A permanent establishment (PE) in North Macedonia is a fixed place of business through which a foreign company carries out its activities, wholly or partially, within the country. The existence of a PE triggers an obligation to register with the tax authorities and pay corporate income tax on profits generated in North Macedonia. For any foreign company operating or planning to operate here, understanding when PE status arises is not optional – it is a fundamental compliance requirement.

What Is a Permanent Establishment?

Under the Corporate Income Tax Law of North Macedonia, a permanent establishment of a foreign legal entity means a fixed place of business through which the foreign entity carries out its activities – directly or through a dependent agent – either wholly or partially in the country.

The law lists the following as permanent establishments by definition:

• A place of management, branch, subsidiary, or office
• A factory, workshop, mine, oil or gas extraction site, quarry, or other place of exploitation of natural resources
• A construction site, building or assembly project, installation works, or supervisory activities lasting more than six months
• The provision of services — including consultancy — related to a single or connected project, lasting more than 90 consecutive days within any twelve-month period

The key takeaway: PE status is not determined by formal structure alone. It depends on the actual nature, duration, and continuity of the activities carried out in North Macedonia.

Time Limits for Permanent Establishment in North Macedonia

The law sets clear thresholds above which activities automatically constitute a PE:

Construction and Installation Activities

A construction site, building project, assembly, installation, or related supervisory activities lasting 6 months create a PE from the first day of activity, including preparatory works.

Services and Consultancy

More than 90 consecutive days within any twelve-month period: Creates a PE. Interruptions of up to 7 days do not break continuity. The threshold applies per project, regardless of how many people are involved.

These thresholds apply to the total duration of the project, not to the presence of any individual employee. Foreign companies that rotate staff to stay below 90 days individually should take note: the period is calculated at the project level.

When Does a Dependent Agent Create a Permanent Establishment?

Even without a physical office, a foreign company may have a PE in North Macedonia if it engages a person who:

• Is authorized to, and regularly does, conclude contracts on behalf of the foreign company; or
• Regularly maintains a stock of goods from which deliveries are made on behalf of the foreign company.

By contrast, the use of independent brokers or agents acting in the ordinary course of their own business does not create a PE.

What Is Not Considered a Permanent Establishment?

The law provides a list of preparatory and auxiliary activities that do not give rise to PE status. A fixed place of business used solely for the following purposes is not a PE:

• Storage or display of goods belonging to the foreign entity
• Maintaining a stock of goods solely for processing by another person
• Purchasing goods or collecting information
• Carrying out preparatory or auxiliary activities
• Sale of goods exhibited at temporary fairs or exhibitions, if sold within one month of the event
• Any combination of the above, provided the overall activity remains preparatory or auxiliary in nature

The distinction between ‘preparatory or auxiliary’ and ‘core business’ activity is frequently contested and should be assessed carefully in light of the specific facts of each situation.

Registration Obligation: When and How

If a foreign entity meets the conditions for a permanent establishment, it is required to register as a corporate income taxpayer at the commencement of its business activities in North Macedonia. Registration results in the issuance of a unique tax identification number (TIN).

Registration must be completed with the competent tax authorities — the Public Revenue Office — and is a prerequisite for filing corporate income tax returns and fulfilling other tax compliance obligations in the country. Failure to register when required may result in retroactive tax assessments, penalties, and administrative complications.

Practical Takeaway

A permanent establishment in North Macedonia can arise even where activities appear limited or temporary at first glance. The determining factors are the actual nature, intensity, and continuity of the business activities carried out in the country – not the formal label given to them.

Proactive structuring of business presence, careful planning of project duration, and clear definition of the role of local agents can significantly reduce the risk of unexpected corporate income tax liabilities and sanctions.

If you are a foreign company operating or planning to operate in North Macedonia and have questions about permanent establishment status, our team can advise on structuring, registration, and compliance. Schedule a consultation to discuss your specific situation.