Kosovo corporate income tax

Tax year 2026, checked against the law on 30 October 2026 (tier 2). No licensed accountant has signed off this revision.

Who this applies to

This skill covers ordinary corporations and other business enterprises with legal personality under Law 06/L-105, Article 4. Resident taxpayers are taxed on Kosovo and foreign-source taxable income; non-residents on Kosovo-source income. Entity residence includes establishment in Kosovo under Article 3(1.13.2). A foreign business needs a separate permanent-establishment assessment under Article 30. Do not apply the company's calculation to a sole proprietor without first determining the correct taxpayer regime. Articles 3–5

Law 06/L-105 is the corporate income tax law in force for 2026. The Official Gazette record lists it as repealing 05/L-029 and lists no later amending act; TAK's current overview and its laws list name 06/L-105 as the corporate law. The 2016 corporate instruction (AI 02/2016) implements the repealed statute. Post-2019 TAK answers apply the construction ruling and describe finance and operating leases, as set out below. The legal continuity of the old instruction, gross-interest reporting and the other implementing questions are listed under Not yet confirmed, so the pack keeps IT-CORP partial. Current Gazette record; TAK current overview.

Rates, bands and thresholds

Test or payment	Rule	Authority
Real-income corporate tax	10% of taxable income	06/L-105 art. 7
Mandatory real-income regime	Annual gross income exceeds EUR 30,000; applies for that period and at least three following periods	Arts. 35(1), (3) and 38(3)
Small-company trade, transport, agriculture and similar activities	3% of quarterly gross income; minimum EUR 37.50 for an income-bearing quarter	Art. 38(2.1.1)
Small-company services, professional, vocational, entertainment and similar activities	9% of quarterly gross income; minimum EUR 37.50 for an income-bearing quarter	Art. 38(2.1.2)
Small-company rent	10% of net rent, less relevant withholding	Art. 38(2.1.3)
Quarter with no income	No payment, but quarterly statement still required	Art. 38(2.1.4)
Ordinary representation	Maximum 1% of annual gross income	Art. 12(2)
Qualifying public-interest donations	Ordinary ceiling 10% of taxable income before the donation deduction	Art. 11
Depreciation, categories 1 / 2 / 3	5% / 20% / 10% straight line	Art. 16(3)–(4)
Low-value asset	Up to EUR 1,000, subject to functional-group/life exception	Art. 16(7)
Qualifying new assets	Additional 10% cost deduction in first-use year, subject to eligibility	Art. 18
Undefined-life intangible	Straight-line over 20 years	Art. 20(3)
Loss carryforward	Four successive periods, oldest first	Art. 24

Law; TAKS current overview. Exactly EUR 30,000 is within the small-company ceiling if no election or continuing real-income obligation applies. Do not describe the small regime as no corporate-tax liability: it substitutes payments based on gross income for the ordinary profit calculation. Rental income has a separate net-rent computation and withholding credit under Article 38(2.1.3); do not apply the trade or service percentage to it.

Election and threshold crossing

A qualifying small taxpayer can elect the real-income books/records regime. An existing taxpayer applies before 1 March of the chosen tax period; a new taxpayer's first quarterly statement communicates the election. The election year and at least three following tax periods are covered. Crossing EUR 30,000 similarly brings the crossing year and at least three following periods into real-income treatment. Articles 35(2)–(3), 38(3)

A return to small-business books is allowed only after three years have passed from the period of the election (or of the crossing), when income in the last period is below EUR 30,000, and with TAK approval granted before 1 March of the year concerned. The original Albanian art. 35(4) says last period ("periudhën e fundit"); the English translation says last quarter. Use the original period wording and keep TAK's approval with the turnover and election history. A low quarter alone does not end the continuing real-income obligation. Article 35(4), original Albanian; English translation

The base

For real-income taxpayers, begin with financial-statement profit and reconcile each adjustment to the supporting ledger and statutory provision. Gross income less allowable deductions determines taxable income under Article 6(1). Article 6(2) separately addresses long-term construction, leasing and gross interest, with reporting delegated to implementing rules; do not infer their full computation from the ordinary bridge below. Articles 6 and 37

