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Republika e Kosovës
Republika Kosovo -Republic of Kosovo
Kuvendi – Skupština – Assembly

LAW Nr.03/L – 146

ON VALUE ADDED TAX

Assembly of Republic of Kosovo,

In support of Article 65 (1) of the Constitution of the Republic of Kosovo,

Approves ,

LAW ON VALUE ADDED T AX

CHAPTER I

GENERAL PROVISIONS

Article 1
Purpose

This Law establishes the system of Value Added Tax (VAT) in the territory of the
Republic of Kosovo.

Article 2
Definitions

1. The terms used in this Law have the following meanin g:

1.1. TAK – the Tax Administration of Kosovo.

1.2. VAT – Tax on Added Value includes application of overall tax in consumption
for goods and services that is exactly proportional wit h the cost of goods and

2
services. VAT is calculated in this cost accordin g to the applicable norm, it is
loaded in different phases of the production, delivery and living cycle of the trade
with goods and services, and in the end it is carried forward from the last
consumer.

1.3 . Director -General Director of Kosovo Tax Admini stration.

1.4. The right in rem -essentially it is a right granted by her owner to use and gain
benefits (goods) of the immovable property. Forms of rights in rem are usufruct
and long term leasing and other similar rights as defined in Kosovo legislation .
Mortgages and loads are not considered as right in rem.

1.5. Capital goods – goods likewise equipment and machinery used for the
production of other goods and services with a useful service life of one year or
more and acquired for a cost price equal to or more than one thousand ( 1,000 ) €.

1.6. Tangible property – any property which is not intangible property and shall
include:

1.6.1. interest in immovable property,

1.6.2. rights in rem giving the holder of those rights a right of use over
immovable p roperty ; and

1.6.3. shares or interests equivalent to shares giving the holder de jure or
de facto rights of ownership or possession of immovable property or any
part of immovable property.

1.7. Intangible property – patents, copyrights, licenses, franch ises, and other
property that consists of right s only, but are incorporeal .

1.8. Consideration – any act or act of forbearance in respect of a supply of goods
or services, and shall include any amount that is payable or goods received in a
barter transact ion.

1.9. Barter transaction – a transaction that involves two parties, where one party
provides for the other party goods, services or asset excluding the cash money, in
exchange for the goods, service or mean excluding the cash money.

1.10. Economic ac tivity – any activity of producers, traders or persons supplying
goods or services including mining and agricultural activities and activities of the
professions. The exploitation of tangible or intangible properties for the purposes
of obtaining income th erefrom on a continuing basis shall in particular be
regarded as an economic activity.

1.11. Employer – any person who pays wages and includes:

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1.11.1. A public authority,

1.11.2. A business organization,

1.11.3. A permanent establishment of a non -resi dent as defined in the
Corporate Income Tax legislation,

1.11.4. A non -governmental organization,

1.11.5. An international organization,

1.11.6. A foreign government ; and

1.11.7. A physical person who pays wages in the course of carrying on
business i n Kosovo,

1.12. Employee – a physical person bound to an employer by a contract of
employment or by any other legal ties creating the relationship of employer and
employee as regards working conditions, remuneration and the employer’s
liability, regardle ss of whether the work is performed under a contract, some other
commercial agreement, or whether there is a written or an unwritten agreement.
An employee includes all public officials and members of executive,
representative and judicial bodies.

1.13. Resident in Kosovo – a person that has a business place or a fixed unit, or
in a short fall of such business place or a fixed unit, has a place with permanent
address or where he usually resides in Kosovo.

1.14. Derogation – for the pur pose of implement ation of this L aw, derogation
means non -implementation or exclusion from general or standard rule of this
law’s provision.

1.15. Rebate – paid reduction for purchasers after the transaction. Examples
include total or partly repayment of money from the se ller on returned goods or
on misfit of the goods quality.

1.16. Reductions (Sales) – reduction from the list or the cost of advertised good
or service that is available for buyers in specific conditions.
Examples include reduction of cash money, reducti on for quick payments,
reductions in volume, trade discounts.

1.17. Fiscal Electronic Device (FED) – for the purpose of this L aw term “Fiscal
Electronic Device” includes electronic devices such as fiscal cash registers and
electronic devices on the sales points which shall be licensed and authorized from
authorized bodies of the Ministry of Finances in order to be recognized as fiscal.
These devices use electronic developed memories integrated in cash registers or

4
developed systems with computer basis for registering the selling transactions,
their printings through fiscal printers and their certification through fiscal
electronic devices for endorsement and similar devices. Fiscal Electronic Device
is used for issuance of fiscal vouchers for the incomes. Issuance of vouchers for
incomes does not depend on the payment manner (payment with cash money,
payment with credit card or any equivalent payment instrument ex. payment with
cheque).

