THE WOLF THEISS GUIDE TO KOSOVO:

Corporate, Tax& other Regulations

3rd EDITION

Guide to: Kosovo

Legal Notice and Information: Status of information: September 2012. Changes are reserved. Conception, design, and editing: WOLF THEISS Rechtsanwlte GmbH Schubertring 6 1010 Vienna Tel.: +43 1 515 10 Fax: +43 1 515 10-25 Contact: Christian Mikosch E-mail: christian.mikosch@wolftheiss.com Thomas Kienbauer E-mail: thomas.kienbauer@wolftheiss.com Disclaimer This brochure was correct at the time it went to press, i.e. September 2012; however, legislative changes and changes in interpretation by the authorities and courts can occur frequently in Kosovo. This brochure contains information that is summarised and, in part, simplified. It does not substitute for specific legal and tax advice. Despite attempting to exercise care in compiling this brochure, the authors cannot warrant the accuracy, completeness, or up-to-date character of its contents. Any liability on the part of Wolf Theiss is therefore excluded. This brochure is based on a standard doing business guide of the Austrian Chamber of Commerce written in German. It has been adapted and updated and provided to the Austrian Chamber of Commerce, Investment Promotion Agency of Kosovo (IPAK) and Economic Initiative of Kosovo (ECIKS), to be published by these institutions in their own name and on their own behalf. This brochure was translated into English and further amended and adapted by Wolf Theiss to be used and published in their own name and on their own behalf. The Austrian Chamber of Commerce, Investment Promotion Agency of Kosovo (IPAK) and Economic Initiative of Kosovo (ECIKS) have received the amendments and updates to the original brochure and may publicise and use this brochure in their own name and on their own behalf. We would like to thank Graham Burnett of the Tax Administration of Kosovo for his valuable input on Kosovo tax law, USAID, Dastid Pallaska of Pallaska & Associates, Lily Thurner, Julia Kollitsch and Agnieszka Zajac.

Guide to: Kosovo

CONTENTS

1. 1.1 1.2 1.2.1 1.2.2 1.3 1.3.1 1.3.2 1.3.3 1.4 1.5 2. 2.1 2.2 2.2.1 2.2.2 2.2.3 2.2.4 2.2.5 2.2.6 2.2.7 2.2.8 2.2.9 2.2.10 2.2.11 2.2.12 2.2.13 2.2.14 2.3 2.4 2.5 2.6 3. 3.1 3.2 3.3 3.3.1 3.3.2 3.3.3 3.3.4 3.3.5 3.3.6 3.3.7 3.3.8 4. 5. 5.1 5.1.1 5.1.2
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General Overview ............................................................................ 5 History of the Legal System ............................................................. 6 Applicable Law ................................................................................ 7 General ........................................................................................... 7 Relevance of EU Laws in Kosovo ..................................................... 8 The Court System ........................................................................... 8 General ........................................................................................... 8 Current Status ................................................................................. 8 Court system pursuant to the new law on courts ............................. 10 The Concept of Social Ownership .................................................. 11 Publicly Owned Enterprises ........................................................... 12 Corporate Law............................................................................... 13 General ......................................................................................... 13 Establishment of Companies.......................................................... 13 Individual Business Enterprises and General Partnership ............... 13 Limited Partnership ....................................................................... 14 Corporations ................................................................................. 14 Duration and Costs of the Foundation ............................................ 15 The Business Registry ................................................................... 16 Foreign Business Organisation ...................................................... 16 Local Registration of Each Premises .............................................. 17 Comparison L.L.C J.S.C ............................................................. 17 Management of a Corporation ........................................................ 17 Shareholders' Liabilities ................................................................. 18 Board of Directors ......................................................................... 18 Directors' Liability .......................................................................... 19 Officers ......................................................................................... 19 Transfer of Shares in a Limited Liability Corporation ....................... 19 Share certificates and share registers ............................................ 21 Annual general meetings and reports ............................................. 21 Transformation of Entity Type ........................................................ 21 Increase in Borrowing, Capital & Bonds.......................................... 21 Insolvency and restructuring .......................................................... 22 Bankruptcy Provisions ................................................................... 22 Types of Insolvency Proceedings Available .................................... 22 Conditions for the opening of insolvency proceedings ..................... 23 Debtor Capable of Insolvency ........................................................ 23 Entitled Partners............................................................................ 23 Commencement and Handling of Insolvency Proceedings .............. 23 Filing of Claims ............................................................................. 24 Effects of Opening the Insolvency Proceedings .............................. 25 Avoidance of Transactions ............................................................. 25 Reorganisations ............................................................................ 25 Sale of the Debtor's Estate and Creditors' Satisfaction .................... 26 Investment Protection for Foreign Investors .................................... 27 Tax Law ........................................................................................ 28 General ......................................................................................... 28 Fiscal and VAT Number ................................................................. 28 Corporate Income Tax ................................................................... 29

Guide to: Kosovo

5.1.3 5.1.4 5.1.5 5.1.6 5.1.7 5.1.8 5.2 5.2.1 5.2.2 5.2.3 5.2.4 5.3 5.3.1 5.3.2 5.3.3 5.3.4 5.3.5 5.4 5.5 5.6 5.7 5.8 5.9 5.10 6. 6.1 6.2 6.2.1 6.2.2 6.2.3 6.2.4 6.2.5 6.2.6 6.2.7 6.2.8 6.2.9 6.2.10 6.2.11 6.2.12 6.2.13 7. 7.1 7.2 7.3 7.4 8. 8.1 8.2 8.2.1 8.2.2 8.2.3

Deductible Items ........................................................................... 29 Losses Carried Forward................................................................. 30 Corporate Assessments and Payments .......................................... 30 Taxation of Permanent Establishments .......................................... 31 Withholding Tax ............................................................................ 31 Avoidance of Double Taxation ....................................................... 33 Personal Income Tax ..................................................................... 33 Taxable Persons ........................................................................... 33 Taxable Income ............................................................................. 33 Tax Rates ..................................................................................... 34 Taxation of Foreigners ................................................................... 34 Value Added Tax ........................................................................... 35 General ......................................................................................... 35 Basic VAT Rules ........................................................................... 35 "Persons" obligated to register ....................................................... 35 Deduction of Input Tax................................................................... 36 VAT Compliance ........................................................................... 36 Social security and Health Insurance Charges ................................ 36 Salary Taxes and Pension Charge Compliance .............................. 37 Customs Duties and Customs ........................................................ 37 Excise Duties ................................................................................ 38 Property Tax ................................................................................. 38 Form of Tax Declarations and Penalties ......................................... 38 Capital Gains Tax .......................................................................... 39 Labour Law ................................................................................... 40 General ......................................................................................... 40 Overview of important Articles of the Law on Labour....................... 40 Scope of the Labour Law Art. 2 ................................................... 40 Social Dialogue and Social Economic Counsel Art. 3.1.4 and Art. 3.1.5 ....................................................................................... 41 Duty to Report to Tax Authorities Art. 7.4 .................................... 41 Labour Contracts ........................................................................... 41 Change of Employer Art. 13 ........................................................ 41 Trial Period Art. 15 ..................................................................... 41 Commissioning of Employees Art. 17 .......................................... 42 Reassignment of Employees Art. 18 ............................................ 42 Working Hours Art.21 et seq. ...................................................... 42 Paid and Unpaid Leave ................................................................. 42 Termination of an Employment Contract ......................................... 43 Collective Dismissals Art.76 ........................................................ 43 Employees of Foreign Investors and Work Permits ......................... 43 Public Procurement Law ................................................................ 44 Introduction to Public Procurement, PPP and Concessions ............. 44 Public Procurement ....................................................................... 44 Public Private Partnerships ............................................................ 44 Concessions ................................................................................. 45 Intellectual Property Protection ...................................................... 46 General ......................................................................................... 46 Patents, Trademarks and Industrial Design .................................... 46 Registration Procedures ................................................................ 46 Patent Protection ........................................................................... 47 Trademark Protection .................................................................... 47
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Guide to: Kosovo

8.2.4 8.2.5 8.3 8.3.1 8.3.2 8.3.3 8.3.4 8.4 9. 10. 11. 12. 13. 13.1 13.2 14. 15. 16. 16.1 16.2 16.3 16.3.1 16.3.2 16.3.3 16.3.4

Industrial Design Protection ........................................................... 48 Rights Enforcement ....................................................................... 48 Copyright ...................................................................................... 49 Granting of Copyright Protection .................................................... 49 Rights of Authors and Related Rights to Copyright ......................... 49 Protection of Foreigners ................................................................ 50 Rights Enforcement ....................................................................... 50 Product Piracy ............................................................................... 50 Environmental Laws ...................................................................... 51 Arbitration ..................................................................................... 52 Mining and Energy ........................................................................ 53 Banking and Insurance .................................................................. 54 Privatisation .................................................................................. 55 Privatisation of SOEs ..................................................................... 55 Privatisation of POEs ..................................................................... 55 Entry and Exit from Kosovo ............................................................ 57 Registration of Vehicles, Insurance, Import of Personal Effects ....... 58 Important Links and Addresses ...................................................... 59 Websites of Institutions in Kosovo .................................................. 59 Websites of International Institutions in Kosovo .............................. 60 Important Addresses in Kosovo...................................................... 61 Banks ........................................................................................... 61 Insurance Companies .................................................................... 62 Business Support Solutions ........................................................... 63 Additional Reading ........................................................................ 63

Guide to: Kosovo

1.

GENERAL OVERVIEW

The Republic of Kosovo has declared independence from Serbia on 17 February 2008. In April 2008 the Assembly of the Republic of Kosovo adopted the new constitution which has entered into force on 15 June 2008. The constitution was based on the Comprehensive Proposal for a Status Settlement for Kosovo, submitted by the United Nations Special Envoy for the resolution of Kosovo's status (the "Ahtisaari Plan"). The Ahtisaari Plan provided, among others, for a number of overriding protection mechanisms for Kosovo's minorities, but its main goal was to prepare, in cooperation with the Kosovo authorities, the grounds for a fully sovereign and independent country.1 For these purposes the Athisaari Plan put into operation such institutions as International Civilian Representative (ICR), who was supported by the International Civilian Office (ICO), European Security and Defense Policy (ESDP, now CSDP- Common Security and Defense Policy) Mission and the International Military Presence. The ICR, according to the Settlement, was the ultimate supervisory authority over the implementation of the Plan. He was armed with such means as: annulment of decisions or laws adopted by Kosovo authorities and sanctioning and removing public officials whose actions were inconsistent with the Settlement. The ESDP Mission, under the direction of the European Union Special Representative (EUSR), who was the same person as the ICR, was acting in Kosovo as an EU representation, developing a stronger and more effective EU Common Foreign and Security Policy. The Athisaari Plan was in effect until September 2012. The Assembly unanimously declared the end of supervised independence of Kosovo and ended the mandate of the ICR with immediate effect. Despite the formal termination of the supervision, two international missions remain in Kosovo. These are NATO's Kosovo Force (KFOR), fulfilling military tasks, and The European Union Rule of Law Mission in Kosovo (EULEX). EULEX was launched in 20082 under the CSDP Mission and is its largest civilian mission. It works under the general framework of the UN Security Council Resolution 1244(1999)3. On 7 September 2012 the Kosovo parliament ratified EULEX for another two years extending the mandate of the EU rule of law mission until 2014.

A letter dated 26 March 2007 from the Secretary- General to the President of the Security Council, Report of the Special Envoy of the Secretary- General on Kosovo's future status; Council Joint Action 2008/124/CFSP on the European Union Rule of Law Mission in Kosovo, EULEX KOSOVO, 4.02.2008 Report of the Secretary- General on the United Nations Interim Administration Mission in Kosovo of 12.6.2008 (S/2008/354) 5

http://www.ico-kos.org/d/Ahtisaari%20Comprehensive%20Proposal%20in%20English.pdf; 3rd October 2012

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Guide to: Kosovo

Although EULEX has not as far-reaching an authority as the ICR had, it still enables the EU to play a role in the Kosovo's policy with the key priority of establishing an effective rule of law system as the basis for attracting foreign investment in Kosovo4. According to the Joint Action of 2008, EULEX shall assist the Kosovo institutions, judicial authorities and law enforcement agencies. This shall be done through monitoring, mentoring and advising whilst retaining some executive responsibilities in specific areas of competence, such as war crimes, organised crime, corruption, etc. EULEX is also preparing to establish the rule of law in the north of the country. 1.1 History of the Legal System

Under the 1974 constitution of the Socialist Federal Republic of Yugoslavia (SFRY), Kosovo was an autonomous province within the SFRY and, as such, enjoyed substantial sovereign rights. As an autonomous province in the SFRY, Kosovo had a parliament, a government, a judiciary, constitutional court and a national bank. In March 1989, following the rise to power of Slobodan Milosevic, Kosovos autonomy was unlawfully abolished and Serbia assumed full control over the province. Shortly thereafter, the newly installed regime dismissed all Kosovo Albanians from their public positions, including the judiciary. Following the disintegration of SFRY, the aforementioned constitutional changes were sanctioned into law by the 1992 constitution of the Federal Republic of Yugoslavia, which was constituted of only Serbia and Montenegro. While some of the dismissed Kosovo Albanian judges and prosecutors moved to private practice, the lawlessness and widespread corruption that followed the installation of the Milosevic regime in the province rendered their roles as attorneys obsolete. Consequently, most of them were forced out of the legal profession completely. Following the end of the war in June 1999 the province was placed under an international protectorate, pursuant to United Nations Security Council Resolution 1244, and was administered by United Nations Mission in Kosovo (UNMIK), while NATO based Kosovo Force (KFOR) provided for overall security. In accordance with UNSC Resolution 1244, UNMIK assumed full competencies in the legislative, executive and judicial branches of government which were exercised by the Special Representative of the Secretary General (SRSG). In order to fill the legislative gap created during the decade of Milosevic's rule, UNMIK enacted laws in the form of executive decrees, commonly referred to as UNMIK Regulations. UNMIK regulations were intended to complement, and govern the precedence of, different legal instruments enacted in the past. Indeed, while the bulk of Kosovo legislation remained relevant, a number of laws enacted during Milosevic's rule, which introduced discriminatory provisions against the Kosovo Albanian community, were repealed. Consequently, UNMIK authorised the application of the provincial law as it was in effect before 22 March 1999 (before the abolishment of Kosovo's autonomy) and excluded the laws enacted between 1989 and 1999, save in cases where these legal instruments were not discriminatory and were needed to fill a legal
4

