How to Run Payroll in North Macedonia: Employment Taxes & Setup

Milani Notshe

Research Specialist

Last Updated

February 13, 2026

In This Guide

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Running payroll in North Macedonia involves many moving parts before your team sees money land in their accounts. Each month you need to calculate gross-to-net correctly, apply statutory withholdings and employer contributions, issue compliant payslips, plus file and remit on schedule. If anything slips through the cracks, you could face penalties, back-pay exposure, and unnecessary friction with your people.

If you’re hiring in North Macedonia, whether you’re building a local presence or expanding your global footprint, this guide is for you. We’ll walk through the choices and compliance requirements that have the biggest impact on your speed and risk, from entity vs. no-entity hiring to worker classification and the statutory bodies you’ll interact with along the way. By the end, you’ll know exactly what to expect and how to keep payroll running smoothly, wherever you’re hiring.

Key Takeaways

Payroll cycle: Employers in North Macedonia generally process payroll on a monthly basis.

Tax filing: Personal income tax and social security contributions are typically reported and remitted monthly.

Employer taxes: Employer obligations include contributions to pension, health, and unemployment insurance calculated as percentages of employee earnings.

Tax year: North Macedonia follows the calendar year for tax purposes, from January 1 to December 31.

Payroll processing methods: Payroll is commonly managed in-house or outsourced to providers familiar with North Macedonian tax and social security requirements.

How to Choose Your Payroll Structure in North Macedonia

Expanding into North Macedonia? Building a compliant payroll setup involves much more than simply paying salaries. You’ll be responsible for employment compliance, monthly tax and social declarations, and mandatory benefits. Even small delays in filings or payments can lead to real penalties.

You have several operating models to choose from to make this easier. The right one depends on your legal footprint, your appetite for risk, and how quickly you need to start hiring. Let’s break down the main options and when to use each.

1. No Local Entity in North Macedonia: Use an Employer of Record (EOR)

If you don’t yet have a legal entity in North Macedonia, an Employer of Record is usually the fastest and lowest-risk way to hire. An EOR becomes the legal employer on paper, provides locally compliant employment contracts, and manages payroll under local regulations, while you continue to direct the work and manage performance.

This model is ideal for:

Testing a new market
Hiring your first team members
Scaling a distributed workforce without building local infrastructure,

Why it’s the fastest and least risky option:

You skip the lengthy process (and cost) of setting up an entity.
All local registrations, monthly declarations, and statutory payments are handled by a provider already set up in-country, dramatically reducing your compliance risk.

2. You Have a North Macedonia Entity: Run In-Country Payroll

If you already operate a local entity, or you’re planning to establish one, running payroll directly gives you maximum flexibility and control. You can set your own policies, design benefits, and align payroll closely with your finance and internal approval processes. But this also comes with greater operational responsibility.

What you’re responsible for:

Registering with relevant authorities and maintaining compliance with statutory bodies (often involving CSS/IPRES or similar local institutions).
Accurately calculating and remitting payroll taxes and contributions every month – plus handling year-end requirements.
Issuing compliant payslips and maintaining audit-ready payroll documentation.

When this option makes sense:

You’re hiring at scale and want payroll fully “in-house,” even if you partner with a local provider for execution.
You need deeper integration with finance systems or custom benefit structures.

If you want to keep the entity but offload the admin, many employers choose global payroll services to handle calculations, filings, and payments while they remain the legal employer.

3. Contractors Only: Use Contractor Management

Paying independent contractors is often simpler than setting up full payroll, especially for short-term or highly specialized work.

However, you need to watch out for misclassification risk. In North Macedonia, as in many jurisdictions, someone may legally qualify as an employee based on how they work – not what their contract says. If they’re under your direction, working like an employee, you may be responsible for full employer obligations.

When contractor payments work well:

You need specialised expertise for a defined scope or timeframe
The contractor operates independently, not under your control or supervision

You can also use contractor management services to streamline compliant contracts, invoicing, and payments.

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What To Know About Payroll Processing In North Macedonia

Payroll in North Macedonia centers on four main obligations: personal income tax withholding, mandatory social security contributions, any applicable local surcharges, and periodic payroll reporting to the Public Revenue Office and social funds. You need to calculate and withhold correctly each month, submit electronic filings on time, and reconcile payroll data with employment contracts and time records.

Non-compliance can trigger financial penalties, late-payment interest, inspections by the Public Revenue Office, and delays in benefit entitlements for your employees, which quickly erodes trust. This guide helps you and your team navigate calculations, deadlines, filing procedures, and setup options, highlighting where rules may differ by income thresholds, contract type, or business size so you can design a compliant payroll process from day one.