1.18. Reimbursement for returned good – for the purpose of this law me ans
reimbursement of the total or partly selling co st of a good, which is returned when
the selling cost is registered in Fiscal Electronic Device in compliance with this
Law.

1.19. Cash Back – bank instrument through which the client after purchasing the
goods uses debit card to pay the bought goods and at the same time withdraws
cash money from his account through the cashier. These two actions are done
with a card payment

1.20. Output tax – VAT on supplies which a taxable person makes or goods a
taxabl e person exports.

1.21. Input tax – means:

1.21.1. VAT due from or paid by a taxable person in respect of goods or
services supplied or to be supplied to him by another taxable person; and

1.21.2. VAT due from or paid by a taxable person in respect of i mported
goods.

1.22. Taxable supply – any supply of goods or services made in the furtherance
of any economic activity developed in Kosovo, other than an exempt supply.

1.23. Exempt supply and exempted supply – any supply of goods or services
made in the furtherance of any economic activity carried on in Kosovo, for which
the taxable person – supplier is not entitled to charge VAT to the customer,

1.24. Entity :

1.24.1. A corporation or other business organization that has the status of a
legal person as defined by the Law on Business Organizations ;

1.24.2. A business organization operating with publicly and socially
owned assets,

1.24.3. A non -governmental organization; and

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1.24.4. A permanent establishment of a non -resident.

The term entity does n ot include a personal business enterprise or a partnership.

1.25. Person – a physical person, a legal person or an entity and shall, for the
purposes of VAT, include a partnership and a grouping of persons.

1.26. Legal person – a corporation or other bus iness organization that has the
status of a legal person under the Law on Business Organizations and other
legislation applicable in Kosovo.

1.27. Partnership – a general partnership and a limited partnership that is not a
legal person under the Law on Bu siness Organizations and that normally
proportionately shares items of capital, income, profit and loss among its partners.

1.28. Non -governmental organization – any foundation, association or
organization registered as a non -governmental organization und er legislation
regulating the registration and operation of Non -Governmental Organizations in
Kosovo.

1.29. Grouping of persons for VAT purposes – an association of persons set up
for a common purpose to develop a special economic activity, including
con sort iums but excluding partnerships .

1.30. Chargeable event of VAT – the occurence through which the legal
conditions necessary for VAT to become chargeable are fulfilled.

1.31. Chargeability of VAT – when the TAK becomes entitled under this Law, at
a g iven moment, to claim VAT from the person liable to pay, even though the
time of payment may be deferred.

1.32. Tax invoice – an invoice or any other do cument required by Chapter 15 of
this Law to be issued by a taxable and non -taxable person in connectio n with the
supply of goods and services.

1.33. Credit note – a document issued by a taxable person to a recipient of goods
or services after a tax invoice or a document serving as an invoice has been
issued, for the purposes of an adjustment, where the am ount of VAT charged on
the tax invoice or a document serving as an invoice exceeds the actual VAT due
for that taxable supply.

1.34. Debit note – a document issued by a taxable person to a recipient of goods
or services after a tax invoice or a document serving as an invoice has been
issued, for the purposes of an adjustment, where the amount of VAT charged on
the tax invoice or a document serving as an invoice is less than the actual VAT
due for that taxable supply.

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1.35. Fiscal receipt, Coupon – a doc ument that has some, but not all, of the
attributes of an invoice referred to in Chapter 15 of this Law and therefore cannot
be used as evidence of entitlement to deduct input VAT referred to in Chapter 13
of this Law,

1.36. Export and exportation – good s going out of Kosovo.
For the purposes of the present law, the placin g of goods into a free zone or
customs procedures or arrangement having the same effect also means export,

1.37. Import, imported and import ation – goods entering within Kosovo. For
the purpose of this law import also means placement of goods on free movement
from free zone in Kosovo or customs procedure or arrangements that have the
same effect.

1.38. Single Administrative Document – a document as determined by Customs
legislation i n force which is used within the framework of trade of goods with
third countries including Customs procedures connected to such trade.
Customs procedure, Customs arrangements, customs warehouses and other
Customs terminology such as free zone, temporary s torage, suspension regimes,
inward and outward processing, reimportation, international transport and others
have the meaning given by t he Customs legislation in force .

