Representative Office (Zyra e Përfaqësisë) in Kosovo

Representative Office (Zyra e Përfaqësisë)In Kosovo, a Representative Office is a structure established for foreign companies to conduct non-commercial activities. It allows companies to perform activities such as market research, promotion, business development, or managing customer relationships without engaging in direct commercial operations.

1. Key Features

• Prohibition of Commercial Activities: Representative offices cannot conduct direct commercial activities in Kosovo. Their role is limited to representing the interests of the parent company.

• Legal Status: A representative office is not a legal entity and operates as an extension of the parent company.

• Purpose:

  • Conducting market research.

  • Establishing business connections.

  • Promoting the parent company’s products or services.

  • Understanding local regulations and exploring business development opportunities.

2. Advantages

• Cost-Effectiveness: An economical way to establish a presence in the Kosovo market without forming a commercial entity.

• Risk Reduction: Limited legal obligations and commercial risks.

• Quick Setup: Establishing a representative office is faster and simpler than forming a commercial company.

• Parent Company Support: All obligations and funding are managed by the parent company.

3. Disadvantages

• Restrictions on Commercial Activities: It cannot generate revenue or enter into commercial contracts.

• Lack of Independence: Local activities are entirely controlled by the parent company.

• Absence of Legal Personality: Legal rights and obligations fall directly on the parent company.

4. Establishment Process

A. Required Documents

1. Parent Company Documents:

   • Certificate of incorporation (business registration document).

   • Proof of operation (e.g., a certificate from the trade registry).

2. Authorization Document:

   • Official authorization to appoint a representative or manager in Kosovo.

3. Proof of Address:

   • Lease agreement or ownership document for the office address.

B. Application Process

1. Registration:

   • Documents are submitted to the Kosovo Business Registration Agency (ARBK).

2. Approval:

   • The legal existence of the representative office is confirmed by ARBK, and a registration number is assigned.

3. Fee Payment:

   • The required registration fees must be paid.

C. Post-Registration Process

• The parent company must prepare an operational plan for the representative office, typically for one year or more.

5. Operation and Management

A. Local Representative

• The representative office is managed by a local representative or manager, who handles regulatory and official matters in Kosovo.

B. Scope of Activities

• Limited to non-commercial activities:

  • Promotional and advertising activities.

  • Market research and analysis.

  • Development of business connections.

C. Reporting

• The representative office regularly submits activity reports to the parent company.

6. Legal Basis

• Kosovo Law on Business Organizations: Governs the establishment and operation of representative offices.

• Administrative Instruction (QRK) No. 05/2021: Specifies rules for representative offices.

7. Post-Establishment Obligations

A. Tax Exemption

• Since representative offices do not engage in commercial activities, they are generally exempt from taxes. However, they must maintain records of expenses incurred on behalf of the parent company.

B. Updates and Changes

• Changes in the office address, representative, or activity plan must be reported to ARBK.

C. Activity Reporting

• The representative office must submit activity reports to the parent company at intervals determined by the parent company.

8. Example Scenario

An international automotive company aiming to increase its sales in Kosovo could establish a representative office to conduct market research and develop business partnerships before setting up a direct commercial presence. The office would manage promotional activities and facilitate local business connections.

Conclusion

A Representative Office is an ideal option for foreign companies seeking to establish a non-commercial presence in Kosovo. This structure allows companies to minimize costs and risks while exploring market opportunities and developing business relationships.