Types Of Payroll Taxes In North Macedonia

In North Macedonia, payroll taxes are built around flat personal income tax, mandatory social security contributions, and health insurance, all calculated on gross employment income and reported monthly through the electronic systems of the Public Revenue Office and the Health Insurance Fund. Employers are responsible for withholding both employee and employer portions and remitting them together, with penalties and interest applied for late or incorrect payments.

Personal Income Tax (PIT)

Personal income tax on employment income is generally levied at a flat 10% rate on the employee’s taxable salary after social security contributions. Employers withhold PIT from each payroll run and remit it to the Public Revenue Office on a monthly basis using the prescribed electronic forms.

If you under-withhold or file late, the Public Revenue Office can assess back taxes, interest, and fines, and may initiate an audit of your broader payroll practices. Because PIT is fully borne by the employee but administered by you, accurate calculation and timely remittance are critical to avoid arrears and employee disputes.

Pension And Disability Insurance Contributions

Pension and disability insurance contributions finance the state pension system and are mandatory for most employees under the Law on Mandatory Social Insurance. The combined contribution rate is typically around 18.8% of gross salary, split between employer and employee, and subject to a minimum and maximum contribution base set annually.

Employers calculate and withhold both portions and pay them monthly to the Pension and Disability Insurance Fund via the integrated payroll reporting system. Failure to contribute correctly can lead to penalties, blocked access to certain state services, and gaps in employees’ pension records, which may result in claims against your company.

Health Insurance Contributions

Health insurance contributions fund access to public healthcare and are compulsory for employees covered by the Health Insurance Fund of North Macedonia. The total health insurance rate is commonly around 7.5% of gross salary, shared between employer and employee, and is calculated on the same contribution base as pension contributions.

Employers must declare and pay health contributions monthly together with other social security charges, using the same electronic submission channels. Underpayment or late payment can result in fines and may temporarily affect employees’ entitlement status in the public health system, creating significant employee-relations issues and potential legal exposure.

How To Pay Employees In North Macedonia

Most employees in North Macedonia are paid by bank transfer in Macedonian denar (MKD), and salaries must be paid at least once per month according to the employment contract and the Labor Law. Employers typically run payroll on a fixed monthly cycle, with payment dates agreed in writing and aligned with the deadlines for tax and social security remittances.

If you do not have a local entity, you can engage an Employer of Record to hire and pay staff compliantly on your behalf, or you can register a local company and work with a payroll provider or in-house team. Payslips should clearly show gross salary, each statutory contribution and tax withheld, net pay, period covered, and employer details so employees can verify their entitlements.

Payment Method: Use electronic bank transfers in MKD to employees’ local bank accounts for standard payroll.
Pay Frequency: Set a monthly pay date in employment contracts and keep it consistent across your workforce.
Payslip Content: Include gross earnings, itemized social contributions, income tax, net pay, pay period, and employer identification.
No-Entity Hiring: Use an Employer of Record if you want to hire quickly without registering a Macedonian company.
Local Entity Route: If you incorporate locally, register with the Public Revenue Office and social funds before running payroll.
Foreign Currency Considerations: If you budget in another currency, convert to MKD using a clear internal policy and document the rate used.
Record Keeping: Store payroll records, contracts, and bank proofs of payment for the statutory retention period in case of audits.

Payroll Set Up Checklist (Entity Vs No-Entity)

Getting payroll set up correctly in North Macedonia ensures you register with the right authorities, apply the correct contribution rates, and meet monthly filing deadlines from the first hire. Your approach will differ depending on whether you operate through your own local entity or rely on an Employer of Record to handle employment and payroll compliance.

With a local entity, you are directly responsible for registrations, calculations, filings, and payments, often supported by a local accountant or payroll provider. With no entity, an Employer of Record becomes the legal employer in North Macedonia, while you manage day-to-day work and costs, simplifying compliance but requiring close coordination on data and approvals.

Incorporation: If using your own entity, register the company with the Central Register of North Macedonia.
Tax Registration: Obtain a tax number and register as an employer with the Public Revenue Office before the first payroll.
Social Security Registration: Enroll with the Pension and Disability Insurance Fund and the Health Insurance Fund for employer contributions.
Bank Account: Open a corporate MKD bank account to pay salaries and remit taxes and contributions.
Employment Contracts: Draft written contracts that define salary, pay frequency, working hours, and benefits in line with the Labor Law.
Payroll Software: Implement local-compliant payroll software or engage a payroll bureau to handle calculations and filings.
Internal Controls: Set up approval workflows for timesheets, variable pay, and payroll sign-off each month.
No-Entity Option: If you do not plan to incorporate, select an Employer of Record partner and align on onboarding, cut-off dates, and reporting.
Policies And Documentation: Establish written policies on overtime, bonuses, allowances, and expense reimbursements to support consistent payroll treatment.

