The following categories or sources of income are subject to PIT:
- The use of intangible property.
- Interest, except interest that is exempted under the PIT law.
- Replacement income, such as reimbursement or compensation for medical treatment and expenses.
- Capital gains resulting from sale of a capital asset, including movable property, immovable property, and securities.
- Lottery winnings and winnings in games of chance.
- Pensions paid according to the respective Law on Pensions in Kosovo.
In addition to wages, income from employment also includes bonuses, per-diems, health and life insurance premiums, employee debt forgiveness, payment of employee’s personal expenses, and benefits in kind exceeding EUR 65/month.
Income from wages does not include reimbursement of business travel expenses; indemnity for accidents at work; reimbursement of public transportation costs or 0.16 EUR/km for distances longer than 20km; and compensation for food and transportation when organised by the employer.
Any compensation in addition to the wage, monetary or non-monetary, provided by an employer to an employee is subject to PIT. There are no specific rules on the manner of taxation of employee stock-option plans.
Self-employment income is taxed in accordance with the PIT rates.
Gross incomes from capital gains are realised through the sale or other disposition of capital assets, including real estate and securities.
Capital gains are taxed in accordance with the PIT rates.
Dividends received by resident and non-resident taxpayers are exempt from PIT.
Gross income from interest includes:
- Interest from loans made to persons or entities.
- Interest from bonds or other securities issued by business organisations.
- Interest from (savings) accounts that accrue interest (where tax is usually withheld by banks or other financial institutions).
Gross income from interest does not include interest earned from the assets of the Kosovo Pension Savings Trust or any other pension fund defined under legislation on pension savings in Kosovo.
Interest on financial instruments that are issued or guaranteed by a Public Authority of Kosovo (i.e. government bonds) paid to resident or non-resident taxpayers are exempted from PIT.
Gross income from rents includes the following:
- Income generated by rental of real estate, such as buildings, land, or apartments.
- Income generated by rental of equipment, transport vehicles, and other kinds of property.
Regardless of the above, income from rent generated by persons involved in economic activities of rental of movable or immovable property for clients shall be treated and taxed as income from economic activities.
Exempt income for PIT purposes includes:
- Wages earned by foreign staff of diplomatic missions, international organisations, donor agencies or their contractors, the United Nations (UN) and its agencies.
- Wages of persons with disabilities.
- Compensation received from expropriation.
- Compensation received from court decisions.
- Compensation received from state institutions for achievements in science, sports, and culture.
- Inherited assets (subject to certain rules).
- Education, scholarship, and training expenses paid for by the employer and subsistence expenses, subject to certain restrictions.