1.39. Turnover or Total supplies – the supplies made by a person and includes
the tax able and exempt supplies as defined by this Law.

1.40. Flat Rate scheme for farmers – a taxation scheme tending to offset the
value added tax charged on purchases of goods and services made by the flat rate
farmers through adding an additional amount on the price of the supplies made by
such farmers to their purchasers -taxable persons.That additional amount is
calculated as a percentage of the price and is called flat rate percentage which
varies according to the category of farming activity.The flat -rate percentages are
defined on basis of relevant macro -economic statistical data which allow to
calculate the compensation of input VAT on the purchases made by flat -rate
farmers.

1.41. Flat -rate farmer – a farmer subject to the flat -rate scheme as referred to in
Article 60 of this Law.

1.42. Kosovo – The Republic of Kosovo.

1.43. Independent Review Board – means the Board established under the Law
on Tax Administration and Procedures, to hear tax appeals from taxpayers.

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Article 3
Object of Taxation

1. VAT shall be charged in accordance with the provisions of the present Law, on:

1.1.s upply of goods and services made for consideration within the territory of
Kosovo b y a taxable person as meant by A rticle 4 of this Law and acting as such,
and

1.2. t he importation of goods in Kosovo.

2. VAT on importation shall be charged and payable in accordance with the arrangements
for Customs duties.

CHAPTER II

TAXABLE PERSONS

Article 4
Taxable persons

1. Taxable person is any person who is, or is required to be registered for VAT, and who
in Kosovo independently carries out any economic activity in a regular or non – regular
manner, whatever the purpose or results of that economic activity.
Any activity of producers, traders or persons supplying goods and ser vices, including
mining and agricultural activities of the professions, shall be regarded as “economic
activity”. The exploitation of tangible or intangible property for the purposes of obtaining
income therefrom on a continuing basis shall in particular b e regarded as an economic
activity.

2. In paragraph 1 of this A rticle, the meaning of the term “independently” excludes
employed and other persons from VAT in so far as they are bound to an employer by a
contract of employment or by any legal ties creati ng the relationship of employer and
employee as regards working conditions, remuneration and the employer’s liability.

3. Authorities of Central and local level and other bodies regulated by L aw shall not be
regarded as taxable persons in respect of the a ctivities or transactions in which they
engage as public authorities, even where they collect du ties, fees, contributions or
payments in connection with those activities or transactions. However, when they engage
in the activities or transactions as define d in Annex 1 to this Law, they shall be regarded
as taxable persons in respect of these activities or transactions provided that those
activities are not carried out on such a small scale as to be negligib le or if carried out by
natural or legal persons, where such persons would not have been obliged to register for
VAT purposes as referred to in A rticle 6 of this Law.

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4. Bodies of International organizations and foreign countries and their agencies shall not
be regarded as taxable persons in respect of th e activities or transactions similar o r
identical to those mentioned in paragraph 3 of this A rticle, even if they receive payments
in connection with those activities. However, agencies of foreign countries shall be
regarded as taxable persons in respect o f those activities or transactions where their
treatment in their own country would result in considering those activities as being
carried out by a taxable person.

Article 5
Certification for import and export

1. Every person involved in economic activ ities, shall prior to making his first export or
import , notify TAK in advance of such activity and request certification for this activity.

2. TAK will determine the procedure and the conditions for obtaining such certification.

Article 6
General pr ovisions in respect of Requirement to be registered and issuance of
registration certificate

1. Every person who meets all conditions of the definition of taxable person referred to in
Article 4 of this Law, is required to register for VAT from the moment when total
supplies in the previous twelve ( 12 ) month period, exceeds a threshold of fifty thousand
(50,000 )€. The month in which the threshold is exceeded counts for the twelve ( 12 )
months period calculation. Only that proportion of the supply which resu lts in surpassing
the threshold will be taken into consideratio n for purposes of VAT.

2. When a person is registered for VAT purposes, TAK shall issue such taxable person
with a registration certificate containing his name, his fiscal number and unique V AT
registration number taxpayer and address or addresses where that person carri es on
business activity. The original, respectively a certified copy of the registration certificate
shall be displayed at each place of business activity so that it can be eas ily seen and read
by the public. The form of the registration certificate shall be provided by TAK.

3. A physical person conducting the same or differen t economic activities and has several
places of economic activity within Kosovo, shall be identified by one individual and
unique VAT registration number for the purposes of this Law. Where a physical person
got registered for VAT purposes under his personal identification number, TAK shall
issue to such person one registration certificate a s meant by parag raph 2 of this A rticle,
containing his name, his fiscal number and unique VAT registration number and the
address or addresses of the places where that person carries on business.