CSDP Newsletter, Summer 2010; http://www.consilium.europa.eu/uedocs/cmsUpload/online_100818_CSDP_Newsletter_hw.pdf

Guide to: Kosovo

vacuum. During its mandate, UNMIK progressively developed a comprehensive modern legal framework, which culminated with the enactment of the Constitutional Framework of Kosovo, on the basis of which, the people of Kosovo were able to democratically elect their representatives on a local and central level. In 2000, UNMIK established an emergency justice system exclusively composed of local judges and prosecutors, who were subsequently joined by a limited number of international judges and prosecutors, who were responsible for serious and sensitive crimes. While, in the executive and legislative branches of government, UNMIK gradually transferred its competencies to Kosovo authorities, UNMIK retained executive control over the judiciary until Kosovo's independence. While the entry into effect of the Kosovo constitution in 2008 has rendered UNMIK largely redundant; UNMIK is still present in Kosovo and continues to facilitate Kosovo's relations with countries which have not formally recognised its independence in general and Serbia in specific. UNMIK, however, remains active in some Serb enclaves and represents Kosovo in international bodies, which have not formally admitted Kosovo such as the International Civil Aviation Authority. 1.2 1.2.1 Applicable Law General

Kosovo`s official languages are Albanian and Serbian. However, laws are usually also published in English. Since the quality of the translations is rather inconsistent, care should be taken. The applicable law in Kosovo stems from different sources with the following order of precedence: Laws passed by the Kosovo Assembly after the constitution came into force in June 2008, provided they are consistent with the constitution and the "Ahtisaari Plan" UNMIK Regulations (with supporting Assembly laws) passed between June 1999 and June 2008 Laws dated prior to 22 March 1989 Laws dated between 22 March 1989 and 10 June 1999 which are not discriminatory.

Pursuant to the Ahtisaari Plan the laws of Kosovo are based on the principles of: Respect for the rule of law, Protection of human rights in compliance with international legal acts, including the European Convention for the Protection of Human Rights and Fundamental Freedoms and its Protocols, Equality and democratic standards, Open market economy with free competition, Recognition and protection of the right of personal movable and immovable property.
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Guide to: Kosovo

1.2.2

Relevance of EU Laws in Kosovo

Kosovo is not an EU member and has submitted no formal application for EU membership to date. Thus, Kosovo does not have a general obligation to implement the EU laws. However, by accepting EU aid and assistance and by signing a European Partnership Action Plan/Agreement to adopt the EU acquis communautaire, which is the cumulative body of European Union laws, comprising the EC`s objectives, substantive rules, policies and, in particular, the primary and secondary legislation and case law5, Kosovo has made commitments to comply with EU laws. The adoption of the EU acquis is monitored annually by means of an EU Commission Report. In April 2010, the Government of Kosovo established the Ministry of European Integration (MEI). The MEIs main mission is the direction, coordination and monitoring of all activities towards the integration of Kosovo in the European Union. 1.3 1.3.1 The Court System General

In 2011 the Law on Courts (Law No. 03/L-199), which regulates the organisation, functioning and jurisdiction of the courts, provided for a reorganisation of the Court system. At this point, only a selection of articles from this law has already come into effect while the rest are in a "transitional phase" and their implementation is due to begin by 1 January 2013. We therefore thought it prudent to first outline the 'old' court system, giving a brief overview of the current situation before introducing the new (not yet fully applied) court system. 1.3.2 Current Status

Kosovos regular court system is currently composed of 27 municipal courts6, five district courts, one commercial court and the Supreme Court (the two latter being in Pristina). The new constitution also created a Constitutional Court7 which became operational in September 20098. The minor offences court system, which adjudicates over administrative offences as well as public order and traffic violations, includes 27 municipal courts for minor offences and the high court for minor offences. "Parallel courts", run by Kosovo Serbs and supported/financed by Belgrade, operate without UNMIK or Kosovo government authorisation in a number of Serbian enclaves throughout Kosovo. Moreover, Serbia has retained the continuity of the public
5

http://www.eurofound.europa.eu/areas/industrialrelations/dictionary/definitions/acquiscommunautaire.htm, 24th July 2012

6 7

Iset Morina Das Gerichtssystem im Kosovo, ZfRV 2010/20 (139);

The Law on the Constitutional Court was published in the Official Gazette of the Republic of Kosovo on 15 January, 2009 and came into force on that date.

American Bar Association; Judicial Reform Index for Kosovo; http://apps.americanbar.org/rol/publications/ kosovo_jri_vol_iv_12_2010_en.pdf 8

Guide to: Kosovo

administration, healthcare and justice institutions from the Milosevic regime by simply transferring the seats of these institutions from Kosovo to different towns in southeastern Serbia after the end of the war. However, decisions by these parallel courts have no legal effect in Kosovo and have not been recognised by either UNMIK or the authorities of newly independent Kosovo. The municipal courts operate as courts of first instance for criminal offences punishable with sentences of up to five years imprisonment9 and as courts of first instance for civil inheritance matters, labour relations and other civil matters. The district courts hear appeals on decisions by the municipal courts. They also serve as courts of first instance for criminal offences punishable by an imprisonment term of more than five years, major property disputes and family law matters. The commercial district court has Kosovo-wide first instance jurisdiction over disputes between business entities, disputes pertaining to bankruptcy proceedings and certain commercial criminal offences. It also hears cases referred by the Special Chamber of the Supreme Court. The Supreme Court of Kosovo serves as a third instance appellate court in a limited number of criminal cases, hears direct appeals on cases originating in the district courts and is court of first instance for extraordinary legal remedies and other matters as provided by law. The Constitutional Court is composed of 6 (six) national judges and 3 (three) international judges appointed by the President of Kosovo upon the proposal of the Kosovo Assembly10. It is the final authority for the interpretation of the constitution and the compliance of laws and government actions therewith. Furthermore, the Constitutional Court can be petitioned directly also by individuals and regular courts regarding certain matters in connection with the constitution11. Kosovo's legal system is based on the continental law tradition, whereby court decisions are generally not considered as precedents, although lower courts tend to follow the opinions and rulings of higher courts. In 2009, an Independent Judicial and Prosecutorial Commission (IJPC), consisting of 5 (five) international members from United States and Europe, was established to conduct a one-time comprehensive review of the suitability of all individuals who seek appointment as a judge or prosecutor in Kosovo. The vetting process, conducted by IJPC, requires full financial disclosure and background checks for all judicial and prosecutorial candidates as well as a high degree of professional competence in addition to professional and personal integrity. The process, which was funded by the

With the exception of, inter alia, traffic accidents with death casualties which are publishable with up to eight years of imprisonment. Official website of the Constitutional Court of Kosovo; http://www.gjk-ks.org/?cid=2,3; 10th July 2012

10 11

American Bar Association; Judicial Reform Index for Kosovo; http://apps.americanbar.org/rol/publications/ kosovo_jri_vol_iv_12_2010_en.pdf; 23rd July 2012 9

Guide to: Kosovo

Government of the United States and the European Union, was organised in three successive phases and has been concluded in October 201012. According to Kosovo law, arbitration is a recognised instrument for the resolution of local and international disputes between physical persons and legal entities. Under the Regulation on Foreign Investments, companies under international ownership can always choose arbitration. UNCITRAL and ICC arbitration are the 2 (two) recognised systems, although neither one maintains a permanent chamber in Kosovo. 1.3.3 Court system pursuant to the new law on courts

According to the new Law on Courts (Law No. 03/L-199), which abrogates the Law on the Regular Courts of KISP, regulations of UNMIK and the Law on Minor Offences, the Kosovo courts system will be organised as follows: There are 7 (seven) Basic Courts, which each have a number of Branches (total 20). These Basic Courts are situated in the following cities: Pristina Gjilan Prizren Gjakova Pej/Pe Ferizaj/Uroevac Mitrovica

All Basic Courts are competent to adjudicate all cases in the first instance, unless they are specifically assigned to one court. This is the case for administrative and commercial matters as they fall under the exclusive jurisdiction of the Basic Court of Pristina. There are five departments established within the Basic Courts, for the purpose of allocating cases according to subject matter. These departments are: Department for Commercial Matters (Basic Court Pristina) Department for Administrative Cases (Basic Court Pristina) Department for Serious Crimes (All Basic Courts) General Department (All Basic Courts) Department for Minors (All Basic Courts)

While the law does list a number of specific crimes, classing them as 'serious', there is also a general provision which states that any crime punishable by 10 (ten) years or more as provided by the law falls under the jurisdiction of the Department for Serious Crimes.

12

Report on the work of the IJPC; http://www.kgjk-ks.org/repository/docs/Official_Final_Text_of_Final_Report.pdf; 24th July 2012 10

Guide to: Kosovo

The Court of Appeals in Pristina decides all appeals against decisions from Basic Courts. In addition to that, it also functions as a third instance Court of Appeals when an appeal is permitted by the law. Conflicts of Jurisdiction between Basic Courts are also resolved by the Court of Appeals. The Five-Department organisational structure still applies at the Court of Appeals. The Supreme Court is the highest judicial authority in Kosovo. It has territorial jurisdiction over the entirety of the Republic of Kosovo. Among others, its competences are: extraordinary revision against final decisions of the courts and revision against second instance decisions of the courts on contested issues. As of 1 January 2011, the following articles of the new Law on Courts have entered into force: Art Art Art Art Art 29: 35: 36: 38: 40: salary and judicial compensation prohibitions on conduct of judges transitional phases (explanation of the stages of entry into force) transfer and reassignment of judges validity of prior final decisions and right of appeal

The implementation of the remaining articles shall begin on 1 January 2013. 1.4 The Concept of Social Ownership

Prior to 1989 almost all economic activities were operated through Socially Owned Enterprises (SOEs). The concept of social ownership was a long-standing legal concept of the SFRY. It stems from the communist doctrine of common ownership in the means of production (i.e. everything is owned by the workers, who contribute to the betterment of society). The SOEs reflected this concept. Some enterprises were entirely socially owned. They were managed by a works council. Combinations of socially and privately owned enterprises were introduced by later laws. These laws provided for the possibility of acquiring private ownership in previously entirely socially owned enterprises (e.g. through the transfer of shares to employees). The concept of private ownership rights in enterprises was continuously refined, and resulted in socially owned enterprises issuing shares to employees and private entities. In most cases, this resulted in mixed enterprises which were partially socially and partially privately owned. However, the legal system prior to 1989 did not provide for rules on the sale of socially owned property, the liquidation of enterprises in social ownership or the privatisation of such entities. Only after 1989 was the sale of socially owned property or entire enterprises in social ownership provided for in the SFRY legislation. All of these laws have now been replaced and are relevant only for a better understanding of the history of SOEs.

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Guide to: Kosovo

1.5

Publicly Owned Enterprises

A publicly owned enterprise (PoE) was (pre March 1989) defined as a subcategory of SOEs, performing infrastructure operations in the public interest. Today, in Kosovo there are basically 2 (two) different types of POEs, ones owned by the Republic of Kosovo, i.e. Central POEs and ones owned by municipalities, i.e. Local POEs. Local POEs are mostly local water and waste companies or heating companies. As of today, the following Central POEs exist in Kosovo: Kosovo Energy Corporation JSC (KEK) Kosovo Electricity Distribution and Supply Company (KEDS Co) Transmission System and Market Operator, JSC (KOSTT) Post and Telecommunications of Kosovo J.S.C. (PTK) Kosovo Railways TrainKos J.S.C Kosovo Railways InfraKos J.S.C. Pristina International Airport Air Control Adem Jashari J.S.C Kosovo Landfill Management Company J.S.C HPE Iber Lepenc JSC

A legal framework for the ownership of POEs, or rather their corporate governance is laid down by the Law on Publicly Owned Enterprises (Law No. 03/L-087; POE Law). Under this law, which was amended (Law No. 04/L-111) in 2012, POEs have to be organised as joint stock companies. This policy has already been applied to all remaining POEs.

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Guide to: Kosovo

2. 2.1

CORPORATE LAW General

Corporate law in Kosovo is regulated by the Law on Business Organisations, (Law No. 02/L-123) which entered into force on 27 May 2008 and was later amended with Law No.04/L-006 bringing the legal framework closer to current EU standards13, it supersedes UNMIK Regulation No. 2001/6 and UNMIK Administrative Direction No. 2002/22. The Law on Business Organisations contains provisions with regard to the following aspects of corporate law: Types of business organisation through which business activity may be conducted in Kosovo Applicable registration requirements for each type of business organisation Legal provisions applicable to each type of business organisation with respect to its legal capacity and structure as well as its rights and obligations, and the rights and obligations of its owners, managers, directors, legal representatives and third parties Legal provisions which promote and facilitate the orderly and efficient creation, operation and dissolution of such business organisations

Similar to common practices in EU countries, only certain types of business can be registered in Kosovo. According to the Law on Business Organisations these types are: (i) (ii) (iii) (iv) (v) Individual business ("I.B"), General partnership, Limited liability company, Limited partnership; and Joint stock company.

