Employment
Payroll tax and contributions in Kosovo
How net pay is calculated in Kosovo: 5% + 5% pension contributions, progressive payroll tax, primary vs secondary jobs and filing deadlines.
Andi B. · · 3 min read
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When you hire someone, the salary you agree and the amount that lands in their account aren't the same. In between are pension contributions and payroll tax, which you as the employer calculate, file and pay.
Gross and net
- Gross salary is the contracted amount, before contributions and tax.
- Net salary is what the employee receives.
- Employer cost is gross salary plus the employer's pension contribution.
The order of calculation:
- deduct the employee's pension contribution (5%) from gross;
- calculate payroll tax on what's left;
- what remains is net pay;
- separately, the employer pays its own contribution (5%) on gross.
Pension contributions
Contributions go to the Kosovo Pension Savings Trust (TKPK), into the employee's personal account:
- 5% from the employee, withheld from gross pay;
- 5% from the employer, on gross pay.
Either side can voluntarily contribute more, within the limits the law allows.
Payroll tax
With the primary employer, tax is progressive: part of the monthly salary is tax-free and the portions above each threshold are taxed at rising rates. After the latest legal changes, the monthly structure is currently:
- up to €250: 0%;
- from €250 to €450: 8%;
- above €450: 10%.
With a secondary employer, i.e. a second job, a flat rate usually applies to the whole amount, with no tax-free band.
Thresholds and rates change by law from time to time, so check the current values with ATK before running payroll.
A simplified example
Gross salary of €800 with a primary employer, using the thresholds above:
| Step | Amount |
|---|---|
| Gross salary | €800.00 |
| Employee contribution (5%) | −€40.00 |
| Taxable base | €760.00 |
| Tax: 0% on €250, 8% on €200, 10% on €310 | −€47.00 |
| Net salary | €713.00 |
| Employer contribution (5%) | +€40.00 |
| Total employer cost | €840.00 |
Filing and paying
Payroll tax and contributions are filed monthly in EDI, usually by the 20th of the following month, and paid by the same deadline. See Filing taxes in EDI.
Pay salaries through the bank, not in cash. It's your proof the salary was paid, and ATK compares it with your returns.
Common mistakes
- Cash "in hand". Undeclared pay brings fines for the employer, and the employee loses pension, access to bank loans and legal protection.
- Applying the thresholds at a secondary employer. If the employee has another job, clarify which employer is primary.
- Forgetting the employer contribution in the budget. The real cost is gross plus 5%.
- Late payments. Interest and fines add up quickly when you have many employees.
Your first hire?
Payroll is only one part. The contract, registration and other obligations are covered in Hiring your first employee. If you still file your own returns, this is usually the moment for an accountant.
Frequently asked questions
How much are pension contributions in Kosovo?
5% from the employee and 5% from the employer, calculated on gross salary and paid into the Kosovo Pension Savings Trust. Either side can voluntarily contribute more.
How is payroll tax calculated?
On gross salary after deducting the employee's pension contribution, at progressive rates using the monthly thresholds set by law for a primary job. A secondary job is taxed at a flat rate.
Who pays payroll tax?
It's withheld from the employee's pay, but the employer calculates, files and pays it to ATK every month.
What is a primary employer?
The employer where the employee has their main job and where the progressive thresholds apply. An employee can have only one primary employer.
This article is for information only and is not tax advice. Rates, thresholds and deadlines are set by law and ATK and can change; check the current values before running payroll.
- Employment
- Taxes
