Foreign Company (Kompani e Huaj) in Kosovo
The Foreign Company (Kompani e Huaj) in Kosovo is a business model that allows foreign companies to operate in the country. A foreign company can establish either a branch or a subsidiary in Kosovo, enabling the expansion of international business operations.
1. Key Features
Branch:
Operates as an extension of the parent company.
Does not have separate legal personality; all liabilities are borne by the parent company.
Subsidiary:
Gains legal personality under Kosovo law.
Liabilities are limited to the subsidiary’s capital.
Legal Status: A foreign company must be registered in accordance with Kosovo laws.
2. Advantages
Market Access: Provides access to local markets in Kosovo.
International Recognition: Operates under the name of the foreign company, enhancing global brand recognition.
Legal Flexibility: Foreign companies operating in Kosovo are granted certain legal facilitation measures.
3. Disadvantages
Compliance Requirements: The foreign company must comply with local regulations and laws.
Branch Liability: In the case of a branch, the parent company’s liabilities are unlimited.
Tax Obligations: Kosovo’s tax regulations may impose additional obligations on foreign companies.
4. Establishment Process
A. Required Documents:
Parent Company Documents:
Certificate of incorporation from the parent company’s home country.
Certificate of activity (e.g., trade registry document).
Authorization Document:
A document authorizing a representative for the company in Kosovo.
Articles of Association:
The parent company’s articles of association or bylaws.
Proof of Address:
Lease agreement or deed for the branch or subsidiary’s location in Kosovo.
B. Application Process:
Registration:
Submit documents to the Kosovo Business Registration Agency (ARBK).
Tax Identification Number:
Apply to the Kosovo Tax Administration to obtain a tax number.
Registration Fees:
Pay the applicable fees depending on the company type.
C. Unique Identification Number (BIN):
After successful registration, the company is assigned a unique Business Identification Number (BIN).
5. Operations and Management
A. Management Structure:
Branch: Managed by the parent company.
Subsidiary: Managed by a local board of directors or representative in Kosovo.
B. Local Representation:
The company must appoint a representative or manager in Kosovo to handle legal processes.
C. Scope of Activities:
The foreign company’s activities are limited to those of the parent company. Additional permissions may be required to operate in new sectors or industries.
6. Legal Basis
Article 35: Registration and Activities of Foreign Companies.
Regulated under the Kosovo Law on Business Organizations (Law No. 06/L-016).
7. Post-Establishment Obligations
A. Tax Obligations:
The foreign company must pay taxes on income generated in Kosovo.
Compliance with double taxation treaties (if applicable) is required.
B. Reporting Requirements:
The branch or subsidiary must submit annual financial reports and tax declarations.
C. Activity Permits:
Foreign companies must obtain special permits to operate in specific sectors (e.g., finance, healthcare, energy).
8. Example Scenario
A software company operating in Europe may wish to enter the Balkan market by opening a branch in Kosovo. The company could establish a structure to provide customer support services in Kosovo, with all liabilities assumed by the parent company. Alternatively, it could set up an independent legal entity in Kosovo to execute its investment and expansion plans.
Conclusion
The Foreign Company (Kompani e Huaj) model is an effective way 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 properly, this model offers opportunities at both local and international levels.