It is also possible to register a business organisation as a branch of a foreign company. 2.2 2.2.1 Establishment of Companies Individual Business Enterprises and General Partnership

A personal business enterprise is established by the operation of a business by a sole proprietor who is a natural person engaged in commerce. No further acts of establishment are necessary. This is the most common business form in Kosovo and more than 95 % of businesses are registered in this form. The owner has unlimited liability, meaning their individual assets can be pursued in the event of default.

13

European Commission; Kosovo 2011 Progress Report; http://ec.europa.eu/enlargement/pdf/key_documents/ 2011/package/ks_rapport_2011_en.pdf; 24th July 2012 13

Guide to: Kosovo

A general partnership comes into existence either through registration or by operation of law. In the latter case, a general partnership is assumed to exist, if 2 (two) or more persons and/or organisations cooperate in the conduct of business activity. A written partnership agreement is not a precondition to establish a general partnership, thus it is sufficient, if such a cooperation is based on an oral agreement. The general partners are jointly and severally liable for all debts and obligations incurred by the general partnership. 2.2.2 Limited Partnership

A limited partnership consists of at least one general partner and at least one limited partner. It is incorporated by registration of the limited partnership agreement which is the founding and constitutional document of a limited partnership. The Business Registry issues a certificate of registration, which serves as public conclusive evidence that the limited partnership was properly incorporated. In case of lack of such an agreement, a limited partnership has not been incorporated, and all persons who have paid-in their contributions become partners of a general partnership (and are thus fully and personally liable). Each limited partner must have paid-in their contribution by the time the limited partnership agreement is registered. The general partner of a limited partnership is jointly and severally liable for the debts of the partnership without limitation, whereas the limited partner is jointly and severally liable only with their contribution to the limited partnership. Individuals and/or legal entities can be partners in a limited partnership. A limited partner cannot represent the partnership. The limited partnership agreement and the business signs, letterhead and other means which expose the limited partnership's name to third parties must include the name of at least one general partner and the words a limited partnership. Every limited partnership has a limited partnership agreement containing provisions governing the management and the operation of the business, as well as provisions specifying the contributions to the partnership capital of each partner. 2.2.3 Corporations

A corporation may either be a Joint Stock Company, J.S.C, (Articles 126 et seq.) or a Limited Liability Company, L.L.C (Articles 78 et seq.). The corporation has to indicate its legal form in its name. A corporation is created only upon the registration of its charter, which is the founding and constitutional document of a limited liability company and a joint stock corporation.

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Guide to: Kosovo

The charter must contain: Name of the corporation; Address in Kosovo at which the corporation will have its principal place of business; the address of its registered office and the name of the corporation's registered agent at that address (the registered agent must be a person with a Kosovo ID who is present in Kosovo for most of the year); Business purpose of the corporation, which may be described as "any lawful business purpose"; but the Business Registry requires you to also use a list of activities which must be identical to the list of codes and business descriptions in the Excel spread sheet list on the Registry website; Charter capital (which must be at least EUR 10.000 for a J.S.C14); Denomination of the share capital, i.e. nominal value and number of shares; Names and addresses and IDs or passport numbers of the founders; Names and addresses of the owners and their respective ownership interest (only for the L.L.C); and Directors' names and addresses of their residence in or outside Kosovo.

Furthermore, there must be a corporation agreement i.e. articles of association (L.L.C) or by-laws (J.S.C), containing provisions governing the management and operations of the corporation. The charter capital can be paid up in cash or in kind. In the case of joint stock companies there are stricter rules regarding the valuations of in-kind contributions (Article 149). In addition to registering with the Business Registry, it is necessary to complete a registration form, produce photocopies of foreign passports of the directors and shareholders and Kosovo residence IDs for any Kosovar citizens. Where a subsidiary or a branch of a foreign corporation is being founded by a foreign entity, a notarised copy and certified translation of the foreign shareholder's business registry extract or equivalent must be submitted. It is possible to use a lawyer's or an accountant's office or similar as the registered office either on a permanent or temporary basis. 2.2.4 Duration and Costs of the Foundation

In accordance with the Law on Business Organisations the Minister of Trade and Industry will publish a schedule of fees regarding the registration of companies and other services provided by the Registry. Current provisions regarding fees of the foundation are provided in Administrative Direction no. 2008/15 of 18 September 2008 by the Ministry of Trade and Industry. In practice, however, the Business Registry has (already prior to the adoption of this direction) applied a simple fee structure of EUR 20 for filing any document related to a limited liability company, joint stock corporation, limited partnership or foreign
14

Elimination of charter capital requirements for Limited Liability Companies (L.L.Cs) 15

Guide to: Kosovo

corporation and EUR 5 (five) for any document related to a personal business enterprise, limited partnership or general partnership. The fee must be paid into the central business registry account at the bank and evidence of payment must be submitted with the filing. There is also a fee of EUR 2 (two) for the certificate collection, which is paid in cash. If a document delivered to the registrar for filing meets all requirements of the Law on Business Organisations, the registrar should register this within ten calendar days of receipt. In the case of shortcomings in the filing, the registrar should return the filing to the applicant within ten calendar days of receipt, together with a brief written explanation of the reasons for refusal. In practice, written explanations are not usually given but are given orally when the person registering visits the Business Registry. 2.2.5 The Business Registry

The Business Registry is a central register which maintains the records of all registered companies and trade names. Each registered corporation can be found online by entering the corporation name or business ID on http://www.arbk.org/arbk. Application forms also are available on that site, although it should be noted that many of them are now out of date and no longer accepted by the registry. The Business Registry is responsible for: Registration of new companies; Registration of termination, voluntary dissolution and merger of companies; Registration and reservation of trade names; the registration of foreign business organisations; Handling new pledge registrations; Receipt of the annual report of every registered business organisation; and Receipt of annual financial statements and business reports of L.L.Cs and J.S.Cs. Foreign Business Organisation

2.2.6

A foreign business organisation is any organisation that has been established under the law of a jurisdiction outside of Kosovo and engages in any kind of business activity in Kosovo. Such a foreign business organisation may engage in business activity in Kosovo to the same extent as a Kosovo business organisation. Prior to that, it has to register with the Business Registry and has to submit a "foreign business organisation agreement" meeting the information requirements according to the Law on Business Organisations. A foreign business organisation has to comply with such regulations, prior to engaging in business in Kosovo. A notarised copy of the certificate (translated into English, Albanian or Serbian if not in any of those languages) must be presented along with the same data as mentioned above (2.2.3).

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2.2.7

Local Registration of Each Premises

Under the Local Government Finance Act 2008, each municipality can also require a business that has any premises in its municipality to register such premises as a further business registration. A copy of the Central Registration certificate and Business Information sheet must be provided. The fee for such municipality registration is based on the activity types of the business (as registered or as should be registered). Each municipality sets its own fees per activity type. This must not be confused with the registration fee for businesses which has been abolished15. Main Focus: Corporations. According to the Law on Business Organisations a corporation is a business organisation whose capital is divided into a specified number of shares (J.S.C) or ownership interests (L.L.C). A corporation is a legal entity which is legally separate and distinct from its owners. Its shareholders may be individuals or legal entities. A corporation is liable for its obligations with all of its assets. The founders are jointly (and regarding the L.L.C severally) liable for the corporations obligations if they have not paid-in their contributions to the charter capital as well as for the founders actions prior to registration. 2.2.8 Comparison L.L.C J.S.C Limited Liability Company No minimum charter capital requirement Unlimited, coownership possible Corporation agreement may impose restrictions: other-wise no pre-emption rights exist by default Joint Stock Corporation EUR 10.000 Unlimited By public offering (after charter capital has been fully paid) or free transfer, i.e., no pre-emption rights but they can be put in a shareholder agreement

Minimum charter capital Number of shareholders

Transfer of shares

2.2.9

Management of a Corporation

J.S.Cs have to allocate management functions among the shareholders' meeting, the board of directors, and the officers of the corporation. L.L.Cs are managed by the owners (shareholders) meeting and one or more managing directors, with the authority to represent the corporation in the conduct of its normal and customary business activities.

15

Art. 8 of the Law on amending and supplementing of the Law on Business Organisations (Law No. 04/L-006); 17

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2.2.10 Shareholders' Liabilities The shareholders' primary liability is to pay their contributions. Partial payments are allowed. Thus, within the first 30 days following its initial registration a J.S.C may issue some or all parts of its shares of stock in return for partial payment. Altogether no less than 25 % of the par value of the shares must be paid. The unpaid balance must be paid by a date no more than two years after the initial registration. A penalty for non-payment is provided in Article 151 of the Law on Business Organisations (forfeiture of shares, court complaint). Article 151 provides that shareholders who have not paid-in their entire contributions to the charter capital are liable to the corporation for the unpaid balance. Moreover, no public offering may be made until the charter capital has been fully paid (Article 153). Therefore, the full payment of the initial charter capital is imperative in connection with the shareholders protection and the issuance of shares. 2.2.11 Board of Directors The board of directors manages the business of the corporation (J.S.C) and therefore has the exclusive authority and competence to: Approve overall business strategy plans; Hire and discharge officers; Purchase under certain circumstances own shares of the corporation on behalf of the corporation; Convene and administer the shareholders' meeting; Determine the officers compensation; Determine the disposition of the corporations reserves; Ensure the observance of the applicable law and accounting standards by the corporation; and Issue shares and bonds within the limits as stated in the corporation's charter.

In general, the directors cannot individually assume obligations on behalf of the corporation vis--vis third persons. However, the corporation may furnish individual directors with the authorisation to conclude certain agreements. As part of the business registration is the creation of an information sheet, which usually shows the authorisation of each director. Companies and authorities in Kosovo can review this document in order to verify someone's power to sign on behalf of a certain corporation. The number of members of a J.S.C's board of directors depends on the total number of shareholders: One or more members for a corporation with less than ten shareholders, At least three members for a corporation with ten or more shareholders and At least seven members for a corporation with more than 500 shareholders.

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Guide to: Kosovo

2.2.12 Directors' Liability Compared to other continental European concepts of director liability, the Kosovo standards for directors liability under the so-called business judgment rule, which sets forth the criteria under which the liability of a director is established or excluded, are somewhat more lenient. The standard is a subjective one (good faith of the director) rather than the usual objective standard (comparison with a prudent director). According to the Law on Business Organisations, no director should be held liable for any action if they reasonably believed they had been acting with proper authority and in the corporation's best interests, in good faith and with due and diligent care and attention to their responsibilities. This, however, does not apply in the event the director has been acting in their personal interest. Notwithstanding the above, the Criminal Code contains provisions, making a director liable for other offences, such as entering into a contract which is unfavourable for the corporation. Regarding such matters, the director is obliged by law to declare any conflict of interest and not to vote in relation to such matter. The concept of an exoneration of a director at the end of each business year (like in most European jurisdictions) does not exist in Kosovo. 2.2.13 Officers Officers of a J.S.C are appointed by the board of directors and have the powers and authorities assigned to them in the by-laws. Each corporation must have a secretary who is responsible for the preparation and administration of shareholder meetings and board meetings. Officers are liable in the same way directors are. 2.2.14 Transfer of Shares in a Limited Liability Corporation It is possible to transfer shares ("ownership interests") in a Kosovo limited liability company freely in whole or in part, provided the corporation agreement does not state otherwise. If shares in a limited liability company are transferred, the registered charter of the corporation must be amended accordingly and the changes must be notified to the Business Registry.

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Guide to: Kosovo

In practice, this has often caused considerable confusion, since the requirements of the Business Registry were often perceived as arbitrary. In the following we have summarised the procedure as provided by the law and last applied in practice in Pristina: Adoption of a resolution of the owners authorising an amendment to the registered charter; Such resolution authorising the amendment shall instruct an "authorised person" (note: every document to be submitted for registration shall be signed by such person, which is either an officer of the corporation or an officer of the board of directors or a founder of the corporation if the document is submitted in connection with the initial registration of the corporation) to sign and submit a notice to the Business Registry, containing: Name and registration number of the limited liability company; Text of each amendment adopted; Date of each adoption of each amendment by the owners; Statement that the amendment was duly approved by the owners in a manner consistent with the present law, the charter and the by-laws; Statement that the person signing and submitting such notice is an "authorised person" and that such person has been duly authorised to sign and submit the notice Copy of the respective resolution(s); Text of the concerned document (here: the registered charter) as amended (the law states that such document does not need to be signed by the owners of the limited liability company)

In practice, the application should also contain: An original or certified copy of the share purchase agreement regarding the transfer of the ownership interest A confirmation that the respective purchase price has been duly transferred and received Copies of the passports of the signing individuals Completed form no. "A 8" (see: website of the Business Registry under http://www.arbk.org/arbk/) A "proof of payment" regarding the registration fees

In case the parties applying for a registration are not individuals, it might also be prudent to provide for official excerpts regarding these legal entities. Once all the documents are submitted to the Business Registry (it is not possible to electronically submit documents) a respective payment form is issued. Such payment form provides for the transfer of registration fees to an "authorised bank" and must (after the transfer of fees is confirmed on such form) be immediately submitted to the Business Registry.

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Guide to: Kosovo

2.3

Share certificates and share registers

Shares do not need to have certificates. There must however be a share register kept at the corporations registered office. 2.4 Annual general meetings and reports

Annual general meetings of J.S.Cs must be held within 30 business days after the board receives the corporation's audited financial statements, but not later than 90 days after the end of the corporation's financial year. Every registered business organisation must submit an annual report to the Business Registry between 1 January and 30 April of each year together with a copy of the accounts. 2.5 Transformation of Entity Type

The current business law does not provide for a transformation from one entity type to another. In practice, the registry does permit this. In order to conduct a transformation, a certificate must be produced by the tax authority showing all taxes have been paid. There is no need to notify creditors of such transformation. 2.6 Increase in Borrowing, Capital & Bonds

Provisions regarding increases in the charter capital of a corporation are provided by the Law on Business Organisations. The shareholders' meeting can increase the charter capital by either increasing the par value of shares or by issuing additional shares. More detailed information on the increase of charter capital can be found in the Law on Business Organisation (L.L.C Article 79, J.S.C Article 154 et seq), as amended with Law No. 04/L-006.

