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FYR Macedonia: FYR Macedonia extends application of preferential VAT rate to first sale of residential buildings


Elena Kostovska

In 2009, as an anti-crisis measure, the FYR Macedonian Government started to apply the preferential VAT rate to the first sale of residential buildings. Initially planned to be in force until the end of 2011, the application was extended until the end of 2015. In July 2015, the government extended it once again, this time for a period of three more years. The Macedonian VAT regime recognises a standard rate of 18% and a preferential rate of 5%. The preferential rate is applicable to the supply of a wide range of goods and services including, among others, food products, medicine, publications, food for livestock, drinking water and agricultural machines.

As of 2009, the first sale of residential buildings completed less than five years ago but which have not yet been occupied also became subject to the reduced VAT rate of 5%, instead of the standard rate of 18% which was applied before 2009. To be eligible for this reduced VAT rate, the building must be used for residential purposes. In the case of a mixed-purpose building, a proportional VAT application will be enforced – the portion of the building to be used for residential purposes will be subject to 5% VAT while the rest of the building will be charged the standard 18% rate.

The most recent amendment to the VAT Law in this area was published in the Official Gazette No.129 of July 31 2015. It entered into force on August 8 2015, extending the application of the reduced VAT rate until December 31 2018.

The government has argued that the measure has caused a significant increase in the number of residential apartments built each year as well as a reduction in the average price of residential properties. This further extension of the preferential VAT regime is expected to provide an additional boost to the already very active residential construction sector and support the trend of decreasing prices of residential buildings.

Elena Kostovska (, Skopje office

Eurofast Global

Tel: +389 2 2400 225


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