Tax Alert: Foreign Electronic Services Providers are obliged to register for Value Added Tax at Kosovo’s Tax Authority

In light of the digital increase of supply of services, on February 14, 2022, Kosovo’s Tax Authority published an announcement which reminds that all foreign businesses that supply services electronically have an obligation to register for value-added tax (“VAT”) in Kosovo. Such registration may take place either by appointment of a fiscal representative in Kosovo or through the registration of a permanent establishment in Kosovo.

Nonetheless, not all foreign electronic service providers are obliged to be registered for VAT in Kosovo. The decisive criterion of the registration relies on the fact that the services should be provided to a non-taxable VAT person e.g., a consumer or a non-registered VAT entity in Kosovo, so as to trigger the registration obligation.

In terms of legislation, the obligation of registration arises out of article 20, paragraphs 4.8 and 4.9.11 of the Law No. 05/L-037 on Value Added Tax, entered into force in 2015, and approximated with EU Acquis on value-added tax. The list of services that may be provided electronically as per applicable law on value-added tax consists of:

  1. Website supply, web-hosting, distance maintenance of programmes and equipment;
  2.  Supply of software and its updates;
  3.  Supply of images, text and information and making available of database;
  4.  Supply of music, films and games, including games of chance, and political, cultural, artistic, sporting, scientific and entertainment broadcasts and events; and
  5.  Supply of distance teaching.

All taxable persons who import/export and taxable persons whose turnover is above EUR 30,000 within a calendar year are required to register for VAT.
Where turnover is less than the threshold, voluntary registration for VAT is possible.

The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.