4. A partnership and grouping of persons shall be identified by one single VAT
registration number for the purposes of this Law. A general partner -representative,

9
respectively member -representative shall be appointed by the partners or members for
fulfilling the obligations and excersing the rights defined by this Law. Where the partners
and members are not yet registered for VAT purposes, they may opt for being registered
for these purposes prior to the registration of the partnership or grouping of persons.

5. The persons not established in Kosovo are subject to VAT registratio n, from the
beginning of their economic activity in Kosovo, regardless of the threshold defined in
paragraph 1 of this article. Such taxable persons not established in Kosovo shall appoint a
tax representative as referred to in paragraph 5 of A rticle 52 of this Law except for those
cases mentioned under sub -paragraph 4 of Article 52 of this Law. The taxable person
shall be registered under his own name and the name of his tax representative within five
(5) days after the appointment as tax representative an d prior to the starting of economic
activity in Kosovo.

6. TAK shall treat any person carrying on the economic activity of a taxable person who
dies or becomes bankrupt or incapacitated as if he were registered for VAT purposes
from the date on which the taxable person died or became bankrupt or incapacitated until
some other person is registered.

Article 7
Compulsory Registration – Compulsory communication of changes in registration
data

1. Every person, except otherwise provided in this Law, is oblig ed to register upon
reaching the threshold referred to in paragraph 1 of A rticle 6 of this Law and shall notify
the TAK within fifteen ( 15 ) calendar days from the date that the registration obligation
arises. The registration has effect from the date that the threshold is exceeded.

2. Every person who has not notified and has not been register ed in due time shall be
registered in a compulsory way by TAK with retroactive effect as of the date of
exceeding the threshol d as defined in paragraph 1 of Article 6 above .

Article 8
Voluntary Registration

1. Every pe rson meeting the conditions of A rticle 4 of this Law, but not fulfilling the
registrat ion requirement referred to in A rticle 6 of this Law, has the right to exercise the
option for being r egistered and shall notify TAK accordingly.

2. TAK shall register such person with effect from the date of receiving the request if the
person making the r equest meets the conditions of A rticle 4 of this Law.

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3. Voluntary registered taxpayers are subject to the same rules in respect of change and
cessation of activity as other registered taxa ble persons in accordance with A rticle 6 of
this Law.

Article 9
Cancellation of registration

1. Every registered taxable person may request that TAK cancel his reg istration for VAT
purposes if his total supplies over the last twelve ( 12 ) calendar months, has fallen belo w
the threshold referred to in A rticle 6 of this Law. The cancellation has effect twelve ( 12 )
months after the date of the submission of the request .

2. Every registered taxable person is obliged to require the cancellation from the moment
of ceasing his activity. He shall notify TAK within fifteen ( 15 ) days after the cessation of
his activity. Such cancellation has effect from the date of notificati on of the cessation of
activity.

3. TAK may cancel the registration of a taxable person registered for VAT purposes
where such person fails to comply with the provisions of this Law. TAK shall notify the
person of the decision and provide the reasons fo r the decision.

4. The Minister of Economy and Finance shall issue a sub -legal act to determine the
procedures in respect of the im plementation of the articles 7, 8 and 9 of this Law. This
sub -legal act shall also provide specific threshold calculation ru les for categories of
persons whose turnover is for the majority composed of exempt supplies.

CHAPTER III

TAXABLE TRANSACTIONS

Article 10
Supply of goods

1. Supply of goods means the transfer of the right to dispose of tangible property as
owner.

2. In addition to the transaction referred to in paragraph 1 of this Article, each of the
following shall be regarded as a supply of goods:

2.1.The transf er of the ownership of property against payment of compensation:

2.1.1. By order made by a public A uthority, or

2.1.2. In the name of a public authority, or

11

2.1.3. Pursuant to the provision s of the L aw,

2.2.The actual handing over of goods pursuant to a contract for the hire of goods
for a certain period, or for the sale o f goods on deferred terms, which provides
that in the normal course of events ownership is to pass at the latest upon payment
of the final instalment.

2.3.The transfer of goods pursuant to a contract under which commission is
payable on purchase or sale.

3. The handing over of certain works of construction as a supply of goods as will be
defined in a sub -legal act issued by the Minister of Economy and Finance.