Example Of Salary Tax Calculation

Assume an employee in Skopje earns a gross monthly salary of 60,000 MKD under a standard employment contract. You will first calculate the mandatory social security contributions on the gross amount, then determine the taxable base for personal income tax, and finally arrive at the net salary to be paid.

The same process repeats each month, with any bonuses or overtime added to gross pay and processed through the same contribution and tax formulas. Using payroll software or a local provider helps you keep up with annual changes to contribution bases and rates while maintaining a clear audit trail.

Step 1 – Determine Gross Pay: Confirm the monthly gross salary of 60,000 MKD including any regular allowances.
Step 2 – Calculate Social Contributions: Apply the current pension, health, and other social rates to 60,000 MKD to find total employee contributions.
Step 3 – Compute Taxable Base: Subtract employee social contributions from gross salary to obtain the taxable income for PIT.
Step 4 – Apply PIT Rate: Multiply the taxable base by the 10% PIT rate to determine income tax withholding.
Step 5 – Derive Net Pay: Subtract employee social contributions and PIT from gross salary to get the net salary to transfer to the employee.

Submitting Employee Tax In North Macedonia

In North Macedonia, employers typically submit payroll taxes and social contributions electronically through the Public Revenue Office and related e-services, then pay via bank transfer using the correct payment references. To complete submissions, you need your company tax ID, employee identification data, the payroll period, calculated amounts for each tax and contribution type, and access to your corporate bank account.

Electronic Filing: Use the Public Revenue Office’s online portal to upload monthly payroll declarations for PIT and social contributions.
Bank Transfer Payments: Pay assessed amounts from your corporate MKD account using the prescribed reference numbers and purpose codes.
Integrated Reporting: Submit combined reports that cover income tax and social security where required by current regulations.
Payroll Provider Submission: Authorize your local payroll bureau to file and pay on your behalf while you review and approve summaries.
Reconciliation: Reconcile filed amounts with your general ledger and bank statements each month to catch discrepancies early.

Payroll Tax Due Dates In North Macedonia

Tax Type	Due Dates
Personal Income Tax Withholding	By the 10th of the month following the month in which salaries are paid.
Pension And Disability Insurance Contributions	By the 10th of the month following the month in which salaries are paid.
Health Insurance Contributions	By the 10th of the month following the month in which salaries are paid.
Unemployment Insurance Contributions	By the 10th of the month following the month in which salaries are paid.
Monthly Payroll Declaration To Public Revenue Office	Filed electronically by the 10th of the month following the payroll month.
Annual Personal Income Tax Reconciliation	By 15 March of the year following the tax year, if an employer adjustment is required.

Running Payroll Processing in North Macedonia

So, what does it actually take to run payroll in North Macedonia? It involves calculating monthly salaries, applying the right statutory deductions, and making sure your team gets paid accurately and on time, while staying fully compliant with local tax and labour laws.

Let’s walk through what that looks like in practice:

Monthly Payroll Workflow

Gather all the essentials: hours worked, leave taken, new joiners, leavers, and any salary or benefit changes.
Double-check timesheets, leave balances, overtime, and any variable pay to make sure everything is accurate.
Work out gross earnings, including base salary, bonuses, commissions, and allowances.
Apply mandatory and voluntary deductions, like income tax, pension contributions, benefits, and any company-specific deductions. Then, calculate net pay after all deductions.
Run internal reviews, compare with previous payroll cycles, and get the necessary approvals.
Pay employees via bank transfer and share payslips through email or your payroll system.
Send statutory payments and required reports to tax authorities.
Update your records and ensure payroll entries flow correctly into your accounting system.
Share payroll summaries with finance and address any open questions or discrepancies.

How Playroll Streamlines Processing

Keeping track of all these steps, especially in a new market, is no easy task. Regulations change, requirements shift, and it’s easy for things to fall through the cracks. Playroll makes this effortless by managing the entire payroll process for you: onboarding employees, handling calculations and deductions, issuing payslips, transferring funds in Macedonian Denar, and taking care of statutory filings and compliance.

Income Tax And Social Security In North Macedonia

Understanding the tax obligations for both employers and employees is crucial when operating in North Macedonia's business landscape. This section explains how taxes and statutory fees affect payroll and individual earnings in North Macedonia.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 16% - 20% on top of the employee salary in North Macedonia. These contributions cover pension and disability insurance, health insurance, unemployment insurance, and work injury insurance, and are calculated on the employee’s gross salary within statutory minimum and maximum bases.