1. Identify exempt income separately. Article 8 includes dividends paid or received by resident and non-resident persons. Do not extend this to interest, royalties or capital gains.
2. Add back corporate income tax, public-authority fines/penalties and related interest, recoverable input VAT, and capital costs that require separate treatment. Article 9
3. Deduct documented costs incurred wholly and exclusively for economic activity, subject to the statutory limits. For an accrued expense subject to withholding, payment after 31 March of the following period postpones deduction to its payment period. Article 10
4. Replace accounting depreciation with the supported tax schedule. Test losses before using them.
5. Apply 10% and reconcile allowable withholding, instalment and foreign-tax credits to evidence. Do not deduct the same credit twice. Articles 7, 29 and 38

Representation is limited to 1% of annual gross income; ordinary media advertising/promotion is separately deductible under art. 12. Public-interest contributions require the eligible recipient, payment receipt and absence of direct or indirect donor/related-person benefit under art. 11. The ordinary 10% limit is measured before the contribution deduction. Special sponsorship relief requires its own law and approval evidence, rather than treating every donation as a tax credit. Articles 11–12

Bad debt requires previously recognised income, an undisputed debt, collection efforts, at least six months overdue and initiation of the declaration procedures within 24 months of the payment obligation. Judicial proceedings are not required for amounts at most EUR 500. Related-party debts and repeated transactions after declaring the debt bad are excluded, with the specified public-service exception. Deduct only the unrecovered amount; a later recovery is taxable. Issue the required **"Bad Debt" invoice/document for the uncollected amount, referencing the original invoice number; it supports the seller's income reduction and the purchaser's expense/cost reduction. An unsupported ledger write-off is insufficient, and the same relief must not be counted twice. Article 13(1)–(3)

Related-party interest, rent and other charges are deductible at the lower of actual payment and open-market amount, rather than increasing an expense to market value when less was paid. Compensation/wages have their open-market test. Article 15

Employee education requires direct payment to a recognised institution, relevance to the existing job, no qualification for a different occupation, and the prescribed post-education employment period. The latter implementing period remains to be confirmed. Job-related training has the separate deduction under art. 10(3). Non-business property rent can use a 10% deemed expense if actual-cost records are not maintained; the property-letting business is excluded from that option. Article 10

Depreciation

Article 16 provides individual straight-line depreciation: buildings/structures 5%; Category 2 assets including vehicles, computers and office equipment 20%; Category 3 plant/machinery and other specified assets 10%. Begin when the asset is first put into service. Land, art and other non-wasting property are excluded. Cost includes the specified pre-service charges and supplier incidentals. Article 16(1)–(6)

An asset costing EUR 1,000 or less can be a current expense, except where it forms part of a functioning asset group whose total value exceeds EUR 1,000 and life exceeds one year. Document the functional unit rather than divide a single system into invoices. Leasehold improvements use straight-line depreciation over the lease life. Articles 3(1.1), 16

Article 18 adds a 10% acquisition-cost deduction in the first-use year for the listed production lines, machinery, railway assets, aircraft, ships and heavy vehicles/equipment. The asset must be new or first placed in use in Kosovo, and not transferred from an existing/former business inside or outside Kosovo. It is unavailable to persons benefiting under art. 8(3). This condition differs from PIT art. 22; do not copy the individual rule into the company calculation. Article 18

Non-routine repairs/improvements extending life at least one year and costing more than EUR 1,000 per asset are capitalised. Amounts at most EUR 1,000 are expensed; ordinary maintenance is separate. Limited-life intangibles amortise straight-line over contractual useful life; an undefined life uses 20 years. Biological-asset and natural-resource calculations require the additional rules in arts. 17 and 21. Articles 17–21

Disposals, distributions and cessation

Capital gain is proceeds (including other consideration) − adjusted basis, where adjusted basis = acquisition cost + improvements − prior allowed depreciation and other allowed expenses. Prior depreciation reduces basis and therefore increases the gain. Adjust related-party undervalue to market. Gains and losses are ordinary business items; the four-year loss rule applies. Instalment-sale gains are spread straight-line over the enforceable agreement. Involuntary conversion has the same-character replacement condition and two-year period in arts. 22–23. Articles 22–24