4. The following is treated as tangible property:

4.1.Electricity, gas, heat, refrigera tion and the like.

4.2.The rights in rem giving the holder a right of use over immovable property
and shares or interests equivalent to shares in respect of immovable property
which gives the holder the right of ownership or possession over immovable
prop erty or a part of it.

Article 11
Application of goods of the business for non -business needs

1. The application by a taxable person of goods forming part of his business assets for
his private use or for that of his staff, or their disposal free of cha rge or, more generally,
their application for purposes other than those of his business, shall be treated as a supply
of goods for consideration, where the VAT on those goods or the component parts
thereof was wholly or partly deductible.

2. The applicati on of goods for business use as samples or as gifts of small value shall not
be treated as a supply of goods for consideration.

3. The Minister of Economy and Finance shall issue a sub -legal act for implementation of
this A rticle.

Article 12
Applicatio n of goo ds for business needs under certain VAT deduction circumstances

1. The application by a taxable person for the purposes of his business of goods
produced, constructed, extracted, processed, purchased or imported in the course of such
business, wh ere the VAT on such goods, had they been acquired from another taxable

12
person, would not be wholly deductible, are considered as a supply of goods for
consideration.

2. The application of goods by a taxable person for the purposes of a non -taxable area o f
activity, where the VAT on such goods became wholly or partly deductible upon their
acquisition or upon their application in accordance with paragraph 1 of this Article, are
considered as a supply of goods for consideration.

3.With the exception of the cases referred to in Article 13 of this Law, the retention of
goods by a taxable person, or by his successors, when he ceases to carry out a taxable
economic activity, where the VAT on such goods became wholly or partly deductible
upon their acquisition or upon their application in accor dance with paragraph 1 of this
Article, are also considered as a supply of goods for consideration.

Article 13
Transfer of business

1. No supply of goods takes place in the event of a transfer by a taxable person whether
for consideration or not or as a contribution to a company, of a to tality of assets or part of
them .

2. The person to whom the goods are transferred is to be treated as the successor to the
transferor and no VAT shall be charged on such transfer provided that the successor to
the transferor is a taxable person who is registered or required to register for VAT
purposes. The transferor and the transferee shall notify TAK of the ir intention to
implement this A rticle at least thirty days before the transfert will occur.

3. Any outstanding liability and outstanding right of the transferor provided by, or by
virtue of this law before the time of the transfer, become the liability and right of the
transferee.

4. All information, books and records relating to th e transferred business which are
required to be kept by the current VAT law or previous VAT Law or Regulations, shall
be kept by the transferee instead of the transferor unless the Director, at the request of the
transferor, otherwise directs.

5. The Mini ster of Economy and Finance shall issue a sub -legal act providing the
procedure and rules for applying this Article.

Article 14
Supply of services

1. Supply of services is any transaction which does not constitute a supply of goods.

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2. A supply of ser vices may consist, inter alia, in one of the following transactions:

2.1.The ass ignment of intangible property, whether or not the subject of a
document establishing title of ownership ,

2.2.The obligation to refrain from an act, or to tolerate an a ct or situation,

2.3.The performance of services in dependence to :

2.3.1.An or der made by a public authority;

2.3.2.In the name of a public authority ; or

2.3.3.In pursuance of the Kosovo Laws.

3. The supply of servic es for sewerage, offscourings and soil disposal by the municipal
and public bodies for consideration.

Article 15
The use of business goods for non -business needs

1. The use of goods forming part of the assets of a business for the private use of a
taxa ble person or of his staff or, more generally, for purposes other than those of his
business, where the VAT on such goods was wholly or partly deductible, shall be treated
as a supply for consideration.

2. The supply of services carried out without consid eration by a taxable person for his
private use or for that of his staff or, more generally, for purposes other than those of his
business, shall also be treated as a supply for consideration.

Article 16
The use of self -supplied services for business nee ds

1. The supply of a service by a taxable person for the purposes of his business, where the
VAT on such a service if supplied by another taxable person would not be wholly
deductible, shall be considered as a supply of a service for consideration.

2. Construction, reconstruction, repair, maintenance and cleaning work with respect of
immovable property used or to be used for existing or future economic activity and
rendered for free by a taxable person or his staff to himself, shall be treated as a supp ly of
services for consideration.

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Article 17
Services in respect of transfer of business

The provisions of Article 13 of this Law shall also apply to the supply of services in
respect of transfer of business by replacing supply of goods with supply of services.

