# Kosovo transfer pricing v0.5

Tax year **2026**, checked against the law on **30 October 2026** (tier 2).
No licensed accountant has signed off this revision. Corporate Law 06/L-105
controls where the older Instruction 02/2017 differs. TAK expressly applies
that instruction in its 30 March 2026 controlled-transactions notice.

## Who this applies to

A corporate taxpayer with controlled transactions must price its taxable
profit at open-market value. Law 06/L-105 art. 3(1.18) includes officers/
directors, legal business partners, employment, at least 50% share/vote
ownership, direct/indirect control, common control, specified family
relationships and same-multinational-group membership. A holding below 50%
is not an exemption where another relationship test applies. The statutory
pricing/documentation duty is not limited by the notification threshold
([06/L-105 arts. 3 and 28](https://www.atk-ks.org/wp-content/uploads/2019/09/LAW_NO.06_L-105.pdf)).

Instruction 02/2017 arts. 2 and 5 address cross-jurisdiction controlled
transactions, including resident/nonresident cases, foreign dealings attributable
to a Kosovo PE, and a resident's dealings attributable to another resident's
foreign PE. Article 5(1.4) additionally brings in dealings with residents of
specified jurisdictions in Annex 1. Screen that actual list, rather than
substituting an EU list or disregarding a listed counterparty because no
shareholding exists. The list uses historical names; document the legal
residence and matching listed entry. Apply domestic-only corporate controlled
transactions under the broader statute; do not import a cross-border annual
notice merely because parties are related ([Instruction arts. 2–5 and Annex 1](https://gzk.rks-gov.net/ActDetail.aspx?ActID=14937&langid=2)).

Sole-trader/individual-business transfer pricing follows PIT Law 05/L-028
art. 35, with its own method wording. Do not automatically replace that
statute with the corporate selection rule
([PIT art. 35](https://www.atk-ks.org/wp-content/uploads/2017/07/LAW_NO._05_L_-028__ON_PERSONAL_INCOME_TAX.pdf)).

## Rates, bands and thresholds

| Item | Figure or rule for 2026 | Official authority |
|---|---|---|
| Share/vote relationship route | At least 50%; other relationship/control routes also apply | [06/L-105 art. 3(1.18)](https://www.atk-ks.org/wp-content/uploads/2019/09/LAW_NO.06_L-105.pdf) |
| Pricing and documentation | Corporate controlled transactions; no EUR 300,000 pricing exemption | [06/L-105 art. 28(1), (5)](https://www.atk-ks.org/wp-content/uploads/2019/09/LAW_NO.06_L-105.pdf) |
| Annual cross-border notification | Gross qualifying total **exceeding EUR 300,000**, including loan balances; no income/expense netting | [Instruction, second art. 28(1), headed Controlled Transactions Notice](https://gzk.rks-gov.net/ActDetail.aspx?ActID=14937&langid=2); [2026 TAK notice](https://www.atk-ks.org/en/notice-to-taxpayers-report-controlled-transactions-4/) |
| Simplified eligible low-value services | 7% of relevant reconciled costs, excluding pass-through items; eligibility and benefit evidence required | [Instruction art. 24(6)–(11)](https://gzk.rks-gov.net/ActDetail.aspx?ActID=14937&langid=2) |
| Requested documentation | Within thirty days of receipt of TAK request | [Instruction art. 29(3)](https://gzk.rks-gov.net/ActDetail.aspx?ActID=14937&langid=2) |
| Comparable search refresh | Every three years if business conditions unchanged; material changes require reassessment | [Instruction art. 29(8)–(9)](https://gzk.rks-gov.net/ActDetail.aspx?ActID=14937&langid=2) |
| Comparable financial information | Annual refresh | [Instruction art. 29(10)](https://gzk.rks-gov.net/ActDetail.aspx?ActID=14937&langid=2) |
| Notification deadline | Annual CIT deadline; nominal 2026-year deadline 31 March 2027 under current rules | [Instruction, notification art. 28(3)](https://gzk.rks-gov.net/ActDetail.aspx?ActID=14937&langid=2); [06/L-105 arts. 37–38](https://www.atk-ks.org/wp-content/uploads/2019/09/LAW_NO.06_L-105.pdf) |
| Corresponding-adjustment response | Within three months of a request meeting the instruction's conditions | [Instruction, first art. 28(5), headed Relevant adjustments](https://gzk.rks-gov.net/ActDetail.aspx?ActID=14937&langid=2) |