Non-share property distributed to a shareholder triggers company gain/loss as an open-market sale. Liquidation similarly values distributed property at market, with the separate recipient and parent-company rules in art. 26. A qualifying reorganisation needs a written plan approved by TAK; carryover basis and succession apply under art. 27, and loss transfer needs the plan's express provision and approval. Do not assume that a dividend exemption eliminates the distributing company's asset gain. These are positive disposal rules, not proof of either a universal departure charge or its absence. Articles 25–27

Losses

Carry a tax loss forward for up to four successive tax periods, oldest first, reduced by amounts already used. Except for the Article 27 reorganisation rules, the loss belongs to the business that incurred it. A change in business-organisation type or ownership change of more than 50% prevents transfer under Article 24(5). Exactly 50% does not meet that particular ownership trigger; other restrictions still require testing. Keep loss-year, expiry, utilisation and ownership evidence. Article 24

Long-term construction: current TAK application

Current CIT art. 6(2.1), (5) delegates the special reporting rules. TAK answer ATK27334/2023 cites that current article and directs taxpayers to Public Ruling 02/2019. Answer ATK27829/2024 applies the ruling's retention rules. These are positive administrative applications after the 2019 law; they do not establish that every older bylaw remains in force (TAK construction answer; retention answer).

The ruling distinguishes the contractor from the investor/developer and investor-contractor. Do not apply one cash or invoice rule to all three:

Role	Ruling's income/cost computation	Official source
Contractor	Percentage of completion: costs incurred in the tax period divided by total planned project costs, applied to the total contract value	02/2019, pp. 8 and 13
Investor/developer or investor-contractor	Recognise received advances and enforceable rights to advances; otherwise recognise under the ruling's accrual conditions. Without a recognition condition, retain work in progress	02/2019, pp. 8 and 13
Matching investor/developer costs	Planned cost per unit × units sold, with the receipt/sale-contract-value proportion for the stated advance cases; reconcile planned and actual cost on final completion	02/2019, p. 8
Completed unsold property	Record remaining unsold units as inventory; keep project/contract cost records	02/2019, pp. 8, 13

Retain a separate contract schedule for value, forecast costs, period costs, recognised income, advances, units/sales, stock and final reconciliation. Barter is not invisible because no cash changes hands: the ruling requires market-value income/expense when the exchange occurs (p. 8). VAT construction reverse charge and chargeable events are separate; use the VAT skill.

Contractual retention is not income until received or the contractor is entitled to receive it. Early payment is income on receipt. An amount paid into a restricted separate account is excluded until withdrawal/use becomes available under the contract. Reconcile those exclusions to the recognition schedule once; an unpaid ordinary receivable is not automatically retention (02/2019, pp. 8 and 20; ATK27829/2024).

Finance and operating leases: current TAK interpretation

TAK answer ATK26322/2021, expressly using current CIT art. 6(2.2), describes finance leases as transferring substantially the ownership risks and rewards. It lists alternative conditions: a term exceeding 75% of asset life, transfer of ownership, a bargain purchase option, or present value of payments exceeding 90% of market value. Keep the term, useful life, option terms, discount-rate evidence and payment schedule (finance-lease answer).

For a qualifying finance lease, separate principal/acquisition from interest. The lessee recognises the acquired asset and allowable depreciation from first business use; the interest component is separately income/expense. Do not deduct the entire payment and also claim depreciation. The answer identifies the CBK-authorised financial-lessor interest-withholding exception; apply the statute's conditions rather than treating all leases as exempt (finance-lease answer; CIT arts. 16 and 31(4)).

TAK ATK28224/2025 describes operating lease payments as lessor income and lessee expense, with depreciation remaining with the lessor. Its quotation labels interest art. 31(2) as rent; apply the actual rent art. 31(3), 9% where withholding is required, rather than copying that citation error. The answer explicitly limits itself to the submitted taxpayer facts; it is administrative evidence of treatment, not a general binding ruling for an unrelated arrangement (operating-lease answer; actual art. 31(3)).

