FYR Macedonia: FYR Macedonia and Israel sign tax treaty

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

FYR Macedonia: FYR Macedonia and Israel sign tax treaty

Kostovska-Elena

Elena Kostovska

On December 9 2015, FYR Macedonian Government representatives signed a double tax treaty (DTT) with Israeli officials in Jerusalem.

Pending approval from both countries' authorities, the treaty will be effective from the calendar year following the one during which ratifications will take place.

The DTT covers personal income tax and profit tax in FYR Macedonia and income tax, company tax and tax imposed on gains from the alienation of property in Israel. According to the treaty, construction and installation projects exceeding 12 months in duration are considered to constitute a permanent establishment.

Article 10 of the treaty with Israel defines a 5% withholding tax rate for dividends in cases when the beneficial owner holds at least 25% of the dividend-paying company and a 15% tax rate in cases when this participation criterion is not met. The same article clearly defines the withholding tax applied to distributions made by real estate investment companies. Such distributions are subject to 15% withholding tax assuming the beneficial owner's participation of at least 10%. The clarifying remarks of the treaty stipulate that a real estate investment company presumes a company meeting the conditions outlined in section 64A2 of the Israeli Income Tax Ordinance.

Additionally, a standard 10% withholding tax rate is applicable on interest and a 5% rate is applicable on royalties.

As far as prevention of double taxation is concerned, the treaty stipulates that both countries will allow deduction from taxes in the amount of tax paid on it the other state.

Given the recent momentum in the bilateral relations between FYR Macedonia and Israel, including the signing of a bilateral investment protection agreement (IPA) in December 2015, it is expected that swift ratifications of the DTT will ensue during 2016.

Elena Kostovska (elena.kostovska@eurofast.eu), Skopje

Eurofast Global

Tel: +389 2 2400225

Website: www.eurofast.eu

more across site & shared bottom lb ros

More from across our site

FTI Consulting’s EMEA head of employment tax and reward tells ITR about celebrating diversity in the profession, his love of musicals, and what makes tax cool
Canadian Prime Minister Mark Carney and US President Donald Trump have agreed that the countries will look to conclude a deal by July 21, 2025
The firm’s lack of transparency regarding its tax leaks scandal should see the ban extended beyond June 30, senators Deborah O’Neill and Barbara Pocock tell ITR
Despite posing significant administrative hurdles, digital services taxes remain ‘the best way forward’ for emerging economies, says Neil Kelley, COO of Ascoria
A ‘joint understanding’ among G7 countries that ‘defends American interests’ is set to be announced, Scott Bessent claimed
The ‘big four’ firm’s inaugural annual report unveiled a sharp drop in profits for 2024; in other news, Baker McKenzie and Perkins Coie expanded their US tax benches
Representatives from the two countries focused on TP as they met this week to evaluate progress under a previously signed agreement – it is understood
The UK accountancy firm’s transfer pricing lead tells ITR about his expat lifestyle, taking risks, and what makes tax cool
Dolphin Drilling intends to discuss the final liability amount and manner of settlement with HM Revenue and Customs
Winning the case against the 20% VAT imposition was always going to be an uphill challenge for the claimants, UK tax advisers argue
Gift this article