**Threshold source conflict.** The instruction and the 30 March 2026 notice say
**exceed**; FAQ question 46 says **reach or exceed**. Apply the binding
instruction's strict-greater-than boundary, with the current notice as
corroboration. Exactly EUR 300,000 does not satisfy that wording. Retain this
conflict with the workpaper and the transaction reconciliation; it does not
remove the statute's documentation duty or any other reporting obligation.
The instruction prints two articles numbered 28: the heading identifies which
is meant (first art. 28, Relevant adjustments; second art. 28, Controlled
Transactions Notice).

## The base

### Define and price the transaction

Include goods, services, intangible rights, financing/guarantees, leases and
capital transfers, including no-charge supplies. Establish actual conduct,
contracts, functions, assets and risks; reconcile the priced transaction to
the ledger. Financing analysis includes principal, term, currency, security,
creditworthiness and rate. Intangible analysis includes expected benefits,
territory, exclusivity and further-development rights; a licence invoice alone
does not establish an arm's-length royalty
([Instruction arts. 5, 7–12, 25](https://gzk.rks-gov.net/ActDetail.aspx?ActID=14937&langid=2)).

| Method | Tested measure and ordinary calculation | Authority |
|---|---|---|
| Comparable uncontrolled price (CUP) | Comparable price/rate after reliable differences adjustments; supported unit price × units | [Instruction art. 17](https://gzk.rks-gov.net/ActDetail.aspx?ActID=14937&langid=2) |
| Resale price | Independent resale proceeds less comparable gross resale margin | [Instruction art. 18](https://gzk.rks-gov.net/ActDetail.aspx?ActID=14937&langid=2) |
| Cost plus | Comparable markup on a consistent direct/indirect cost base; distinguish operating-cost treatment | [Instruction art. 19](https://gzk.rks-gov.net/ActDetail.aspx?ActID=14937&langid=2) |
| Transactional net margin | Net operating result relative to the selected comparable sales/cost/asset base | [Instruction art. 20](https://gzk.rks-gov.net/ActDetail.aspx?ActID=14937&langid=2) |
| Profit split | Joint profit/loss allocated by supported contributions/objective factors | [Instruction art. 21](https://gzk.rks-gov.net/ActDetail.aspx?ActID=14937&langid=2) |

The newer statute's art. 28(4) selects the most suitable method by strengths/
weaknesses, transaction nature/functions/assets/risks, reliable data and
comparability/adjustments. Apply that rule rather than treating the older
instruction art. 22's CUP-first wording as an unconditional veto of a better-
supported method. Select a tested party consistent with the functional analysis;
a foreign tested party needs sufficient evidence for TAK to evaluate it.
Comparable differences must be material, measurable and reliably adjustable.
Review internal comparisons before external searches; foreign comparisons
need geographic/economic adjustment analysis
([06/L-105 art. 28(3)–(4)](https://www.atk-ks.org/wp-content/uploads/2019/09/LAW_NO.06_L-105.pdf); [Instruction arts. 13–23](https://gzk.rks-gov.net/ActDetail.aspx?ActID=14937&langid=2)).

Combine economically inseparable transactions only where separate analysis
would be unreliable (instruction art. 26). Document the supported range and
its statistical treatment. Article 27 permits an outside-range adjustment to
the median unless the facts support another point; the instruction requires
written Director-General approval for TAK's adjustment. Its restricted-data
quartile rule removes the lower and upper 25% when applied; the English
"twenty per cent (25%)" inconsistency does not create a 20% upper exclusion.
Do not set every transaction to the median without first testing its result
and comparability ([Instruction art. 27, Albanian/Serbian comparison](https://gzk.rks-gov.net/ActDetail.aspx?ActID=14937&langid=2)).