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Guide to: Kosovo

3. 3.1

INSOLVENCY AND RESTRUCTURING Bankruptcy Provisions

Insolvency law in Kosovo is laid down in the Law on Liquidation and Reorganisation of Legal Persons in Bankruptcy (Law No. 2003/4) promulgated and entered into force on 14 April 2003 (the "Law on Bankruptcy"). It is expected that the Government of Kosovo will soon adopt rules regarding its implementation. In that case, the Law on Bankruptcy will become fully applicable. Law No. 2003/4 of the Assembly of Kosovo on the Liquidation and Reorganisation of Legal Persons in Bankruptcy, promulgated by UNMIK Regulation no. 2003/7 and amended with Law No.02/L-115, provides that a creditor can submit a bankruptcy petition to a court if (a) the debtor has failed to pay a debt that is at least 60 days overdue; or (b) the total amount of the overdue debt exceeds EUR 5.000, or (c) the debtor is generally not paying debts as they become due. A debtor can initiate bankruptcy proceedings under the same conditions. There are also advertisement requirements. The applicable secondary legislation is in the process of being drafted. Directors' and officers' failure to initiate proceedings when necessary can lead to their personal liability vis--vis the creditors. Public and social enterprises are not subject to this law. Most importantly there is almost no practical experience with these legal concepts in practice. Actual successful insolvency procedures are extremely rare and even where all the conditions for insolvency have been met, these regulations have been seldom applied in practice. Nevertheless, the following should give the reader an introduction to the laws which will certainly be applied in practice in the future. At the moment the most important application of the Law on Bankruptcy is that it sets out the basis for the assessment of e.g. directors liability, liquidity requirements or good governance. 3.2 Types of Insolvency Proceedings Available

The Law on Bankruptcy provides for 2 (two) types of insolvency proceedings: Bankruptcy (liquidation) proceedings, which lead to the sale of the debtor as a whole, or on an asset-by-asset basis; and Reorganisation proceedings, which aim to preserve the debtor's business and allow the debtor to discharge liabilities within a certain period of time in accordance with the reorganisation plan.

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3.3 3.3.1

Conditions for the opening of insolvency proceedings Debtor Capable of Insolvency

Pursuant to the Law on Bankruptcy, only legal entities (i.e. a general partnership, limited partnership, joint stock company and limited liability company) can be made subject to insolvency proceedings. 3.3.2 Entitled Partners

The insolvency proceedings shall be initiated by the petition of the debtor, creditor or group of creditors. The debtor may submit a petition only after obtaining an approval of its board of directors or other governing body in accordance with its charter, founding documents, or partnership agreement. Furthermore, the following criteria must be fulfilled: Debtor has failed to pay a debt which is at least 60 days overdue; Total amount of the overdue debt exceeds EUR 5.000; and Debtor is generally not paying its debts as they become due.

The creditor or a group of creditors may submit a petition for initiating the insolvency proceedings when: Debtor has failed to pay a debt which is at least 60 days overdue; Total amount of the overdue debt of each creditor exceeds EUR 2.000; Debt is not conditional or subject to a bona fide dispute; and Debtor is generally not paying debts as they become due.

The court may presume that the debtor is generally not paying its debts as they become due when a creditor presents a competent evidence proving that its debt has not been paid when due. 3.3.3 Commencement and Handling of Insolvency Proceedings Competent Court The Commercial Court in Pristina has Kosovo-wide first instance over disputes pertaining to insolvency proceedings. Insolvency Administrator Appointment and Responsibilities The insolvency administrator shall be appointed no later than 2 (two) days after the opening of insolvency proceedings. In case of an urgent need to protect the assets from damage or unauthorised dispositions, the court may, on its own initiative or at the request of the petitioner, appoint an interim administrator prior to the opening of insolvency proceedings.

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Guide to: Kosovo

Furthermore, the creditors (secured and unsecured) holding 60 % or more of the outstanding debt of the debtor, may submit at any time a written request to the court to replace the appointed administrator with an administrator of their own selection. If such a request is validly made and the requirements met, the court must appoint the selected administrator no later than 2 (two) days after the submission of such request. The insolvency administrator is entitled to: Take immediate possession of the debtor's property; Call the creditor meetings and preside over such meetings; Initiate and continue the legal and administrative proceedings related to the enforcement of the debtor's rights; Serve as the official authorised representative of the debtor's estate; Upon the court approval, hire the employees, subordinates and experts required for the proper administration of the case and supervise their work; Close the debtor's bank accounts and open a special insolvency account in a bank approved by the court; Make payments to creditors for approved claims; and Compel the debtor or designated representatives of the debtor's management to appear at and assist in taking an inventory of the debtor's property. Creditors Committee The creditors' committee consists of at least three and not more than five creditors from among those with the largest unsecured or partially secured claims. If fewer than three creditors are willing to serve, than no committee shall be formed. The rules governing the creditors' committee meetings and creditors' meetings (in cases where the creditors' committee has not been formed) are to be prescribed by the respective implementing rules. 3.3.4 Filing of Claims

Creditors are required to file with the court a proof of claim in written form no later than 60 days after the opening of insolvency proceedings. Within 30 days after the claims' bar date, the administrator shall evaluate the validity, extent and priority of the filed claims and submit an objection, if there are grounds to do so. If no objection is submitted to the court within 30 days after the claims' bar date, all submitted claims shall be deemed valid and accepted. After the resolution of all objections, the administrator shall compile and submit to the court a final list of claims, indicating their amount and status, which shall be delivered to the debtor and the creditors' committee. If the creditors' committee has not been formed, the final list of claims shall be delivered to the creditors holding the 10 (ten) largest unsecured claims. The rules governing the minimum required information for a proof of claim and the computation of claims are to be prescribed by the respective implementing rules.
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Guide to: Kosovo

3.3.5

Effects of Opening the Insolvency Proceedings

As of the petition submission date, all actions, proceedings or acts of any kind aimed at satisfying the claims against the debtor shall be suspended, including: Any acts, including judicial proceedings, intended to collect or recover a claim for debts, taxes penalties or obligations of any kind arising prior to the petition submission date; Any acts intended to create, modify, increase, perfect, register or enforce a mortgage or pledge in the property of the debtor's estate; and Any acts intended to seize or sell any pledged or mortgaged property of the debtor's estate. Avoidance of Transactions

3.3.6

The court may void transactions concluded by the debtor prior to the opening of insolvency proceedings or later, if it determinates those transactions: (i) (ii) (iii) (iv) Were concluded for less than fair value; Have resulted in a reduction of the total assets in the debtor's estate; Were undertaken with the intent to harm the creditors' interests; or Have occurred after the date on which the petition was submitted and before the appointment of the administrator. Reorganisations Reorganisation Plan Reorganisation is carried out in accordance with a reorganisation plan which must be prepared in writing. Pursuant to the Law on Bankruptcy, the reorganisation plan may be filed by the debtor, administrator, creditors holding at least 30 % of the secured claims, creditors holding at least 30 % of the unsecured claims, or persons owning at least 30 % of the debtor's shares. The reorganisation plan shall be filed with the court within 60 days after the opening of insolvency proceedings. Given the appropriate circumstances, this deadline may be extended by the court for additional 30 days. Proceedings and Voting The court shall schedule a hearing for consideration of the reorganisation plan and voting within 30 days after the date on which the plan was filed. The rules governing such hearings shall be prescribed by the implementing rules. All creditors (secured and unsecured) are eligible to vote on approving the reorganisation plan. Creditors' claims shall be divided into classes based primarily upon the relevant secured rights and their ranking. For a reorganisation plan to be
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3.3.7

Guide to: Kosovo

approved it must be adopted by each class of creditors by simple majority vote, i.e. the reorganisation plan shall be deemed to have been approved, if all the classes of creditors adopt it. Consequences of Adoption In the event of the adoption of a reorganisation plan, the creditors face the situation in which all of their claims and rights towards the debtor shall be governed solely by terms stated in the plan. More precisely, the approved plan shall be considered to be a new contract for the satisfaction of claims presented therein. 3.3.8 Sale of the Debtor's Estate and Creditors' Satisfaction

After the issuance of the decision on bankruptcy, the insolvency administrator shall commence and carry out the sale of all or part of the debtor's estate. The debtor's estate may be sold at a public auction or through a direct agreement. Creditors' claims shall be satisfied in order of priority as follows: Secured claims; Priority claims, including: Court expenses; Administrator's expenses; Administrator's compensation; Administrative expenses related to the maintenance and protection of the insolvency estate; Expenses, financing and credits related to the reorganisation (in case of failed reorganisation); Expenses of the administration; Expenses of the creditors' committee; Salary claims; Unsecured claims; Claims of the shareholders, founders, participants or partners of the debtor.

The rules governing the procedure of creditors' satisfaction shall be established by the implementing rules.

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4.

INVESTMENT PROTECTION FOR FOREIGN INVESTORS

According to UNMIK Regulation No 2006/28 on Foreign Investment and the Law on Foreign Investment (Law No. 2005/02-L33), foreign investors are granted the same treatment as resident investors and do not require a further license or approval. The principal purpose of this law is to promote and to encourage foreign investments in Kosovo by providing foreign investors with a set of fundamental and enforceable legal rights and guarantees. These rights are designed to safeguard foreign investments in strict accordance with the rule of law, fairness and respect as well as widely accepted international standards and practice. Therefore, when establishing subsidiaries, branches, and representative offices, the same rules apply for foreign investors as for domestic business organisations. Also, foreign investors must not be taxed less favourably in comparison with domestic business organisations. In addition foreign investors may: Open bank accounts in the currencies that are legally permitted (Bank accounts in any foreign currency also may be opened); Transfer into and out of Kosovo profits after the payment of taxes16 Use their investments and any income lawfully received for any lawful purpose; and Retain the profits of their investment, and convert such into another currency in any domestic or foreign market.

Detailed provisions concerning the protection of foreign investors against unjustified expropriation were also incorporated in this law. Furthermore, the Ministry of Trade and Industry of Kosovo has established the Investment Promotion Agency of Kosovo (IPAK), which is intended to provide a onestop shop service to both local and foreign investors seeking investment opportunities in Kosovo. On a bilateral level, to this date a variety of investment protection agreements between Kosovo and a lot of foreign countries are already in place. For instance, foreign investments by Austrian entities in Kosovo are protected by such an investment protection treaty between the Republic of Austria and Kosovo which came into force on 1 February 2012, providing, inter alia, for: Non-discrimination of foreign investors in relation to domestic investors Protection of investors from unfair treatment and guaranteed adherence to international minimum standards Dispute resolution by means of international arbitration

16

Dividend withholding taxes which had been applicable prior to 2010 have been abolished as of 20th February 2010. 27

Guide to: Kosovo

5. 5.1

TAX LAW General

The Kosovo tax system is a young system. The first state duties were introduced in 1999 by the implementation of a customs regulation. Since 2000, further taxes have continuously been implemented, e.g. municipal taxes. However, until now there has been no integrated fiscal code governing all tax aspects, but rather several regulations issued to cover the main taxes applicable in Kosovo. In 2009, the standard VAT rate was increased to 16% and the corporate income tax rate was reduced to 10%. The tax regulations aim to strengthen the development of the economy and be generally consistent with European standards. The most important taxes are: Corporate income tax, Personal income tax; Value added tax; Wage withholding tax Rent withholding tax; Custom duties; Excise tax; Municipal tax (immovable property tax and business license fee). Fiscal and VAT Number

5.1.1

From mid-2012 the business and tax registration processes were combined and this process now takes place through Business Registration Agency (part of the Ministry of Trade and Industry) one stop shops which have been established in most of Kosovos municipalities. The one stop shops issue both business registration and fiscal numbers, and if the business requests them, VAT certificates and import/export certificates. The previous requirements for TAK to visit business premises before tax registration/issue of a fiscal number were all removed in an Administrative Instruction signed by the Minister of Finance earlier in 2012. New businesses can request educational visits from the tax office, but these and any other checks by the tax office are all now post-registration. Also while separate VAT registration numbers are still required (mainly due to the legal requirement for them to be shown on VAT invoices and other VAT documentation), over time this will be replaced by the fiscal number. (for information on VAT please see 5.3).

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5.1.2

Corporate Income Tax

On 29 December 2009 the Kosovo Assembly adopted the Law on Corporate Income Tax (Law No. 03/L-162), which has effect as of 1 January 2010 and which has been amended with Law No. 04/L-103. According to this law, the following entities are subject to corporate income tax: Corporations or other business organisations which have the status of a legal entity under the applicable laws in Kosovo; Companies operating with public or socially owned assets; Organisations registered as non-governmental organisations; and Permanent establishments in Kosovo of non-residents. Such permanent establishments include but are not limited to: plants, branch offices, representation offices, factories and construction sites.

The corporate income tax rate is 10 % of the profits. Certain revenues like such of non-governmental organisations holding the public benefit status certificate are exempt from corporate income tax. 5.1.3 Deductible Items

Expenses are considered deductible if they are incurred during the tax period wholly and exclusively in connection with conducting the business activity. In particular, representation costs (advertisements, marketing) are now fully deductible; partial deductibility limitation now only relates to business entertainment such costs are 50 % deductible up to a maximum limit of 2 % of annual turnover. Repair and maintenance costs of vehicles and of other assets are fully deductible, irrespective of amount, where the repairs do not extend the useful life of the asset by more than one year; otherwise they are required to be capitalised as part of the cost of the asset and amortised. The tax authority will not allow as an expense an invoice from a company that is not registered in Kosovo when it should be. The tax authority also does not easily recognise the validity of inter-company agreements, e.g. for services provided by the parent company or headquarters. Expenses which are not deductible include, for example, costs associated with the acquisition of real estate, the acquisition of goods that can be amortised, contributions to reserve funds/provisions, fines and the value added tax for which the taxpayer claims a deduction of input tax. Further, expenses which are EUR 500 or more are only deductible if paid by bank transfer and all expenses need the business registration number and full name of the supplier and business registration number and full name of the purchaser on the coupon or invoice. A list of all expenses over EUR 500 with details of supplier and the nature of the expense must be submitted by 31 March each year to the tax authority.