Article 18
The supply of services in his own name but on behalf of another person

Where a taxable person acting in his own name but on behalf of another person, takes
part in a supply of services, he shall be deemed having received and supplie d those
services himself.

CHAPTER IV

PLACE OF TAXABLE TRANSACTIONS

Article 19
Place of supply of goods

1. Supply of goods without transport . Where goods are not dispatched or transported, the
place of supply is deemed to be the place where the goods a re located at the time when
the supply takes place.

2. Supply of goods with transport:

2.1.Where good s are dispatched or transported by the supplier, or by the
customer, or by a third person, the place of supply shall be deemed to be the
place where the goods are located at the time when d ispatch or transport of the
goods to the customer begins.

2.2.Where goods dispatched or transported by the supplier, by the customer or by
a third person are installed or assembled, with or without a trial run, by or on
behalf of the supplier, the place of supply shall be deemed to be the place where
the goods are installed or assembled.

3. Supply of goods on board ships, aircraft or trains:

3.1.Where goods are supplied on board ships, aircraft or trains during the sec tion
of a passenger transport operation effected within Kosovo, the place of supply
shall be deemed to be at the point of departure of the passenger transport
operation.

15
3.2.In the case of a trip beginning in Kosovo, going to a place outside of Kosovo
and then returning to Kosovo, only that part of th e trip from Kosovo to that place
outside of Kosovo shall be deemed to have taken place at the point of departure in
Kosovo.

3.3.In the case of a return trip, the return leg shall be regarded as a separate
tra nsport operation.

4. Supply of natural gas and electricity through distribution systems:

4.1.In the case of the supply of gas through the natural gas distribution system, or
of electricity, to a taxable dealer, the place of supply shall be deemed to be the
place where that taxable dealer has established his business or has a fixed
establishment for which the goods are supplied, or, in the absence of su ch a place
of business or fixed establishment , the place where he has his permanent address
or usually r esides. For the purposes of this paragraph, “ taxable dealer” means a
taxable person whose principal activity in respect of purchases of gas or
electricity is reselling those products and whose own consumption of those
products is negligible.

4.2.In the ca se of the supply of gas through the natural gas distribution system, or
of electricity, where such a supply is not covered by sub -paragraph 1 of paragraph
4 of this A rticle, the place of supply shall be deemed to be the place where the
customer effectivel y uses and consumes the goods.

4.3.Where all or part of the gas or electricity is not effectively consumed by the
customer, those non -consumed goods shall be deemed to have been used and
consumed at the place where the customer has established his busines s or has a
fixed establishment for which the goods are supplied. In the absence of such a
place of business or fixed establishment, the customer shall be deemed to have
used and consumed the goods at the place where he has his permanent address or
usually resides.

Article 20
Place of supply of service

1. Definition of taxable person for the purpose of this A rticle:

For the purpose of applying the rules concerning the place of supply of services, the
definicion of taxable person for this article shall be:

1.1. A taxable person shall be any person who,in the course of their economic
activity as referred to in Article 4 of this Law:

16
1.1.1. makes taxable and exempted supplies of goods and
services where his turnover is exceeding fifty thousand ( 50.000 ) € .

1.1.2. makes supplies of goods and services on which no VAT can be
charged where his turnover does not exceed fifty thousand (50.000) € .

1.2. Any person not included in sub -paragaph 1.1 of this A rticle shall not be
considered as a taxable per son with respekt to all services offered to him.

2. General rule and particular rules in respect of supply of services to a taxable person
acting as such.

2.1. General rule:

The place of supply of services to a taxable person acting as such shall be th e place where
that person has established his business. However, if those services are provided to fixed
establishment of the taxable person located in a place other than the place where he has
established his business, the place of supply of those service s shall be the place where
that fixed establishment is located. In the absence of such place of establishment or fixed
establishment, the place of supply of services shall be the place where the taxable person
who receives such services has his /her permane nt address or usually resides.

2.2. Particular rules :

2.2.1. Service supplies related to the immovable property: Service supply
place, related to the immovable property including services of experts and
agents for property sales, provision of accommod ation in hotel’s sector or
in sectors of similar functions, such as resting camps or places created to
be used as camping sites, issuing the right to use immovable property and
services for preparation and coordination of construction work, such as
archite cts services and firms (enterprises) offering supervision of the
place, is the place where the immovable property is placed. (Article 47)

2.2.2. supply place of passengers transport is the transport place in
proportion with covered roads.