### Low-value group services

First establish an actually supplied service, benefit/expected economic value,
an independent recipient's willingness to pay or self-perform, and a supported
price. Mere duplication fails the test; art. 24(2) describes the limited
reorganisation/business-decision-risk exception. Direct services are tested
individually. Shared services require a reasonable, measurable allocation to
actual/expected beneficiaries, reflecting the service and benefit.

The simplified approach covers supportive activities outside the group's core
business, with no unique valuable intangibles or significant risk assumption/
control. R&D, production, sales, marketing, financial transactions, insurance
and reinsurance are excluded. Low price does not establish low-value eligibility.
Compute annual costs by service category, remove solely direct-recipient costs,
allocate the shared pool to beneficiaries and apply **7% to the relevant cost
base**, not turnover. Exclude the pass-through costs on which no profit is
attributable; the English "overdrafts" wording must be read with the Albanian/
Serbian text. Above 7%, TAK need not accept the simplified approach and can
require full functional/comparability work. No benchmarking study of the
specified simplified markup is required, but the eligibility, benefits,
contracts, costs, allocation key and calculation still need proof
([Instruction art. 24(1)–(11)](https://gzk.rks-gov.net/ActDetail.aspx?ActID=14937&langid=2)).

### Documentation and annual notification are separate

Prepare the file for controlled transactions under current law art. 28(5).
Instruction art. 29(6) requires taxpayer/group organisation and business
context; controlled transactions and comparability factors; pricing policy;
method/financial-indicator selection; comparable search, rejected internal
comparisons and adjustments; economic analysis; foreign pricing agreements;
and the compliance conclusion/necessary adjustment. Reconcile the financial
results and relevant accounts. Incomplete, inaccurate or non-objective material
does not discharge the requirement.

TAK FAQ 47 describes group/master and Kosovo/local material: group legal/
business/IP/finance/pricing structure and consolidated finances, plus local
organisation, FAR analysis, transactions, contracts, method, benchmark and
financial reconciliation. FAQ 49 asks preparation before the annual return
and annual/material-change updates. A foreign group report alone does not
supply the local analysis. Instruction art. 29(8)'s simplified below-threshold
wording does not override the later statute's universal preparation duty;
FAQ 48 expressly includes below-EUR-300,000 cases when requested. Official-
language documentation is the default; English is permitted for special cases,
not an automatic right for any English-only group report
([06/L-105 art. 28(5)](https://www.atk-ks.org/wp-content/uploads/2019/09/LAW_NO.06_L-105.pdf); [Instruction art. 29](https://gzk.rks-gov.net/ActDetail.aspx?ActID=14937&langid=2);
[TAK FAQ 47–49](https://www.atk-ks.org/en/transferimi-i-cmimit/)).

For notification, reconcile **absolute** transaction income and expense
separately, and include the relevant loans. The current official form asks
opening and closing borrowed/lent balances, interest status, counterparty
residence, transaction type, method, documentation status, capital acquisitions/
disposals, group FAR structure and no-charge supplies. It defines opening as
prior-year carried balance or first-year loan amount and closing as year-end
outstanding balance. Do not net borrowed against lent balances or silently
count the same principal again as goods/service consideration. The instruction
requires loan-balance inclusion but does not itself prescribe summing both
opening and closing balances into one double-counted threshold amount.
Record the method used and obtain specific instructions for a case where that
measurement changes threshold status
([Notification art. 28 and Annex 2](https://gzk.rks-gov.net/ActDetail.aspx?ActID=14937&langid=2); [Current form and completion guidance](https://www.atk-ks.org/wp-content/uploads/2023/02/ENG-Njoftimi-Vjetor-per-Transaksionet-e-Kontrolluara.docx)).

## Deadlines and filing

The notification deadline follows the annual CIT deadline under notification
art. 28(3), normally 31 March following the year: for tax year 2026,
**31 March 2027** under the current rule. The specific notice read here sets
31 March **2026 for tax year 2025**. Do not present that historical notice as
a newly published 2027 operational instruction
([Instruction, notification art. 28(2)–(3)](https://gzk.rks-gov.net/ActDetail.aspx?ActID=14937&langid=2);
[06/L-105 arts. 37–38](https://www.atk-ks.org/wp-content/uploads/2019/09/LAW_NO.06_L-105.pdf); [30 March 2026 notice](https://www.atk-ks.org/en/notice-to-taxpayers-report-controlled-transactions-4/)).