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5.1.4

Losses Carried Forward

In principle, losses may be carried forward and may be settled against future profits for seven consecutive fiscal years. This does not apply in the event that the ownership structure changes by more than 50 %. As a general rule, losses have to be settled against profits of the same category of income ("horizontal loss adjustment"). Currently, there are no group taxation provisions in Kosovo that would enable losses of one corporation to be offset against the taxable profits of another corporation in the same group. 5.1.5 Corporate Assessments and Payments

The fiscal year corresponds to the calendar year. Taxpayers are required to make quarterly advance payments for the immediately preceding quarter to any authorised bank. These advance payments have to be made on or before 15 April, 15 July, 15 October and 15 January of each year. Enterprises with an annual turnover of less than EUR 50.000 can be taxed either on an actual profit basis (i.e. after deducting expenses) or a presumptive tax basis (based on turnover). The turnover basis applies if the taxpayer does not opt for taxation on the actual profit basis and his annual turnover is less than EUR 50.000. Enterprises involved in trade, transport, agricultural, and similar commercial activities pay 3 % of each quarters gross income, but not less than EUR 37.5 per quarter. Enterprises deriving income from services, professional, vocational, entertainment, and similar activities pay 9 % of each quarters gross income, but not less than EUR 37.5 per quarter. (Note: for quarters ending on or before 30 June 2012, a lower 5 % rate than the 9 % now in place, applied). However, such enterprises can also opt for taxation on the basis of actual profits. The tax rate in this case is 10 % of actual taxable income by submitting a form. They must then produce related financial statements and continue to pay income tax on the actual profit basis for the year the option was exercised and at least the following 3 (three) tax years. The payments of enterprises that opt for the actual profit basis and not presumptive tax basis are as follows: For the first tax year after making the option, taxpayers are required to pay of the estimated quarter tax liability, less any amount withheld by a third party. For subsequent tax years, taxpayers are required to pay at least 110% of the assessed corporate income tax liability for the previous year less any amount withheld by a third party

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Additionally, such tax payers are obligated to submit an annual tax declaration to the tax administration on or before the 31 March of the year subsequent to the tax period and to pay the taxes that have not been paid up to such date. Together with the tax declaration, these taxpayers are also required to submit financial statements. Together with the submission of the final tax declaration, a confirmation of the already paid taxes should be submitted. The taxpayer is entitled to receive a refund for any surplus. 5.1.6 Taxation of Permanent Establishments

A permanent establishment is considered to be any workplace through which a nonresident person carries on a business in Kosovo. This place can be a plant, a branch office, a representative office, a factory, a shop, etc. In practice, such non-resident person is subject to corporate income tax for the profits made in Kosovo. Non-resident persons with a permanent establishment in Kosovo can obtain an official document from the Kosovo tax administration, certifying the amount of taxes they have paid, in order for this to be used to obtain a credit if permitted by the foreign tax authority. The test for corporate income taxation in Kosovo is far-reaching and the tax authority under Law No 03/L-162, taxes companies which acquire income as a result of even a short consultancy visit to Kosovo, even when they have no permanent office or staff in Kosovo if their company bills work for more than 90 cumulative staff days spent in Kosovo or are present for more than 183 days. After such a period tax is due retrospectively. VAT is also chargeable by entities doing business in Kosovo irrespective of the period of residence and even for services. With the rules on reverse charge VAT having come into effect, Kosovo has implemented the place of supply rules from the EU Directive on VAT dated 28 November 2006 (EU 6th Directive). 5.1.7 Withholding Tax

The Law on Corporate Income Tax also provides for regulations of the withholding tax. This Law provides that each taxpayer who pays interest or royalties to a resident or a non-resident person is liable for withholding 10 % tax at the time of payment. There is no longer any tax on dividend income and thus no withholding obligation. However, interest on shareholder loans is still subject to the withholding tax. This makes intra-group financing of local Kosovo subsidiaries through shareholder loans rather unattractive. The income generated by a non-resident person or entity, and from entertainers in Kosovo is subject to withholding tax, provided that the non-resident person or entity has no permanent establishment in Kosovo and the gross compensation received is
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Guide to: Kosovo

more than EUR 5.000 in any tax period. The withholding tax applied is 5 % of the gross compensation. There is also a withholding tax on rent. Whenever a legal entity, e.g. a limited liability corporation, pays rent, 9 % of the gross rent must be withheld. Furthermore, a 10 % withholding tax applies with respect to lottery and game of chance winnings. The withholding tax is subject to the following general rules: Any person on whose behalf tax is withheld can request receipt of a certificate from the taxpayer concerning the withholding of the respective tax. This certificate has to be issued by 1 March of the subsequent year. Please note that such certificate is not issued by the Kosovo Tax Administration, but rather by the payer itself in the form established by the Kosovo Tax Administration. Not paying a withholding tax may result in personal liability of the person who had the obligation to make the payment in the event that this person knew or should have known that the tax had not been paid or withheld. In addition a penalty of 25 % of the unpaid portion of the tax will be imposed. Notwithstanding any other provisions in this Law, the amount of the withholding tax shall be 5 % of the gross compensation. Each payer shall submit a statement of withholding and remit the amount of tax withheld to an account designated by the Tax Administration in a bank licensed by the Central Bank of Kosovo within 15 days after the last day of each calendar month, in accordance with a sub-legal act issued by the Minister of Finance. A withholding tax under Article 41 of the Law on Personal Income Tax shall be considered to be a final tax and the recipients of such income subject to the withholding shall not submit a declaration to the tax administration, notwithstanding the provisions of Article 48 of this Law. Each payer who withholds under Article 41 of the Law on Personal Income Tax during a tax period shall, upon request of the recipient of the income, by 1 March of the year following the tax period, provide a certificate of tax withholding in the form specified in a sub-legal act issued by the Minister of Finance. Each taxpayer who withholds tax under Article 41 of the Law on Personal Income Tax during a tax period shall submit to the tax administration an annual reconciliation statement in the form and format specified by the Tax Administration no later than 1 March of the year following the tax period. Each taxpayer must include a copy of all withholding certificates, required by paragraph 5 of this Article, with the annual reconciliation statement submitted to the tax administration.

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5.1.8

Avoidance of Double Taxation

The Law on Corporate Income Tax provides that any applicable bilateral agreement on the avoidance of double taxation supersedes domestic legal provisions. Kosovo authorities do recognise the tax treaties signed by the former Federal Republic of Yugoslavia unless they have been replaced by Kosovo specific agreements. In this context individual verification of the current practice of the Kosovo Tax Authority with regard to specific historic agreements is advised. In the past the authorities have refused application of certain historic agreements without giving any reason whatsoever. Also informal inquiries with authorities have produced varying results with respect to the application of former Yugoslav double taxation treaties. There are now three signed double tax treaties (with Albania in 2005, Macedonia in 2011 and Turkey in 2012). Other agreements have been negotiated with the Czech Republic and Hungary and are simply awaiting formal signing. Furthermore, negotiations are near completion on a treaty with the United Kingdom. 5.2 Personal Income Tax

The Law on Personal Income Tax (Law No.03/L161, amended with Law No. 04/L104) has effect from 1 January 2010 and regulates the personal income tax regime. As was the case in introducing the corporate income tax, this regulation aims to introduce one single tax for all sources of income derived by individuals. 5.2.1 Taxable Persons

Taxable persons are resident and non-resident individuals who receive income in Kosovo. A resident is defined as any person who has their principal residence in Kosovo. A person is also deemed resident if physically present in Kosovo for at least 183 days in any 12 month period of time. Therefore, the following individuals are subject to Kosovo's personal income tax: Residents on taxable income derived from Kosovo source income and foreign source income; and Non-residents on taxable income derived from Kosovo source income. Taxable Income

5.2.2

The taxable income for a tax period is calculated using the difference between gross income and any allowed deductions. Gross income consists of income from: a) wages, b) business activities, c) rent, d) use of intangible property, e) interest, g) capital gains (capital gains have become taxable to individuals from 1 January 2010), h) lottery winnings or other game of chance prizes, i) pensions paid by previous employers, j) replacement income and k) any other income that increases the taxpayers net worth. Dividends are no longer taxable for income tax purposes.
33

Guide to: Kosovo

5.2.3

Tax Rates

The personal income tax rate system is a progressive tax system with a 10 % maximum tax rate. Taxes must be withheld by employers on a monthly basis at set amounts. Income taxes are zero for the first EUR 80 per month; 4 % for the next EUR 170; 8 % for the next EUR 200. For earnings above this per month, they are 10 %. In other words, for earnings above EUR 450 per month the tax is EUR 273.60 plus 10 % on the amount above EUR 450. Nearly all benefits are taxable except for the mandatory payments to the State pension scheme and up to EUR 50 per month in benefits in kind such as provision of a canteen lunch at work or a mobile phone. Annual taxable income Up to EUR 960 EUR 961 up to EUR 3.000 EUR 3.001 up to EUR 5.400 More than EUR 5.400 5.2.4 Taxation of Foreigners Tax rate, as of 1 January 2010 0% 4 % of the amount exceeding EUR 960 EUR 81.60 + 8 % of the amount exceeding EUR 3.000 EUR 273.60 + 10 % of the amount exceeding EUR 5.400

The only concession for the taxation of foreigners is that foreigners do not need to pay personal income tax on the accommodations provided for them or on school fees. Travel and accommodation and educational benefits provided to foreigners (and locals) are not subject to wage withholding tax, subject to certain conditions. Expatriate personnel usually are employed under a Kosovo labour contract and consequently, liability for taxes is incurred as of the first day of work. The employer must withhold income tax on pay for ex-pats just as such employer must do for locals. The only difference is that there is no obligation to make the pension contributions for ex-pats. There are also exemptions from income tax of payments made to foreigners providing assistance to Kosovo under donor projects or who work for recognized international organizations, as many of the foreigners in Kosovo are here to provide such assistance and are exempt from Kosovo taxes (either under Kosovo laws or under bilateral agreements with donors which supersede the laws).

34

Guide to: Kosovo

5.3 5.3.1

Value Added Tax General

The VAT law and system in Kosovo is based on the EU Directive for VAT (Directive 2006/112/EC). It does include a tax on the export of services (exports of goods and services are zero-rated) and the only VAT paid at the border is in relation to imports. 5.3.2 Basic VAT Rules

VAT is chargeable on taxable values of imports and domestic supplies of goods and services. Generally, the VAT rate is 16 %. The law also defines what is considered a supply of goods versus a supply of services. The taxable value of a taxable supply in Kosovo is the total consideration payable for that supply. For imports, the taxable value is the customs value plus customs duties, excise taxes and other charges levied in customs. No VAT has to be paid e.g. for: Exports of goods (0 %) Imports, and supplies of the goods listed in the Annex of the law (0 %) Import of a traveller's personal effects or of tourist duty free goods (not taxable)

In addition, the Regulation on VAT provides for certain rebates or exemptions, for example for some donor funded projects. Supplies of financial services are also VAT exempted. 5.3.3 "Persons" obligated to register

Registration is mandatory when the turnover in the previous 12 months exceeds EUR 50.000. (Registration is not required until this threshold is reached. Thus, mere expectation of annual turnover criteria over EUR 50.000 does not trigger a mandatory registration.) This applies to all private individuals, as well as legal and public entities. Where annual turnover is less than the threshold, voluntary registration for VAT is possible. There is no need to register for VAT for export/import purposes since there is a separate provision - contained in the VAT law (Law No. 03/L-146 of December 2009, which came into effect on 1 July 2010), according to which such persons are required to register for an import/export certificate.

35

Guide to: Kosovo

5.3.4

Deduction of Input Tax

Only registered suppliers are entitled to deduct input taxes on supplies on which VAT is imposed. A deduction of input taxes only may be applied to items used for supplies that are subject to VAT. A deduction of input tax requires that the suppliers be in possession of authentic customs documents for imports or exports or, in the case of other supplies, in possession of an authentic invoice issued by the taxable person or in possession of proof that the debt has been paid. The following supplies do not qualify for a deduction of input tax: Yachts and boats intended for sport and recreation, private aircrafts, cars and motorcycles that are only used for non-business purposes. Furthermore fuels, lubricants and spare parts related to their use. Costs for entertainment and amusement during business or social contacts, as well as food and drink costs related to that. Purchase and current expenditure costs of cars used for both private and business purposes (however, in this case, the right of deduction is limited to 50 %) VAT Compliance

5.3.5

VAT compliance provides for the monthly submission of VAT returns to the competent tax authority and monthly payment of VAT due by the 20 of the month following the end of each tax period. The submission has to be completed no later than by the 20 of the month following the reporting month. Also, the payment has to be issued no later than on this very day. Late filings or late payment of taxes are subject to penalties and interest. However, where the due dates for payment or filing for all taxes fall on a weekend or public holiday, payments/filings on the next business day are treated as being on time and therefore are not penalised. The deduction of input tax is calculated based on the information recorded in the sales and purchases books. VAT records have to be kept for 6 (six) years after the end of the tax period to which they relate. 5.4 Social security and Health Insurance Charges

Currently, Kosovo has established only one mandatory social charge in the form of pension contributions, which are administered and managed by the Kosovo Pension Savings Trust (Trusti). The pension law 2012 provides that both employees and employers should contribute to the individual savings pension system. This is a defined contribution scheme, with an account held for each individual who has invested therein. Each individual receives an annual account statement. Foreigners are not obligated to make such pension contribution.

