What is the Employment Cost in North Macedonia?

North Macedonia offers a highly favorable employment environment for employers, primarily due to the absence of additional employer payroll burdens. In practice, this means employers are not required to pay mandatory contributions beyond the agreed gross salary, making the country an attractive destination for business expansion and workforce growth.

Key Features of the System

1. Gross Salary–Based Employment Model

In North Macedonia, employers are responsible solely for paying the gross salary agreed with the employee.

• The gross salary represents the total compensation before deductions.
• Employers are not required to make any additional payments on top of this amount for taxes or social security contributions.
• This approach simplifies payroll planning and ensures predictable employment costs.
  
  

2. Employee Responsibility for Taxes and Contributions

Unlike many jurisdictions where employers share the burden of social security or income tax contributions, in North Macedonia:

• Employees bear full responsibility for personal income tax and social security contributions.
• All applicable deductions are withheld directly from the employee’s gross salary.
• As a result, employers are not exposed to variable contribution rates or additional statutory costs.
  
  

Personal Tax Allowance Increase for 2026

Starting in 2026, the personal tax allowance (personal exemption) will increase to MKD 10,932. This change affects only the calculation of personal income tax and has no impact on the employer’s total employment costs.

• The gross salary remains unchanged.
• Any social security contributions linked to the gross salary are not affected.
• The net salary of employees will increase, as a larger portion of income will be exempt from taxation due to the higher allowance.

In summary, while employees benefit from a higher take-home pay in 2026, employers will not incur any additional costs as a result of this change.

Benefits for Employers

Reduced Administrative Burden

Employers are not required to calculate, fund, or manage additional payroll contributions. This significantly simplifies payroll administration and reduces compliance complexity.

Lower and Predictable Employment Costs

The absence of employer-side contributions leads to lower overall employment expenses. Businesses can better forecast costs and potentially allocate savings toward competitive salaries, growth initiatives, or operational investments.

Attractive Business Environment

North Macedonia’s payroll structure offers cost efficiency, transparency, and stability. These features are particularly appealing to small and medium-sized enterprises (SMEs) and startups, as well as international companies seeking a straightforward and cost-effective employment framework.