Current TAK notice/FAQ directs physical submission to its Central Office,
Archives Office, Department for Transfer Pricing and Digital Economy, at
Dëshmorët e Kombit/Bill Klinton, Prishtina. The notice points to the form on TAK's
Forms page; the version linked is the 2023 English form. Use the actual
reporting year in the template and keep the signed form, attachments and
receipt. The instruction allows the physical or electronic channel determined
by TAK; the 30 March 2026 notice requires submission in person.
Check the operational notice applicable when making the later-year filing.

Prepare the documentation separately and make it available within thirty days
of receiving TAK's request. Record receipt, scope, language and delivered
material. Stable comparable searches refresh at least every three years;
financial information refreshes annually, and material changes require a new
assessment. Passing the notification threshold test does not extend those
duties ([Instruction art. 29](https://gzk.rks-gov.net/ActDetail.aspx?ActID=14937&langid=2); [TAK FAQ 46–49](https://www.atk-ks.org/en/transferimi-i-cmimit/)).

## Penalties and interest

An annual controlled-transactions notice is an information statement under
TAK's current notice. Current procedure Law 08/L-257 art. 101(1) charges EUR
150 for each missing, inaccurate or incomplete statement, maximum EUR 3,000.
Failure to provide information in response to an art. 9(1) request has the
EUR 500 penalty under art. 102(1); failure to give required records access
under arts. 8–9 has the distinct EUR 150-per-day default rule in art. 101(5).
Apply the actual request and conduct, not an assumed flat annual TP fine
([08/L-257 arts. 101–102](https://www.atk-ks.org/wp-content/uploads/2024/01/LAW_NO._08_L-257_ON_THE_ADMINISTRATION_OF_TAX_PROCEDURES.pdf); [TAK notice](https://www.atk-ks.org/en/notice-to-taxpayers-report-controlled-transactions-4/)).

If incorrect prices understate tax, art. 100(1) charges 15% of the difference
where at most 10% of correct tax, and 25% where larger, with art. 100(4)'s
non-overlap rule for art. 101. The resulting tax adjustment also bears
applicable late interest under art. 24, monthly/part-monthly up to ten years,
at the Minister's published rate. The numeric 2026 rate is not confirmed.
Do not import the repealed 03/L-222 penalty cross-reference from the 2017
instruction as current law ([08/L-257 arts. 24, 100–102](https://www.atk-ks.org/wp-content/uploads/2024/01/LAW_NO._08_L-257_ON_THE_ADMINISTRATION_OF_TAX_PROCEDURES.pdf)).

## Cross-border points

Where a treaty-partner country's adjustment taxes profit already taxed in
Kosovo, request a corresponding adjustment under current CIT art. 28(6).
Instruction's first art. 28 (headed Relevant adjustments) requires a written
request with parties/registrations, years, amounts, related-party residence
certificate, foreign assessment/basis, comparability/method evidence and the
specified statement about further foreign appeals. TAK tests arm's-length
compliance; an assessment abroad does not automatically grant Kosovo relief.

That instruction provides a three-month response from receipt of a qualifying
request, with reasons for rejection, and preserves applicable treaty procedures
and deadlines. Identify the actual treaty and competent-authority route before
calculating its limitation period; there is no universal Kosovo MAP filing
period to apply ([06/L-105 art. 28(6)](https://www.atk-ks.org/wp-content/uploads/2019/09/LAW_NO.06_L-105.pdf);
[Instruction, first art. 28(1)–(6)](https://gzk.rks-gov.net/ActDetail.aspx?ActID=14937&langid=2)).

Keep treaty relief, WHT, PE attribution and VAT distinct from transfer-pricing
valuation. The related-income inclusion does not establish a withholding
exemption. Separate multinational country-by-country reporting and advance-
pricing procedure applicability have not been confirmed by this source pass;
there is no claimed exemption from them.