Deadlines and filing

The ordinary tax period is the calendar year. Quarterly advances are due on or before 15 April, 15 July, 15 October and 15 January for the preceding quarter. Real-income taxpayers submit the annual declaration/financial statements and settle by 31 March following the tax period. A business closure has a separate declaration timing rule. For an ordinary 2026 calendar year, the final quarter payment is due 15 January 2027 and annual settlement 31 March 2027; check any official non-working-day or extension rule before execution. Articles 3(1.19), 37–38

For real-income advances, Article 38(2.2) permits one quarter of estimated current-year tax, less relevant withholding for the quarter. From the second period, the alternative is at least one quarter of 110% of prior-period liability, less relevant quarterly withholding. A prior-year loss excludes the prior-liability method. Instalments are credits against the annual result, not additional tax. Article 38(2.2), (5), (7.4)

Retain sales/purchase books, cash records, asset schedules and financial statements under art. 35; small-company records remain required under art. 36. The current TAK timetable identifies QS for small companies, QL for real-income advances and CD for the annual corporate return. The CD layout includes foreign-tax, withholding and instalment credits separately. File using the current EDI form, not a guessed box number. In a closure, submit the annual statement in the period when applying for business deregistration, under art. 37(5). Articles 35–38; TAK timetable; CD layout.

Penalties and interest

Article 38(7) addresses late or insufficient advances using the interest rate in force when payment was due, charged on the underpaid amount for the specified period. Its relief tests include timely filing/payment conditions, the 20% instalment difference test, prior-year liability protection, the audit-adjustment exception and the first-year cumulative payment rule. Do not treat 110% of prior-year liability as an unconditional waiver. Article 38(7)

Current procedure Law 08/L-257 art. 99 charges a legal entity EUR 150 for each missing mandatory return resulting in tax liability. Article 100 charges 15% of the understatement difference where at most 10% of correct tax, and 25% where larger. Failure to withhold/pay tax or pension has a separate 25% of shortfall under art. 103. Apply the distinct triggers and statutory exclusions rather than automatically adding every penalty. Arts. 99–103

Late interest runs for each month or part-month, at most ten years, at the Minister's rate published by TAK. A compliant instalment agreement stops it from the following month; default reinstates it. The numeric 2026 tax-interest rate is on the Not yet confirmed line. Do not substitute the repealed procedure statute's penalty schedule or a commercial-debt reference rate. Art. 24

Cross-border points

Controlled transactions require arm's-length profit and documentation under Article 28. Article 29 provides a foreign-tax credit limited to the Kosovo tax attributable to the foreign income and gives applicable treaties precedence. Articles 31–33 contain separate withholding obligations. Treaty eligibility, treaty rates and permanent establishments are in the cross-border skill; the transfer-pricing notice, documentation and methods are in the transfer-pricing skill. Articles 28–33

Two worked examples that recompute

1. Ordinary profit and annual settlement

Assume a resident company in the real-income regime, no exempt/special income, accounting profit EUR 40,000 after a EUR 2,000 non-deductible public fine and EUR 8,000 accounting depreciation. Tax depreciation from the asset schedule is EUR 10,000. A EUR 5,000 carried loss survives all conditions. The tax base is EUR 35,000, tax EUR 3,500 and balance EUR 900 after EUR 2,400 advances and EUR 200 allowable withholding credit. Depreciation and loss eligibility are case assumptions, not inferred from the arithmetic.

name: Kosovo corporate profit and settlement bridge
inputs:
  profit: 40000
  fine: 2000
  book_depreciation: 8000
  tax_depreciation: 10000
  eligible_loss: 5000
  tax_rate: 0.10
  advances: 2400
  withholding_credit: 200
steps:
  before_losses: profit + fine + book_depreciation - tax_depreciation
  taxable: before_losses - eligible_loss
  tax: taxable * tax_rate
  balance: tax - advances - withholding_credit
expected:
  before_losses: 40000
  taxable: 35000
  tax: 3500
  balance: 900