2.2.3. supply p lace shall be the place where in fact happen cases as
following related to:

2.2.3.1. services related with allowance of entrance in cultural,
artistic, sports, science, education events or similar, such as fairs
and exhibition and related to assisting ser vices that deal with
allowance of the entrance ;

2.2.3.2. services related to cultural, artistic, sports, science,
education activities or similar such as fairs and exhibition,

17
including service supply of organizers of such activities and
assisting service s related to certain services;

2.2.4. service supply place of the restaurant and supply services with other
food from those developed physically in ships, aeroplanes or trains decks
during the operation part of passengers transport in Kosovo, shall be the
place where the services shall be conducted physically.

2.2.5. place for issuing short -term rent of transportation equipment shall
be place where in fact the transportation equipment shall be at client’s
disposal. For the purpose of this sub -paragraph” short -term” shall mean
continuous possession or use of transportation equipment during the
period not longer than thirty (30) days and in case of boats no longer than
ninety (90) days.

2.2.6. Starting point of transport operation where physically restaur ant
services are conducted and services of food supply in the ships, aeroplanes
or trains decks, during the operation part of passenger transport conducted
within Kosovo territory.

2.3. In order to avoid double tax, non -tax or distortion of competition,
M inister of Economy and Finances, regarding the services or for some of the
services whose supply place shall be regulated with paragraph 2.2 and
paragraph 2.3.5 of this Article may:

2.3.1. consider that the supply place of any or all of these services if they
happen within Kosovo territory, that are outside Kosovo if efficient use
and if domain of these services happens outside Kosovo.

2.3.2. consider that the supply place of any or all of these services, if they
happen outside Kosovo that have happened within their territory, if
efficient use and if domain of services happens within Kosovo territory.

2.3.3. If the Minister of Economy and Finances determines conditions as
described in paragraph 2.3, implementation of every change of provisions
of sub -pa ragraphs 2.3.1 or 2.3.2. shall be conducted t hrough sub -legal act
issued after the approval of the Assembly.

3. General rule and particular rules in respect of supply of services to a non taxable
persons acting as such:
3.1. General rule:
The place of sup ply of services to a non -taxable person shall be the place where the
supplier has established his business. However, if those services are provided from a
fixed establishment of the supplier located in a place other than the place where he has

18
established his business, the place of supply of those services shall be the place where
that fixed establishment is located. In the absence of such place of establishment or fixed
establishment, the place of supply of services shall be the place where the supplier ha s his
permanent address or usually resides .
3.2. Particular rules:
3.2.1. Supplies of services connected with immovable property: The place
of supply of services connected with immovable property, including the
services of experts and estate agents, the pr ovision of accommodation in
the hotel sector or in sectors with a similar function, such as holiday
camps or sites developed for use as camping sites, the granting of rights to
use immovable property and services for the preparation and coordination
of con struction work, such as the services of architects and of firms
providing on -site supervision, is the place where the immovable property
is located.

3.2.2. The place of supply of passenger transport is the place where the
transport takes place, proportio nate to the distances covered.

3.2.3. The place of supply of transport of goods is the place where the
transport takes place proportionate to the distances covered.

3.2.4. The place of supply shall be the place where the following events
actually take pl ace in respect of:

3.2.4.1 The services in respect of admission to cultural, artistic,
sporting, scientific, educational, entertainment or similar events,
such as fairs and exhibitions, and of ancillary services related to
the admission;
3.2.4.2. The serv ices in connection with cultural, artistic, sporting,
scientific, educational, entertainment or similar activities, such as
fairs and exhibitions,and of ancillary s ervices related to the
respective services;
3.2.5 The place of supply shall be the place whe re the services are
physically carried out:
3.2.5.1. In respect of supply of restaurant and catering services
other than those physically carried out on board ships, aircraft or
trains during the section of a passenger transport operation in
Kosovo.