## Two worked examples that recompute

### 1. Supported comparable-price adjustment

Assume a corporate sale of 1,000 units to a related party at EUR 80 each and
a reliable adjusted independent CUP of EUR 95. Booked revenue is EUR 80,000;
supported revenue EUR 95,000; profit adjustment EUR 15,000. Assuming full
ordinary 10% CIT exposure and no loss/credit interaction, incremental CIT is
EUR 1,500. Comparability and exposure are explicit hypothetical facts.

```oa-check
name: Kosovo controlled goods CUP and ordinary tax adjustment
inputs:
  units: 1000
  booked_unit_price: 80
  supported_unit_price: 95
steps:
  - booked_revenue: units * booked_unit_price
  - supported_revenue: units * supported_unit_price
  - profit_adjustment: supported_revenue - booked_revenue
  - incremental_cit: profit_adjustment * 0.10
expected:
  booked_revenue: 80000
  supported_revenue: 95000
  profit_adjustment: 15000
  incremental_cit: 1500
```

### 2. Eligible low-value shared service

Assume art. 24 eligibility/benefit tests are satisfied. Annual reconciled
shared costs EUR 80,000 already exclude solely direct-recipient costs and
unmarked-up pass-through items. A supported allocation assigns 25% to the
Kosovo beneficiary. Allocated cost EUR 20,000 plus 7% markup EUR 1,400 gives
EUR 21,400. This calculation does not establish WHT/VAT treatment, service
eligibility or ultimate deductibility.

```oa-check
name: Kosovo eligible low-value shared-service allocation
inputs:
  eligible_shared_costs: 80000
  supported_recipient_share: 0.25
steps:
  - allocated_cost: eligible_shared_costs * supported_recipient_share
  - markup: allocated_cost * 0.07
  - service_charge: allocated_cost + markup
expected:
  allocated_cost: 20000
  markup: 1400
  service_charge: 21400
```

## Ask the client first

1. Which corporate/individual taxpayer, ownership/control/family relationships, counterparty residences and Annex 1 entries apply?
2. What transactions, no-charge supplies, capital movements and opening/closing loans reconcile to the ledger for the reporting year?
3. What actual functions, assets, risks, contracts and internal/external comparisons support the method, tested party and result?
4. For group services, what benefit evidence, eligible cost pool, exclusions and allocation key support the charge?
5. What documentation, notification receipts, TAK requests and language/response deadlines already exist?
6. Is there a foreign assessment, treaty request or wider multinational reporting/pricing-agreement requirement?

## Sources

| Source | URL | Read on |
|---|---|---|
| Law 06/L-105 on Corporate Income Tax, arts. 3(1.18), 7, 28, 37–38 | https://www.atk-ks.org/wp-content/uploads/2019/09/LAW_NO.06_L-105.pdf | 2026-10-30 |
| Law 05/L-028 on Personal Income Tax, art. 35 | https://www.atk-ks.org/wp-content/uploads/2017/07/LAW_NO._05_L_-028__ON_PERSONAL_INCOME_TAX.pdf | 2026-10-30 |
| Administrative Instruction MF 02/2017 on Transfer Pricing, arts. 5, 24, 27, both arts. 28, 29; Annexes 1 and 2 (Official Gazette text) | https://gzk.rks-gov.net/ActDocumentDetail.aspx?ActID=14937&langid=2 | 2026-10-30 |
| TAK transfer pricing FAQ 46–49 | https://www.atk-ks.org/en/transferimi-i-cmimit/ | 2026-10-30 |
| TAK notice of 30 March 2026: notification above EUR 300,000, 2025 deadline, in-person channel | https://www.atk-ks.org/en/notice-to-taxpayers-report-controlled-transactions-4/ | 2026-10-30 |
| TAK Annual Controlled Transactions Notification form (English, 2023) | https://www.atk-ks.org/wp-content/uploads/2023/02/ENG-Njoftimi-Vjetor-per-Transaksionet-e-Kontrolluara.docx | 2026-10-30 |
| Law 08/L-257 on Tax Administration and Procedures, arts. 24, 100–102 | 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 |

Not yet confirmed: numeric 2026 tax late-interest rate; loan-threshold measurement where opening/closing balances change notification status; standalone country-by-country reporting and advance-pricing applicability/procedures; case-specific treaty route/deadline.

> Contributed by Michael Cutajar.