2. Small-service-company quarterly minimum

Assume an eligible service company with annual gross income no higher than EUR 30,000, no prior real-income obligation/election, and no rental or mixed activities. Quarterly receipts EUR 200, 5,000, zero and 6,000 yield payments EUR 37.50, 450, zero and 540. The zero quarter still requires its statement. These are gross-income payments: expenses do not reduce them.

name: Kosovo small service company quarterly payments
inputs:
  q1: 200
  q2: 5000
  q3: 0
  q4: 6000
  rate: 0.09
  minimum: 37.50
steps:
  annual_gross: q1 + q2 + q3 + q4
  payment_q1: max(minimum, q1 * rate)
  payment_q2: max(minimum, q2 * rate)
  payment_q3: 0
  payment_q4: max(minimum, q4 * rate)
  total: payment_q1 + payment_q2 + payment_q3 + payment_q4
expected:
  annual_gross: 11200
  payment_q1: 37.50
  payment_q2: 450
  payment_q3: 0
  payment_q4: 540
  total: 1027.50

Ask the client first

• What is the legal entity, place of establishment and foreign presence?
• What are annual and quarterly gross receipts by activity, including rental income?
• Was real-income taxation elected or triggered in any of the preceding periods?
• Are accounts, asset-service dates, loss history and ownership changes documented?
• Which accrued costs involve withholding, and when were they paid?
• What advances, withholding and foreign taxes were actually paid and evidenced?

Sources

Source	URL	Read on
Law 06/L-105 on Corporate Income Tax, arts. 3–38 (official TAK PDF of Official Gazette No. 15/2019)	https://www.atk-ks.org/wp-content/uploads/2019/09/LAW_NO.06_L-105.pdf	2026-10-30
Official Gazette record for 06/L-105: repeals 05/L-029, no later amending act listed	https://gzk.rks-gov.net/ActDetail.aspx?ActID=20988&langid=2	2026-10-30
Law 06/L-105, original Albanian text, arts. 35(4) and 36(1)	https://gzk.rks-gov.net/ActDocumentDetail.aspx?ActID=20988	2026-10-30
TAK laws list (06/L-105 as current corporate law)	https://www.atk-ks.org/en/legislation/laws/	2026-10-30
TAK general information on taxes: CIT rates, EUR 30,000 threshold, QS/QL/CD timetable	https://www.atk-ks.org/en/portfolio/informata-te-pergjithshme-per-tatimet-ne-kosove/	2026-10-30
TAK CD annual corporate declaration layout (boxes 37, 38, 41)	https://crmm.atk-ks.org/en/Public/CalculatorDetail?id=9	2026-10-30
Law 08/L-257 on Tax Administration and Procedures, arts. 24, 99–103	https://www.atk-ks.org/wp-content/uploads/2024/01/LAW_NO._08_L-257_ON_THE_ADMINISTRATION_OF_TAX_PROCEDURES.pdf	2026-10-30
TAK Public Ruling 02/2019 on long-term construction contracts, pp. 8, 13 and 20	https://www.atk-ks.org/wp-content/uploads/2019/02/VendimiShpjeguesPublik.pdf	2026-10-30
TAK answer ATK27334/2023 (construction, art. 6(2.1))	https://www.atk-ks.org/en/pyetje/?wpfaqpage=120	2026-10-30
TAK answer ATK27829/2024 (retention payments)	https://www.atk-ks.org/en/pyetje/?wpfaqpage=151	2026-10-30
TAK answer ATK26322/2021 (finance lease, 75% and 90% tests)	https://www.atk-ks.org/pyetje-te-shpeshta/?dy=20&mcat=all&month=04&time=day&wpfaqpage=49&yr=2021	2026-10-30
TAK answer ATK28224/2025 (operating lease, art. 31 citation error)	https://www.atk-ks.org/en/pyetje/?wpfaqpage=183	2026-10-30

Not yet confirmed: current ministerial instrument/legal continuity for special reporting, beyond the cited positive TAK construction/lease applications; gross-interest recognition/reporting; prescribed post-education employment period; numeric 2026 tax-interest rate; case-specific treaty and departure/cessation treatment. IT-CORP remains partial for these implementing-rule gaps.

Contributed by Michael Cutajar.