Tax Type	Tax Rate
Employer Pension And Disability Insurance Contribution	Approximately 9.2% of gross salary
Employer Health Insurance Contribution	Approximately 3.75% of gross salary
Employer Unemployment Insurance Contribution	Approximately 1.2% of gross salary
Employer Work Injury Insurance Contribution	Approximately 0.5% of gross salary
Employer Additional Social Contributions	Approximately 1.5% of gross salary
Estimated Total Employer Social Contributions	Approximately 16% - 20% of gross salary

Employee Payroll Tax Contributions

In North Macedonia, the typical estimation for employee payroll contributions cost is around 27%. Employees contribute to pension and disability insurance, health insurance, unemployment insurance, and other social funds through withholdings from their gross salary.

Tax Type	Tax Rate
Employee Pension And Disability Insurance Contribution	Approximately 9.6% of gross salary
Employee Health Insurance Contribution	Approximately 3.75% of gross salary
Employee Unemployment Insurance Contribution	Approximately 1.2% of gross salary
Employee Additional Social Contributions	Approximately 1.5% of gross salary
Employee Personal Income Tax Withholding	10% of taxable income
Estimated Total Employee Social Contributions	Approximately 16% - 17% of gross salary, plus 10% PIT

Individual Income Tax Contributions

Individual income tax in North Macedonia is primarily based on a flat 10% rate applied to taxable income after social security contributions. Certain types of income may have different treatment, but employment income is generally taxed at this single rate.

Income Bracket	Tax Rate
0 – 120,000 MKD annual taxable income	10%
120,001 – 600,000 MKD annual taxable income	10%
600,001 – 1,200,000 MKD annual taxable income	10%
Above 1,200,000 MKD annual taxable income	10%

Pension in North Macedonia

Pension contributions in North Macedonia are mandatory for most employees and are shared between employer and employee, with combined rates around the high teens as a percentage of gross salary. Contributions are paid into the public pension system and, where applicable, into individual funded pension accounts, building entitlement to future retirement benefits based on years of service and contribution history.

Managing Common Payroll Challenges in North Macedonia

Global employers operating in North Macedonia often encounter unique payroll challenges that can affect compliance and efficiency, like navigating evolving tax laws and managing employee data. With a need for real-time accuracy, modern organizations must develop strategies to overcome these challenges effectively. Below, we explore some of the most common payroll hurdles and provide actionable solutions to streamline payroll processes in North Macedonia.

Maintaining Accurate And Detailed Payroll Reports

Maintaining accurate global payroll reports is often challenging due to currency exchange complexities, data integration issues, and the need to keep employee information up-to-date –including tax information, hours worked, leave balances, and any changes in salary or job status. Generating accurate reports is easy with a comprehensive payroll automation tool that consolidates fragmented data sources, and can keep track of employee payments and deductions.

Keeping up with ever-changing tax laws & Compliance Laws

In North Macedonia, tax laws and compliance regulations can change frequently, presenting a significant challenge for global employers. Monitoring updates to federal, state, and local tax codes is crucial to avoid non-compliance and costly penalties, but requires significant time and resources. Partnering with local experts or a reputable global HR platform is an effective way to maintain compliance. These services can help employers stay compliant with evolving regulations while freeing up time for more strategic work.

Consolidating Multi-Vendor Payroll Analytics

Managing payroll across multiple vendors often leads to fragmented data and inefficiencies, making it difficult to consolidate analytics. These challenges can hinder decision-making, especially when trying to gain a clear view of workforce costs and trends. To address this, organizations can invest in a centralized payroll management system that unifies data from multiple vendors. A consolidated platform simplifies payroll tracking, ensures data accuracy, and provides actionable insights into payroll expenditures.

Integrating Multiple HR & Payroll Systems

Global companies are prone to using multiple HR or payroll systems across regions, which can easily lead to fragmented payroll data, increasing the risk of delays and errors in employee compensation. To combat this, seamless integration between payroll and other systems is critical.

Payroll management systems that connect with existing HR and financial platforms can help streamline workflows by reducing manual inputs and ensuring that all departments operate with up-to-date, accurate information. In turn, this helps guarantee on-time, accurate payroll, boosting employee satisfaction.

How Playroll Can Streamline Payroll & Taxes In North Macedonia

Expanding globally is an exciting milestone for any company, but it comes coupled with complex payroll challenges. It doesn’t have to be complicated. At Playroll, our easy-to-implement global payroll management software combines automation with hands-on support to make global payroll truly simple. Here's how Playroll helps:

Multi-Vendor Integration: Our platform syncs seamlessly with your providers and in-house systems to unify global payroll services in one platform.
Standardize Payroll Processes: Unify your operations in one dashboard to ensure payroll is running smoothly globally, with advanced approval flows and reports.
Improve Governance & Compliance: Improve compliance by centralizing all your compliance tasks and processes. Easily track your payment obligations, with digitized audit trails.
Advanced Reporting: Access and configure your data, your way, with a comprehensive suite of payroll analytics and reporting tools.

Disclaimer

THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). Playroll does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect Playroll’s product delivery in any given jurisdiction. Playroll makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.

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