Foreign Company (Kompani e Huaj) in Kosovo

Foreign Company (Kompani e Huaj)

In Kosovo, a Foreign Company (Kompani e Huaj) is a business model that allows foreign companies to operate commercially within the country. A foreign company can establish either a branch or a subsidiary to conduct its activities, providing a platform for expanding international operations.

1. Key Features

• Branch:

  • Operates as an extension of the parent company.

  • Does not have separate legal personality; all liabilities belong to the parent company.

• Subsidiary:

  • Gains separate legal personality under Kosovo law.

  • Liabilities are limited to the subsidiary's capital.

• Legal Status: Foreign companies must register in compliance with Kosovo regulations.

2. Advantages

• Market Access: Enables entry into Kosovo's local markets.

• Global Recognition: Operates under the name of the foreign company, enhancing global branding.

• Legal Flexibility: Certain legal facilitations are available for foreign companies in Kosovo.

3. Disadvantages

• Compliance Requirements: Foreign companies must adhere to local laws and regulations.

• Branch Liability: If operating as a branch, the parent company bears unlimited liability.

• Tax Obligations: Foreign companies may face additional tax liabilities under Kosovo's tax regulations.

4. Establishment Process

A. Required Documents

1. Parent Company Documents:

   • Certificate of incorporation from the country of origin.

   • Proof of operations (e.g., business registry extract).

2. Authorization Document:

   • A document authorizing a representative to act on behalf of the company in Kosovo.

3. Articles of Association:

   • The parent company’s articles of association or bylaws.

4. Proof of Address:

   • Lease agreement or property deed for the branch or subsidiary in Kosovo.

B. Application Procedure

1. Registration:

   • Submit documents to the Kosovo Business Registration Agency (ARBK).

2. Tax Number:

   • Apply to the Kosovo Tax Administration to obtain a tax number.

3. Registration Fees:

   • Pay the required registration fees based on the type of entity being established.

C. Unique Business Identification Number (BIN)

• Upon completion of registration, the foreign company is assigned a unique Business Identification Number (BIN).

5. Operations and Management

A. Management Structure

• Branch: Managed by representatives appointed by the parent company.

• Subsidiary: Managed by a local board or representatives appointed for operations in Kosovo.

B. Local Representation

• The company must appoint a legal representative or manager for its operations in Kosovo.

C. Business Scope

• Activities must align with those of the parent company. Expanding to new sectors may require additional permits.

6. Legal Basis

• Article 35: Registration and operations of foreign companies.

• Governed by the Kosovo Law on Business Organizations (Law No. 06/L-016).

7. Post-Establishment Obligations

A. Tax Obligations

• Foreign companies must pay taxes on income generated in Kosovo.

• Compliance with double taxation treaties (if applicable).

B. Reporting Requirements

• Branches or subsidiaries must submit annual financial reports and tax returns.

C. Activity Permits

• Certain industries (e.g., finance, healthcare, energy) may require specific operating licenses.

8. Example Scenario

A software company based in Europe might open a branch in Kosovo to access the Balkan market. The company could provide customer support services locally while the parent company retains full liability. Alternatively, it could establish a subsidiary in Kosovo as a separate legal entity to support investment and expansion strategies.

Conclusion

A Foreign Company (Kompani e Huaj) is an effective model for international businesses to enter the Kosovo market and expand their operations. Companies can choose between branch or subsidiary structures based on their needs and risk tolerance. When managed effectively, this model offers opportunities in both local and international markets.