Kosovo's wage tax change: what employers should check

Since September 2024, wages in Kosovo have been taxed under the brackets introduced by Law No. 08/L-142. For most employees the change means a lower monthly tax bill. For employers it means one more thing to get right every month: the calculation has to follow the new brackets, the right employer has to apply them, and the result has to reach the Kosovo Tax Administration (ATK) on time. This note sets out how the calculation works and the checks we recommend running before each payroll is approved.

How the brackets work

At the employee's main employer, the monthly taxable wage is taxed progressively:

The brackets apply to the wage after the employee's 5% pension contribution has been deducted. That order matters: calculating tax on gross pay rather than on pay after pension overstates the tax and understates the employee's net salary.

A worked example

Take an employee with a gross monthly wage of EUR 1,000 at their main employer.

• Employee pension (5%): EUR 50, leaving a taxable wage of EUR 950.
• First EUR 250: taxed at 0%, so EUR 0.
• Next EUR 200 (from EUR 250.01 to EUR 450): taxed at 8%, so EUR 16.
• Remaining EUR 500 (above EUR 450): taxed at 10%, so EUR 50.

Wage tax is EUR 66 and the net salary is EUR 884. On top of the gross wage, the employer pays its own 5% pension contribution, EUR 50, so the total monthly cost of this employee is EUR 1,050.

Main employer and secondary employer

The progressive brackets apply only at the main employer. An employee with a second job is taxed there at a flat 10%, withheld by the secondary employer, with no 0% or 8% band. Two practical consequences follow:

• Every employee should confirm in writing which employer is their main employer. Keep that declaration in the personnel file.
• When someone joins you who already works elsewhere, check before the first payroll which role is the main one. Applying the brackets in two places understates tax; applying the flat 10% at the main employer overstates it.

Pension contributions

Pension contributions are 5% from the employee and 5% from the employer, paid to the Kosovo Pension Savings Trust (KPST). They are declared and paid together with wage tax. Check that both halves appear in every payroll, including for employees who join or leave in the middle of a month.

Deadlines and filing

Wage tax and pension contributions for a month are declared and paid by the 15th of the following month, so October wages are declared and paid by 15 November. Declarations are filed electronically through ATK's EDI system. A payroll approved on the 14th leaves no room for a correction, so we recommend closing payroll several working days earlier.

Checks to run every month

1. Brackets in the software. Confirm that your payroll software or spreadsheet uses the 0%, 8% and 10% brackets and applies them after the 5% pension, not before.
2. Main employer status. Every employee is marked as main or secondary, and the mark matches a signed declaration.
3. A reasonableness test. Recalculate two or three payslips by hand each month, at least one in each bracket. It takes ten minutes and catches most setup errors.
4. Joiners and leavers. Part-month wages are pro-rated correctly and pension is calculated on what was actually paid.
5. Reconciliation. The totals in the EDI declaration match the payroll report and the amounts leaving the bank.
6. Payment timing. The payment reaches ATK and KPST by the 15th, not just the declaration.

Most payroll errors we find are not complex. They are a bracket set up incorrectly once and then repeated every month.

When to ask for help

If your payroll was set up before September 2024 and has not been reviewed since, it is worth checking a few months of payslips against the rules above. Where an error has been repeated, correcting it early keeps any adjustment small. The treatment of specific situations, such as benefits in kind or payments to non-residents, depends on the facts, so confirm it with your adviser before you change the payroll.