36

Guide to: Kosovo

Employees have to contribute 5 % of their monthly wages to their pensions, which is then matched by another 5 % contribution from their employer. In practice, employers withhold and pay for both elements. Employees and employers may contribute a higher percentage voluntarily, up to a maximum of 15 % of the employees monthly wage. Employer contributions are deductible up to the maximums allowed (up to 15 %) under pension law. Therefore, if an employer makes a pension contribution of 20 % of the employees monthly salary, the contribution of up to 15 % is deductible, but the balance is not. When wage withholding tax is calculated in respect of employee wages, employee pension contribution amounts are deducted before the calculation of the wage withholding tax. There is no withholding obligation in respect of pension contribution benefits. Personal income tax liability arises when pensions are ultimately paid out (generally from age 65).

In contrast to this, payments to health insurance schemes by employers need to be added to any individual employee's gross income before calculating the wage withholding tax. 5.5 Salary Taxes and Pension Charge Compliance

Employers are obligated to withhold an employees pension contributions and personal income taxes, and to pay such contributions and taxes by the 15 of the month following the reporting month. At the same time, employers are obligated to submit a monthly payroll record, a wage tax withholding and remittance statement, and a statement of pension contributions and remittance form. A monthly pension report form must also be submitted. Foreign individuals are not obligated to contribute to the local pension system, but may choose to do so. The separate monthly wage withholding tax and pension contribution forms have recently been merged into one monthly form covering both wage withholding tax and pension contributions. Payroll records are required to be filed with this form. However, it is now mandatory for employers to e-file their monthly wage withholding/pension contribution forms. E-filing of VAT declarations is also encouraged, but not mandatory. 5.6 Customs Duties and Customs

Customs are regulated by the Customs and Excise Code (no 03/L 109), amended with Law No. 04/L-099 and the Administrative Instruction of the Minister of Finance implementing this Code. The tariff as applied to the specific type of goods imported can be found in the Integrated Tariff of Kosovo (TARIK). It consists of a Goods Nomenclature and is based on the Harmonised System of the World Customs
37

Guide to: Kosovo

Organisation (WCO) as well as on the Combined Nomenclature of the European Communities. While in general, a flat rate of 10 % is applied to all goods imported into Kosovo, goods imported from certain countries are exempt from customs duties. Note that a 16 % VAT charge is applied on all goods imported, even on those exempt from customs duties. All relevant information on customs can be found at this website: http://dogana.rksgov.net/en/Home 5.7 Excise Duties

The Law on Excise Taxes, amended in 2008 and 2009, provides a list of goods subject to excise tax. The goods subject to excise taxes include: coffee, wine, cigarettes, and other tobacco products, oils, fruit juice and other drink concentrates, cars and other motor-operated vehicles. Fixed amounts are provided for certain goods. 5.8 Property Tax

The Law on Taxes on Immovable Property (Law No 03/L-204) states that in general, the person liable for paying the tax is the real estate owner. The rate is set at an annual basis between 0.05 % and 1 % of the market value of the real estate. There are different rates for the various different types of property such as residential, commercial or agricultural property. For unfinished property, the tax is 40 % of the rate which would be applied to the finished property according to its purpose. The annual tax has to be paid in two equal portions no later than on 30 June and 31 December respectively. The municipalities in each jurisdiction must assess the real estate and update the market value of each real estate parcel every 3 (three) to 5 (five) years. Furthermore, the municipality has the authority to collect the tax for the real estate. 5.9 Form of Tax Declarations and Penalties

The Law on Tax Administration and Procedures (Law No. 03/L-222) which entered into force in July 2010, contains provisions regarding the competencies of the Tax Administration of Kosovo ("TAK"), the establishment of a "Tax Investigation Unit" (responsible for the investigation or prevention of tax evasion) as well as the regulations concerning the registration and deregistration of taxpayers and their corresponding obligations. The statute contains a rather complex and exhaustive scheme of administrative fines for the infringement of a taxpayer's obligations under the relevant tax law.
38

Guide to: Kosovo

All tax declaration forms must now be downloaded from the tax administration website (unless they are e-filed). There are three copies, two of which remain with the bank while one is for the taxpayers record. All taxes must be paid to a commercial bank in Kosovo17. 5.10 Capital Gains Tax

There is no capital gains tax on gains made by individuals before 2010. Gains within companies or legal entities are taxed under corporate income tax regulations.

17

Some commercial banks now accept tax payments electronically while others are working on introducing this. 39

Guide to: Kosovo

6. 6.1

LABOUR LAW General

Employment relationships are governed by the Law on Labour (Law No. 03/L-212), which aims at codifying the employment law of Kosovo and introduces a detailed and elaborate regulation of all aspects of the collective and individual employment relationship. With the Labour Law entering into force, UNMIK Regulation No. 2001/27 on the Essential Labour Law in Kosovo, the Yugoslav Labour Law from 1977 with the relevant amendments and all provisions of other laws in force which are in contradiction with the provisions of the Labour Law, have been superseded. The Labour Law obliges employers to comply with all applicable employee protection provisions such as annual leaves, minimum wage, overtime pay, safety standards; maternity leave and sick leave. Additionally, the Labour Law provides for the protection of employees' rights against anti-union discrimination and gender discrimination. In order to be able to monitor compliance with the Labour Law, a compliance office has been created by the Ministry of Labour and Social Welfare. Labour disputes are adjudicated before the 7 (seven) Basic Courts and their respective branches. Generally speaking, nowadays the Labour Law in Kosovo is well developed and comparable to labour laws in other jurisdictions. There are however still some peculiarities such as somewhat low minimum wages in the amount of EUR 170 per month, there is no compulsory insurance for employees and no need for them to carry health insurance in Kosovo. 6.2 6.2.1 Overview of important Articles of the Law on Labour Scope of the Labour Law Art. 2

The Labour Law applies to employees and employers in the private and public sector in Kosovo, including employees of POEs, as well as employees and employers whose employment is regulated by a special law (to the extent that this special law does not provide for a more specific solution) and employees with a foreign or no citizenship who are employed to employers within the territory of the Republic of Kosovo.

40

Guide to: Kosovo

6.2.2

Social Dialogue and Social Economic Counsel Art. 3.1.4 and Art. 3.1.5

The Labour Law provides for a so-called social dialogue to be conducted regularly, i.e. a process of negotiation and consultation between representatives of the employees, employers and the Kosovo Government and a social and economic council which is established at national level to lead consultations on employment relationships and social welfare in Kosovo. 6.2.3 Duty to Report to Tax Authorities Art. 7.4

The employer is obliged to report the employee to the Tax Administration of Kosovo and other institutions which manage and administer the obligatory pension schemes and other obligatory schemes. 6.2.4 Labour Contracts Types of Labour Contract Art. 10.2 The Labour Law establishes certain mandatory standards to be provided for in labour contracts by giving flexibility to their contents, as long as it does not conflict with applicable law. The law allows for employment contracts with duration of up to 10 (ten) years as well as for indefinite employment contracts. All labour contracts must be in writing. Content of a Labour Contract Art. 11 Article 11 of the Labour Law sets out the mandatory content of employment contracts, among others, the aspects of the employment relationship which must be covered are designation, nature and form of the labour, working hours and working schedule, duration of the labour contract and information regarding the salary. 6.2.5 Change of Employer Art. 13

In case of change of employer, the new employer takes over all obligations and responsibilities of the employment relationship that were applicable on the day of the change. The previous employer has a duty to inform the employees and the new employer about the change and all facts concerning the employment relationships. The previous employer may terminate the employment contract of an employee who refuses the transfer of the labour contract. 6.2.6 Trial Period Art. 15

The Labour Law sets the maximum trial period to 6 (six) months. During such period, both the employee and the employer may terminate the contract by seven-day notice.

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Guide to: Kosovo

6.2.7

Commissioning of Employees Art. 17

In cases of restructuring or new labour organisation, an employee, in compliance with the labour contract may be reassigned to another post appropriate for employees professional qualification, competence and same level of salary as defined in the labour contract. 6.2.8 Reassignment of Employees Art. 18

An employee may be reassigned temporarily for other duties and tasks, without previous consent, in the following cases: In an extraordinary state as a consequence of an earthquake, fire, flooding or other natural catastrophes (for as long as these conditions prevail) If there is a need to replace an absent employee from work If there is a sudden increase in workload (for no more than 30 days) In other as defined by the Collective Agreement. Working Hours Art.21 et seq.

6.2.9

The Labour Law contains detailed provisions on working hours, which are not to exceed 40 hours per week and 12 hours per working day, respectively. Full time working hours for employees under 18 years of age must not exceed 30 hours per week. Overtime must not exceed 8 (eight) hours per week. Overtime has to be paid at a rate of 20 % to 50 %, while the employee may choose to be compensated with corresponding time off. Time between 22:00 and 6:00 is considered a night shift. Employees under 18 years of age and pregnant employees must not take night shifts. A single parent of a child under 3 (three) years of age or a parent of a disabled child may only be allocated night shifts with their consent. 6.2.10 Paid and Unpaid Leave The law provides for paid leave on an annual basis for 4 (four) weeks and during official holidays. In addition, there are also various benefits such as days off for certain other personal occasions like weddings or funerals, etc. Unpaid leave may be agreed upon between the employer and employee. Furthermore the Labour Law provides for 12 weeks of paid maternity leave.

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Guide to: Kosovo

6.2.11 Termination of an Employment Contract Retirement age in Kosovo is 65 years. An employer may terminate the employment contract of an employee with the prescribed period of notice of cancellation, when the employee is no longer able to perform the job. Other accepted reasons for terminations by an employer are economic, technological, or structural changes to the enterprise. An employee may cancel their contract of employment without required notice, when the employer is guilty of a breach of obligations under the employment contract. In contrast to the UNMIK Regulation No. 2001/27 notification periods have changed and now are as follows: From 6 (six) months to 2 (two) years of employment: 30 calendar days; From 2 (two) to 10 (ten) years of employment: 45 calendar days; Above 10 (ten) years of employment: 60 calendar days. 30-day notice for fixed term contracts

6.2.12 Collective Dismissals Art.76 Cases of dismissals for economic, technical or organisational reasons which include at least 10 % of the employees but no less than 20 employees discharged within a six-month period are considered collective dismissals. In such cases, the employer has a duty to inform the employees as well as employee organisations and the Employment Offices about the changes planned, the measures taken to mitigate the effects of such lay-offs, and the severance payments. The severance payments are calculated as follows: From 2 (two) to 4 (four) years of service, 1 (one) months salary; and From 5 (five) to 9 (nine) years of service, 2 (two) months salary.

Positions which become vacant again within one year of an employee's dismissal have to be offered to that same employee. 6.2.13 Employees of Foreign Investors and Work Permits With the amendment of the Law on foreigners (Law No. 04/L-069) in 2011, foreigners no longer have to obtain work permits in order to work in Kosovo18.

18

Ministry of Trade and Industry; http://www.mti-ks.org/?cid=2,633,1911; 25th July 2012 43

Guide to: Kosovo

7. 7.1

PUBLIC PROCUREMENT LAW Introduction to Public Procurement, PPP and Concessions

In 2011 the new Law on Public Procurement in Kosovo (Law No. 04/L-045) entered into force and replaced the Law No.03/L 241. In 2011, a new Law on Public Private Partnership came into force (Law No. 04/L045). Having been harmonised with the European Council regulations and acquis communitaire (see above 1.2.2), the new Law on PPP creates separate definitions for concessions and PPP, in order for deals to be structured more flexibly. The provisions regarding unsolicited proposals have been removed, ensuring a competitive bidding process. Limits for the length of projects have also been removed19. 7.2 Public Procurement

Apart from rules concerning the award procedure and the mandatory content of offers, the Public Procurement Law also contains legal protection rules. There is a very short period during which complaints may be submitted. 7.3 Public Private Partnerships

Generally speaking, "Public-Private-Partnerships" are forms of co-operations between public authorities and private entities. Such undertakings usually aim to provide the contractual framework for the construction, renovation, financing, operation, managing and maintenance of infrastructure as well as some form of allocation of risk to the private partner20. The scope of application of the Law on PPP is relatively wide. It governs the rights to utilise and exploit publicly owned infrastructure and to provide public services in all economic and social sectors, such as transportation, energy, distribution of heat, water and sewage treatment, telecommunications, education, sports and recreation, tourism and culture, prison infrastructure, industrial parks, public buildings, oil and gas pipelines, etc. The Law on PPP does not apply to the granting of licenses, except to the extent that a license is issued within the framework of a concession or public-private-partnership contract; to the privatisation or divestiture of public infrastructure or publicly owned enterprises; to mines, minerals, underground rights or the rights to air space; or to service contracts or work contracts, as defined in the Law on Public Procurement.

19 20

U.S. Department of State; http://www.state.gov/e/eb/rls/othr/ics/2012/191177.htm Ministry of Economy and Finance; "Bridging Kosovo`s http://pppkosova.org/repository/docs/public_private_partnerships.pdf; 16 July.2012 Infrastructure Gap";

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Guide to: Kosovo

7.4

Concessions

A concession means the exclusive right granted by a public authority to a private partner for the purpose of providing, operating, and maintaining an existing infrastructure facility for a specified period of time. The private partner assumes a significant economic risk, while the public sector retains ownership of the original asset. Concessions differ from greenfield projects insofar as greenfield projects generally involve new, not-yet-existing infrastructure facilities, whereas concessions deal with infrastructures already in place. Since the concession law was set up particularly with regard to the implementation of infrastructure projects, it contains special rules for issuing construction concessions in this context. Although the Law on PPP distinguishes between a PPP and concessions, the requirements for awarding both PPPs and concessions, as well as the requirements for the contract, are the same.

