollars or francs.
• If you use payment platforms, withdraw to the business account and keep the statements as evidence.
• Issue an invoice for every payment.

A contract with the client#

Even for small projects, a written contract or agreement should set out: the scope of work, deadlines, price, currency, payment terms and rights to the work (who owns the code, design or text).

Your profile#

Foreign clients often check whether you're a real business. A verified Kerko profile with a description, contacts and activities adds credibility to your name. Verify your business.