Permanent Establishment in North Macedonia: A Guide for Foreign Companies

For any foreign company with business activities in North Macedonia, understanding when a permanent establishment (PE) arises is a fundamental compliance requirement — not an optional consideration. PE status triggers corporate income tax obligations and mandatory registration with the Public Revenue Office. The rules are more nuanced than they appear, and activities that seem limited or temporary can still cross the threshold. This page is part of our practice in business and corporate law. 

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.

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

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

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 Public Revenue Office and is a prerequisite for filing corporate income tax returns and fulfilling other tax compliance obligations. 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.

Practical Checklist

For foreign companies with activities in North Macedonia, verify the following: (1) Map all activities in North Macedonia — list every type of activity your company carries out: installations, services, consultancy, use of local agents, storage, exhibitions. Classify each against the PE definitions in the Corporate Income Tax Law. (2) Check project duration — at project level — for construction/installation: has the project lasted or will it last more than 6 months (including preparatory works)? For services: have activities exceeded 90 consecutive days in any 12-month period? Remember: continuity is calculated per project, not per employee. (3) Assess local agents carefully — does any local person regularly conclude contracts on your behalf or maintain a stock of goods for delivery? If yes, you likely already have a PE regardless of whether you have a physical office. (4) Do not assume exclusions apply automatically — the ‘preparatory or auxiliary’ exclusions are narrow. If local activities go beyond storage, purchasing or information gathering and contribute directly to the company’s core business, the exclusion will not apply. (5) Register promptly if PE conditions are met — registration with the Public Revenue Office must be completed at the commencement of business activities. Late registration risks retroactive tax assessments and penalties. (6) For PE assessment and registration assistance, contact our business law team.

Frequently Asked Questions

Can rotating staff prevent a permanent establishment from arising?

No. The 90-day threshold for services and the 6-month threshold for construction are calculated at the project level, not per individual. A foreign company that rotates staff so that no single person exceeds 90 days — while the project itself continues — does not avoid PE status. The total duration of the project determines whether the threshold is crossed.

Does a 7-day interruption reset the 90-day count for services?

No. The law provides that interruptions of up to 7 days do not break the continuity of the 90-day period. Shorter interruptions (weekends, short breaks) are disregarded when calculating whether the threshold has been reached.

Does using a local independent agent create a permanent establishment?

Not automatically. An independent broker or agent acting in the ordinary course of their own business does not create a PE. However, if the agent is dependent on the foreign company — for example, if they are authorized to and regularly do conclude contracts on the foreign company’s behalf, or maintain a stock of goods for delivery — this creates a PE regardless of whether there is a physical office.

What are the consequences of failing to register a PE?

Failure to register when PE conditions are met may result in: retroactive corporate income tax assessments covering the entire period of unregistered activity; interest on unpaid tax; administrative penalties; and reputational and operational complications. Registration at the commencement of activity is strongly recommended rather than waiting for a tax authority inquiry.

Can the PE be avoided by using a branch office instead?

A branch office is itself one of the defined forms of permanent establishment under the Corporate Income Tax Law. Registering a branch does not avoid PE status — it is a PE by definition. The choice between operating through a PE, a branch or a separate local company (LLC) should be made on the basis of tax, liability and operational considerations, with appropriate legal and tax advice.

Last updated: July 2026

Note: The above does not constitute legal advice and in no way can be accepted or understood as an instruction to act in a specific case. Each legal situation has its own characteristics that should be reviewed at separately, and for that reason we recommend that you contact a professional – a lawyer – for legal advice.