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Guide to: Kosovo

8. 8.1

INTELLECTUAL PROPERTY PROTECTION General

Kosovo established a comprehensive legal framework for intellectual property, especially regarding the protection of the following intellectual property rights: Patents Trademarks Industrial design Copyright and related rights.

Furthermore, new legislation on product piracy entered into force in Kosovo in 2008. 8.2 8.2.1 Patents, Trademarks and Industrial Design Registration Procedures

Protection of patents, trademarks and industrial design in Kosovo can be obtained by registration in the respective property right register conducted by the Industrial Property Office21 of Kosovo. The Industrial Property Office was established in Pristina in November 2007. The registration procedure before the Industrial Property Office is governed by three Administrative Instructions (AI) corresponding to the respective intellectual property rights (patent, trademark or industrial design)22. The English version of the application form for the registration of a patent, a trademark or an industrial design is attached to the respective Instruction. The application must be filed with the Office in the official language of Kosovo (Serbian or Albanian). Applicants without residence in the territory of Kosovo shall appoint a so-called authorised representative to be responsible for the procedures before the Industrial Property Office (AI No. 2007/1123). Such authorised representatives are registered in the Representatives Register headed by the Office24. Official fees in all procedures regarding registration and maintenance of patent rights, trademarks and industrial design and the procedure of payment are regulated by the Administrative Instruction No. 2007/1925.

21

Industrial Property Office ks.org/index.php?cid=2,381..

as

part

of

the

Ministry

of

Trade

and

Industry,

http://www.mti-

22

AI No. 2007/10 on the Procedure of Registration of Patents, AI No. 2007/13 on Trademark Registration Procedures and AI No. 2007/12 on the Industrial Design Registration Procedures. Administrative Instruction No. 2007/11 on Representation of Rights in the Sphere of Industrial Property. The AI 2007/11 stipulates requirements for registration as an authorised representative of Kosovo, such as certain professional qualifications or an exam before the panel of the Industrial Property Office. Administrative Instruction No. 2007/19 on Administrative Taxation of Industrial Property Objects.

23 24

25

46

Guide to: Kosovo

8.2.2

Patent Protection

Patent rights are governed by the Law on Patents (Law No. 04/L-029). In Kosovo, an invention shall be protected by a patent if it is new, involves an inventive step and is industrially applicable. The terms "novelty", "inventive step" and "industrial applicability" are defined by the Patent Law. In accordance with internationally recognised standards in this field, a patent constitutes a property right. For a limited period of time, the patent owner is entitled to exploit the protected invention and to exclude others from producing, using or selling the invention without their express permission. On the other hand, anybody (be it a person or legal entity) may file a motion with the Industrial Property Office of Kosovo to declare a patent null and void for reasons stipulated by the Patent Law (e.g. the invention was not new or did not include an inventive step as of the priority date). The Office finally issues the decision on the declaration of nullity of a patent (entirely of partially) or on the refusal of the motion. The right to exploit the protected invention may be assigned by a license contract. A patent may be transferred completely or partially. The patent right is granted for a period of 20 years after the filing date of the patent application, provided that annual maintenance fees are paid duly for the third and each subsequent year. 8.2.3 Trademark Protection

The independence of Kosovo as declared by the Kosovo government had significant impacts on its system of trademark protection. Former trademark rights granted as either national Serbian trademarks or international trademarks of the WIPO26 (with the Republic of Serbia as the required designation) ceased to be valid in Kosovo. Since the deadline for revalidation of these former rights expired in November 2008, trademark protection can only be obtained in form of national Kosovo trademarks, registered by the Industrial Property Office27 of Kosovo. In 2011, the Kosovo Assembly adopted a new trademark law (Law No. 04/L-026) which meets the European Union requirements28 and internationally recognised best standards and practices in this field. Any signs, particularly words, designs, letters, numerals, audio marks and three-dimensional configurations capable of

26 27

World Intellectual Property Organisation (WIPO), www.wipo.int. Industrial Property Office ks.org/index.php?cid=2,381. as a part of the Ministry of Trade and Industry, http://www.mti-

28

First Directive 89/104/EEC of the Council, of 21 December 1988, to Approximate the Laws of the Member States Relating to Trademarks (OJ EC No L 40 of 11.2.1989, p. 1). 47

Guide to: Kosovo

distinguishing the goods of one undertaking from those of another undertaking shall be protected as trademarks in Kosovo. The proprietor of a registered trademark owns the exclusive rights to use the trademark in relation to those goods or services covered by the registration. On the other hand, a registered trademark can be revoked if it has not been used by the proprietor in Kosovo within five years from the date of registration and if there is no proper justification for non-use. A trademark is registered for a period of 10 (ten) years. The registration may be renewed for further ten-year periods by payment of a renewal fee. 8.2.4 Industrial Design Protection

In compliance with the European Union standards, the Law on Industrial Design (Law No. 04/L-028) establishes the conditions for the protection of the design of a product in form of an industrial design. The design can be protected by an industrial design in Kosovo if it is an innovation with a specific character. Precise definitions for the terms "design innovation" and "specific character" with respect to the availability to the public's and the consumers' impression can be found in the Law on Industrial Design. The owner of an industrial design right is granted the exclusive right for exploitation of the registered design and the right to bar other persons from using the same design without permission. An industrial design right may be licensed entirely or partly or transferred onto other persons. The license can be granted for the whole or for a part of the territory of Kosovo. The protection of the industrial design lasts five years counting from the date of the filing of the application and can be extended for further five-year periods up to a maximum of 25 years by payment of extension fees29. 8.2.5 Rights Enforcement

Owners of patents, trademarks and industrial designs protected in Kosovo are entitled to a civil action before the competent court against any person who infringes on their property rights. The substantive laws on patents, trademarks and industrial designs create the legal basis for the respective intellectual property right enforcement by defining the infringements of the rights, as for example selling products manufactured according to a patent invention, using a sign that is identical or deceptively similar to the registered trademark or imitating the protected design of a product without consent of the respective owner. If the holder deems their rights were infringed upon or that there is a risk of infringement of their rights, they may request the order of provisional measures before the final decision of the court comes into effect. If appropriate, in particular
29

Article 48 of the Law on Industrial Design (Law No. 04/L-028)

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Guide to: Kosovo

where any delay is likely to cause irreparable harm to the holder of rights, the court may order interim injunctions, such as the order to cease and desist from acts infringing on the intellectual property right or the order to seize any products resulting from such infringements. The interim measures are explicitly stated in the Patent Law and the Law on Industrial Design. According to the Law on Trademarks, any judicial remedy that is available to proprietors of other types of property rights shall also be available to proprietors of a registered trademark. 8.3 Copyright

Authors (individuals) of works in the literary, scientific and artistic field enjoy protection with respect to their works and their use according to the Law No. 2004/45 on Copyright and Related Rights promulgated by the UNMIK Resolution No. 46/2006 ("Copyright Law"). In particular, spoken and written works, musical and theatrical works, film and photographic works, works of architecture or computer programmes are considered copyright works. 8.3.1 Granting of Copyright Protection

In compliance with internationally recognised standards, any of the relevant types of works is considered to be protected by copyright as soon as it has been created. No prior administrative formalities are required for obtaining copyright protection. 8.3.2 Rights of Authors and Related Rights to Copyright

A copyright consists of: Non-assignable exclusive moral (personal) rights, especially the right of first disclosure and the right of recognition of authorship Exclusive economic rights, especially the right of use of the work and connected rental Other rights of the author, such as the right of exhibition of the work

The Copyright Law also comprises special provisions on copyright contract law with special copyright contracts, such as a publishing or performance contract. In general, the copyright shall be valid for the life of the author and for 70 years beyond their death. Only economic rights and other rights of the author and the execution of moral rights which last beyond the death of the author are subject to succession. The Copyright Law of Kosovo also regulates the so-called "related rights to copyright" with a specific (mostly shorter) duration which have rapidly developed over the last decades (such as rights of performing artists, producers of sound recordings, film producers, broadcasters or publishers etc.).
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Guide to: Kosovo

8.3.3

Protection of Foreigners

According to Copyright Law, foreigners enjoy the same protection as domestic persons; this protection is based on International agreements Factual reciprocity Certain criteria as stipulated by the Copyright Law, such as domicile in Kosovo, first publication of the work in Kosovo or work performance in Kosovo

With respect to moral rights, foreign authors and performers finally enjoy protection under Copyright Law in any case. 8.3.4 Rights Enforcement

In case of infringement of their rights granted by the Copyright Law, holders of rights may demand judicial protection in Kosovo by raising a claim corresponding to the kind of infringement as stipulated by the Copyright Law. The Copyright Law provides comprehensive claims on rights protection, including the statement of the infringement of rights, recovery of material and non-material damages and the publication of the judgement in public media at the infringer's expense. 8.4 Product Piracy

In December 2009, UNMIK Regulation No. 2008/22 on Implementing Customs Measures Regarding Goods Infringing Intellectual Property Rights which established customs procedures to enable UNMIK Customs Services to take action against goods infringing on intellectual property rights, such as counterfeit goods bearing a registered trademark without authorisation of the trademark holder, pirated goods and goods infringing on certain intellectual property rights (patents, geographical designation, etc.), was repealed by the Law on Customs Measures for Protection of Intellectual Property Rights (Law No.03/L 170). Intellectual property rights protected under this law include rights registered in any country (not only in Kosovo); but the infringement is to be defined by the legislation applicable in Kosovo. Actions by the Customs Service of Kosovo may be initiated either by the holder of rights or by a Customs Officer who suspects intellectual property right infringements as a result of the importation or transit of goods and notifies the person considered to be the holder of the rights in question. The law stipulates comprehensive enforcement measures to protect intellectual property rights, such as the suspension of the goods, their detention and seizure as well as severe financial sanctions.
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Guide to: Kosovo

9.

ENVIRONMENTAL LAWS

According to the Laws on Environmental Protection (Law No. 03/L-025) and on Environmental Impact Assessment (Law No. 03/L-214), Environmental Impact Assessment is required inter alia for projects in the following sectors: industry, mining, energy, traffic, tourism, agriculture, forestry, and water management. Projects that are subject to an Environmental Impact Assessment cannot commence without an Environmental Permit from the Ministry of Environment and Spatial Planning. For other projects, which may cause damage to the environment but for which an Environmental Impact Assessment is not required, a municipality environmental license needs to be obtained. Additionally, there are also a Law on Air Protection (Law No. 2004/30, promulgated by UNMIK Regulation No. 2004/48), a Waste Law (Law No. 027/L-30, promulgated by UNMIK Regulation No. 2006/31) and a Water Law (UNMIK Regulation No. 2004/41). The Ministry of Environment and Spatial Planning and local municipalities (who each have inspectorates) are responsible for executing and specifying the general conditions as set out in the above mentioned laws. There is a considerable amount of secondary legislation critical to interpreting the laws, which has not yet been drafted or is in the process of being drafted. In addition, there are some pending laws, including one law on environmental permits.

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Guide to: Kosovo

10.

ARBITRATION

Arbitral awards made by an arbitral tribunal inside or outside of Kosovo are recognised and declared enforceable by the Kosovo courts under the Law on Arbitration (Law No. 02/L-75, promulgated by UNMIK Regulation no. 2008/30). This law establishes a set of rules which apply to arbitration agreements, arbitration proceedings, jurisdiction of arbitral tribunals and the recognition and enforcement of arbitral awards. Arbitration is also expressly recognised under the Law on Foreign Investment (Law No. 02/L-33). Furthermore, the Law on Contested Procedure (No.03/L-006) complements the rules of arbitration and the development of the procedure before the arbitral tribunal, while the Law on Executive Procedure (Law No. 03/L-008) is of primary importance after the issuing of the final arbitral award and in the stage of the enforcement of the award30. Even though the Kosovo courts recognise foreign arbitral awards, their enforcement often turns out to be difficult and therefore disputes can take a long time to resolve. Kosovo courts enforce arbitral awards made outside of Kosovo if they are recognised and published as enforceable. Therefore a request for recognition and enforcement has to be submitted to the Court.

30

Kosovo Permanent Tribunal of Arbitration; http://www.kosovo-arbitration.com/en/kosovo-arbitration-legislation/l008

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Guide to: Kosovo

11.

MINING AND ENERGY

Kosovo has a Law on Mines and Minerals (Law No. 03/L-163), which regulates the issuance of mining licenses (exploration and exploitation), and a Law on Energy (Law No. 03/L-184), which, together with the Law on Electricity (Law No. 03/L-201), regulates energy licenses. Foreigners can apply for such licenses.

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12.

BANKING AND INSURANCE

In 2011, the Law on Banks, Microfinance Institutions, Non Bank Financial Institutions (Law No. 04/l-093) entirely replaced both UNMIK Regulations on Banking and Insurance (Regulations No. 1999/21 and 2008/28). The purpose of this law is to foster and maintain a stable financial system through promoting the sound and prudent management of banks, microfinance institutions and other Non Bank Financial Institutions (NBFIs) as well as to provide an appropriate level of protection for the depositors interests. Under this law, the Central Bank of Kosovo (CBK) has the sole responsibility for the issuance of licenses to all banks, the registration of all Microfinance Institutions and NBFIs and for the issuance of permits to foreign banks with respect to the establishment of representative offices. With regard to a foreign bank which is licensed to operate in Kosovo through one or more branches, the provisions of this Law directly apply to the foreign bank, save where either the Law expressly provides for it to be applied solely to the branches or the CBK deems this appropriate. While foreign banks are not subject to the same minimum capital requirements as domestic banks, they are however bound by other rules regarding ratio of claims on residents of Kosovo to liabilities to residents of Kosovo.

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13.

PRIVATISATION

A very important aspect of the Kosovo economy is the privatisation of socially-owned enterprises ("SOEs") and publicly owned enterprises ("POEs"). 13.1 Privatisation of SOEs

The so called Privatisation Agency of Kosovo (PAK; Law No. 05/L-034) was established as the successor of the Kosovo Trust Agency, regulated by UNMIK Regulation 2002/12 On the establishment of the Kosovo Trust Agency and took over its agenda31. It is responsible for the administration, privatisation and liquidation of SOEs. In the past, around 300 new companies were created from privatised SOEs and there are still up to 200 SOEs left to be privatised by the Kosovo Privatisation Agency. According to certain sources, 498 NewCo-s have been tendered for sale and 397 sales contracts signed, with total privatisation proceeds (received and banked) amounting at EUR 392.281.978. SOEs are privatised through spin-offs and voluntary liquidation. The 'Spin-Off' is a two-step procedure whereby the assets of the SOEs are transferred to a joint stock company, which initially will be 100 % owned by the SOE. The PAK is then able to sell shares to private investors. The proceeds from the sales are held in trust by the PAK, without prejudice to ownership or creditor claims against the old enterprise. The Liquidations allow an inexpensive exit from the market for those enterprises which clearly have no survival prospects. Proceedings would be out of court following the procedures outlined in the Law on Business Organisations (UNMIK Regulation No. 2008/26). 13.2 Privatisation of POEs

Before shares of a Central POE can be sold, the Government has to adopt a written decision authorising the Government Privatisation Committee to proceed with the tender offer and the sale of the shares. Such a government decision has to be approved by a simple majority vote of the Assembly of Kosovo.

31

Work Report of English_Ver.pdf

the

Privatisation

Agency

of

Kosovo;

http://www.pak-ks.org/repository/docs/090904-

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Guide to: Kosovo

The POE Law states that a Privatisation Committee consisting of 5 (five) ministers shall be responsible for the tender, which shall be conducted according to the procedure set out in the Law on Public Private Partnerships and Concessions in Infrastructure and the Procedures for their Award (Law No. 03/L-090). These procedural rules correspond in essence to the other concession rules in the CEE/SEE region. The general structure of the tender procedure is as follows: Publication of tender notice (i.e. invitation to participate in the pre-selection proceedings) Pre-selection of bidders Request for proposals (either in a single-stage procedure or a two-stage negotiated procedure) Submission of proposals Evaluation of proposals Final negotiations with the best bidder Award

Under certain circumstances, the Law on the Procedure of the Award of Concessions allows for the awarding of a contract without a prior tender procedure (e.g. in case of an unsolicited proposal for concession). However, since the relevant provisions are tailored to the award of concession contracts, it is doubtful whether these exemptions may be invoked with regard to a privatisation process.

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Guide to: Kosovo

14.

ENTRY AND EXIT FROM KOSOVO

The new Law on Foreigners (Law No. 04/L-069) provides regulations for the entry, stay and departure of foreigners in Kosovo. A foreigner, in terms of this law is a person, who is not a national citizen of the Republic of Kosovo. According to the new Law on Foreigners a foreigner may only enter the Republic of Kosovo with a valid travel document, in which a Visa or a permission to stay is recorded. Responsible for the issuance of Visas are the diplomatic missions and / or consular offices of the Republic of Kosovo (as well as other bodies authorised by the government of Kosovo). In practice, border authorities do not apply this new Visa regulation to citizens of European Countries, the US or Canada. There is a mutual treaty with Turkey. Visitors from countries which require visa for the EU are more likely to face an entry problem, and should therefore seek an invitation or authorisation prior to arrival. If resident for more than 90 days, registering visitors must apply for a Kosovo temporary residency permit document, which is similar to those issued to residents, no later than 30 days prior to the expiration of the temporary stay term. In practice, this materially facilitates entry and exit and avoids the need for entry/exit stamps in one's passport and allows for such a person to act as the authorised representative of a branch office. This is also necessary if, for example, one wishes to register one's vehicle. Due to the fact that Serbia does not recognise Kosovo borders, exiting from Kosovo via Serbia is only possible if one's entry into Kosovo or Serbia was via a Serbian policed border.

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Guide to: Kosovo

15.

REGISTRATION OF VEHICLES, INSURANCE, IMPORT OF PERSONAL EFFECTS

Third party liability insurance is compulsory for vehicles. As Kosovo is not part of the international Green Card scheme, foreign registered vehicles must buy separate transit insurance either at the border or at the Kosovo insurance centre. An ex-pat can bring his/her vehicle into Kosovo and register it in Kosovo on a temporary basis for up to 3 (three) years without paying customs, provided it has not been deregistered overseas. No personal vehicle older than 8 (eight) years may be imported into Kosovo. However, this provision seems not to be enforced. KS plates are not recognised by Serbia. Vehicles with KS plates are however permitted to enter Macedonia, Montenegro, Albania, Bulgaria, Turkey, Greece, Croatia and most EU countries (with the exception of Spain and Slovakia), but insurance must be purchased in those countries. Personal property of up to a certain value (which is more than 6 (six) months old) can be brought into Kosovo without customs duties on a temporary basis by international staff.

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Guide to: Kosovo

16. 16.1

IMPORTANT LINKS AND ADDRESSES Websites of Institutions in Kosovo Republic of Kosovo Assembly: http://www.assembly-kosova.org/ The Office of the Prime Minister of Kosovo: http://www.kryeministri-ks.net Ministry of Trade and Industry of Kosovo: http://www.mti-ks.org/ Ministry of Finance and Economy: http://www.mfe-ks.org/ Ministry of Science, Education and Technology of Kosovo: http://www.masht-gov.net Ministry of Agriculture, Forestry and Rural Development: http://mafrd-ks.org/ Ministry of Labour and Social Welfare: http://www.mpms-ks.org/ Ministry of Transportation and Telecommunications: http://www.mtpt.org/ Ministry of Environment and Spatial Planning: http://www.ks-gov.net/mmph/ Ministry of Public Services: http://www.ks-gov.net/mshp Ministry of Justice: http://www.md-ks.org Ministry of Internal Affairs: http://www.mbp-ks.org Ministry of Energy and Mining: http://www.ks-gov.net/mem Ministry of Local Government Administration: http://www.mapl-ks.net Ministry of Culture, Youth, Sports and Non Residential Issues: http://www.mkrs-ks.org
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Guide to: Kosovo

Ministry of Health: http://www.mshgov-ks.org Ministry for Community and Return: http://www.ks-gov.net/mkk Kosovo Tax Administration: http://www.atk-ks.org Central Bank of the Republic of Kosovo: http://www.bqk-kos.org/ ICMM Independent Commission for Mines and Minerals: http://www.kosovo-mining.org/ The Kosova Business Registration Agency: http://www.arbk.org/ Privatisation Agency of Kosovo: http://www.pak-ks.org/ Kosovo Customs: http://www.dogana-ks.org Statistical Office of Kosovo: http://www.ks-gov.net/esk/ Society of Certified Accountants and Auditors of Kosovo: http://www.scaak-ks.org/ The Kosovo Pension Savings Trust: http://www.kpst.org/ Kosovo Energy Corporation: http://www.kek-energy.com/ Post and Telecommunications of Kosovo: http://www.ptkonline.com/ 16.2 Websites of International Institutions in Kosovo UNMIK United Nations Interim Administration Mission in Kosovo: http://www.unmikonline.org/ European Union Special Representative in Kosovo: http://www.eusrinkosovo.eu/en International Civilian Office in Kosovo: http://www.ico-kos.org
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Guide to: Kosovo

EULEX Kosovo European Union Rule of Law Mission: http://www.eulex-kosovo.eu European Union in Kosovo: http://www.euinkosovo.eu World Bank - Kosovo: http://www.worldbank.org/kosovo The European Commission Liaison Office to Kosovo (ECLO): http://www.delprn.ec.europa.eu UNDP United Nations Development Programme - Kosovo: http://www.ks.undp.org/ OSCE Mission in Kosovo: http://www.osce.org/kosovo United States Agency for International Development Pristina Office: http://usaid.gov/kosovo 16.3 Important Addresses in Kosovo

16.3.1 Banks Raiffeisen Bank UK Street No 51 10000 Pristina Tel.: +381 38 222 222 Fax: +381 38 222 222 http://www.raiffeisen-kosovo.com info@raiffeisen-kosovo.com Prokredit Bank Nna Terez Street No 16 10000 Pristina Tel.: +381 38 555 777 Fax: +381 38 248 777 http://www.procreditbank-kos.com info@procreditbank-kos.com Bank for Business UK Street No 41 10000 Pristina Kosovo / UNMIK Tel.: +381 38 244 666 Fax: +381 38 243 656, 657 http://www.bpb-bank.com hq@bpb-bank.com NLB Pristina Rexhep Luci Street No 5 10000 Pristina Tel.: +381 38 246 180 Fax: +381 38 246 189 http://www.kasabank.com kasabank@kasabank.com Economic Bank Migjeni Street No 1 10000 Pristina Tel.: +381 38 22 53 53 Fax: +381 38 22 54 54 http://www.bekonomike.com bek@bekonomike.com TEB Bank Agim Ramadani No 15 10000 Pristina Tel.: +381 38 230 0000 Fax: +381 38 224 699 http://wwww.teb-kos.com

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Guide to: Kosovo

16.3.2 Insurance Companies DARDANIA Insurance Company Nna Terez Street Pristina Tel.: +381 38 244 080,+381 38 244 081 SIGAL part of Uniqa Austria Rruga UCK No 60 Pristina Tel. Fax: +381 38 240 241 http://www.sigal.com.al info@sigal-ks.com SIGMA part of Vienna Insurance Company Branch "Sigma" Pashko Vasa Street p.n Pristina Tel.: +381 38 246 301, +381 38 246 302 CROATIA SIGURIMI Insurance Company Fehmi Agani Street 69, D/1-2 Pristina Tel.: +381 38 246 956 Fax: +381 38 246 957 http://www.crosig.hr info@crosig.hr SIGKOS Sylejman Vokshi Red Palace 10000 Pristina Tel.: +381 38 24 00 22 Fax: +381 38 24 02 22 http://www.sigkos.com info@sigkos.com Insurance Association of Kosovo Sylejman Volkshi Street No 12 10000 Pristina Tel.: +381 245 110 Fax: +381 245 110 http://www.iak-ks.com info@iak-ks.com

DUKAGJINI Insurance Company Nna Terez Street No 33 Pristina Tel.: +381 38 225 385 Fax: +381 38 225 384 http://www.insurancedukagjini.com info@insurancedukagjini.com KOSOVA E RE Insurance Company Agim Ramadani No 1 Pristina Tel.: +381 38 224 815 Fax: +381 38 28 823 http://www.kosovaere.com info@kosovoaere.com SIGURIA Insurance Company Qamil Hoxha Street No 15 Pristina Tel.: +381 38 248 850 http://www.siguria.info info@siguria.info INSIG Tirana Branch "ISIG" Pristina Q. pejton, Rr Pako Vassa No 6 Pristina Tel.: +381 44 136 986 http://www.insig.com.al support@insig.com.al

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Guide to: Kosovo

16.3.3 Business Support Solutions Economic Initiative of Kosovo (ECIKS) Central and Eastern European Business Information Center (CEEBIC) Nussdorfer Strasse No 20/23 A-1090 Vienna, Austria Tel.: +381 38 549 516 Tel.: +43 1 890 50 26 Fax: +381 38 549 890 Fax: +43 1 890 50 26 26 http://www.eciks.org info@eciks.org Kosova Chamber of Commerce Mother Teresa Street No 20 Pristina Tel.: +381 38 224 741 Fax: +381 38 224 299 http://www.kosovo-eicc.org/oek/ oek@ek-kcc.org Riinvest Institute Rexhep Mal No 18 Pristina Tel.: +381 38 249 320 Fax: +381 38 244 540 http://www.riinvestinstitute.org riinvest@riinvestinstitute.org Kosovo Business Support KBS Nazim Hikmet Street No 116 Pristina Tel.: +381 38 243 631 Fax: +381 38 517 216 Investment Promotion Agency of Kosovo (IPAK) Muharrem Fejza str. N.n, Lagja Spitalit Pristina Tel.: +381 38 200 36 527 Fax: +381 38 212 807 http://www.invest-ks.org info@invest-ks.org 16.3.4 Additional Reading Kosovo (Bradt Travel Guide Kosovo): A tourist, historical and geographical guide published in English (revised edition July 2008) and available at www.amazon.com or www.amazon.de. The authors are Gail Warrander and Verena Knaus. World Bank Office Tirana Street No 35 Pristina Tel.: +381 38 549 459, +381 38 549 998 Fax: +381 38 549 780 http://www.worldbank.org American Chamber of Commerce in Kosovo Gustav Majer No 6 10000 Pristina Tel.: +381 38 246 012 Fax: +381 38 248 012 http://www.amchamksv.org info@amchamksv.org Kosovo Regional Enterprise Agency Str. UCK n.n. Pristina Tel.: +381 38 245 343 Fax: +381 38 244 952 SME Support Agency of Kosova http://www.sme-ks.org

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Wolf Theiss is one of the largest and most respected law firms in Central, Eastern and Southeastern Europe (CEE/SEE). Since starting out in Vienna over 50 years ago, we have grown to a team of several hundred people, with offices throughout the region. During that time, we have worked on many cases that have broken new ground. We concentrate our energies on a unique part of the world: the complex, fast-moving markets of the CEE/ SEE regions. This is a fascinating area, influenced by a variety of cultural, political and economic trends. We enjoy analysing and reflecting on those changes, drawing on our experiences working on a wide range of domestic and cross-border cases.
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