19
3.2.5. 2. In respect of ancillary transport activities such as loading,
unloading, handling and similar activities.
3.2. 5.3. In respect of valuations and work on movable property.
3.2.6 The place of short -term hiring of a means of transport shall be the
place whe re the means of transpo rt are actually put at the disposal of the
customer -recipient.
For the purpose of this sub -paragraph, “short -term” shall mean the continuous possession
or use of the mean of transport throughout a period of not more than thirty (30) days and,
in the case of vessels, not longer than ninety ( 90 ) days.
3.2.7 . The place of supply of restaurant and catering services which are
physically carried out on board ships, aircraft or trains during the section
of a passenger operation effected with in Kosovo, shall be at the point
departure of the passenger transport operation.
3.2.8 . The place of supply of electronically supplied services which are
referred to in Annex II when supplied to non -taxable persons in Kosovo,
or who have their permanent ad dress or usually reside in Kosovo, by a
taxable person who has established his business in a country outside of
Kosovo or has a fixed establishment there from which the service is
supplied, or who, in the absence of such a place of business or fixed
establ ishment, has his permanent address or usually resides outside
Kosovo, shall be the place where the non -taxable person is established, or
where he has his permanent address or usually resides.
Where the supplier of a service and the customer c ommunicate via electronic mail, that
shall not of itself mean that the service supplied is an electronically supplied service.
3.2.9 The place of supply of the following services to a non -taxable person
who is established or has his permanent address or usually resides o utside
of Kosovo, shall be the place where that person is established, has his
permanent address or usually resides:
3.2.9.1. transfers and assignments of copyrights, patents, licences,
trade marks and similar rights;

3.2.9.2. advertising services;

3.2.9 .3. the services of consultants, engineers, consultancy firms,
lawyers, accountants and other similar services, as well as data
processing and the provision of information;

20
3.2.9.4. obligation to refrain from pursuing or exercising, in
whole or in part, a business activity or a right referred to in this
Article;

3.2.9.5. banking, financial and insurance transactions including
reinsurance, with the exception of the hire of safes;

3.2.9.6. the supply of staff;

3.2.9.7. the hiring of movable tangible prope rty, with the
exception of all means of transport;

3.2.9.8. the provision of acc ess and of transport or transmission
through, natural gas and electricity distribution systems and the
provision of other services directly linked to these ;

3.2.9.9. tele communications services;

3.2.9.10. radio and television broadcasting services;

3.2.9.11. electronically supplied services, in particular those
referred to in Annex II.

Where the supplier of a service and the customer communicate via electronic mail, tha t
shall not of itself mean that the service supplied is an electronically supplied service.

3.2.10 The place of supply in respect of telecommunications – and radio –
and broadcasting services is Kosovo if those services are supplied to
non -taxable persons w ho are established in Kosovo or who have their
permanent address or usually reside in Kosovo, by a taxable person who
has established his business outside of Kosovo or has his fixed
establishment outside Kosovo from where the services are supplied, or
who, in the absence of such a place of business or fixed establishment,
has his permanent address or usually resides outside Kosovo.

3.2.11 The place of supply of services rendered to a non -taxable person
by an intermediary acting in the name and on behalf of another person
shall be the place where the underlying transaction is supplied in
accordance with this Law.

3.3. In order to avoid double taxation, non -taxation or distortion of competition,
the Minister of Economy and Finance may, with regard to service s or for some of

21
the services the place of supply of which is governed by the paragraph 2.1, 3.2.6
and 3.2.9, (a) till (j) :
3.3.1. Consider the place of supply of any or all of those services, if situated
within Kosovo, as being outside Kosovo if the ef fective use and enjoyment of
the services takes places outside Kosovo.
3.3.2. Consider the place of supply of any or all those services, if situated
outside Kosovo, as being situated within their territory if the effective use and
enjoyment of the services takes place within Kosovo.
3.3.3 If the Minister of Economy and Finance determines that conditions
exist as described in paragaph 3.3 implementation of any revisions of the
provisions of sub -pargraph 3.3.1 or 3.3.2 shall be through a sub -legal act
issued subject to the approval of the Assembly.

Article 21
Place of importation of goods

1.General rule:
The place of importation of goods shall be where the goods are located when they enter
Kosovo.

2. Derogations:

2.1.By way of derog ation from paragraph 1 of this A rticle, where, on entry into
Kosovo, goods which are not in free circulation are placed under one of the
Customs arrangement s such as customs warehouses or other similar Customs
arrangements or under temporary importation arrangements with total exemption
from import duty, or under transit arrangements, the place of importation of such
good s shall be that place in Kosovo where the goods cease to be covered by those
arrangements or situations.

2.2.Similarl y, where, on entry into Kosovo, good s which are in free circulation
are placed under one of the arrangements or situations referred to in sub –
paragraph 1 of paragraph 2 of this A rticle, the place of importation shall be that
place in Kosovo where the goods cease to be covered by those arran gements or
situations.

2.3.The Minister of Economy and Finance shall issue a sub -legal act in which the
implementation of this paragraph shall be explained.

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CHAPTER V

CHARGEABLE EVENT AND CHARGEABILITY OF VAT

Article 22
Chargeable e vent and chargeability of VAT in respect of supply of goods and
services

1. General rule:
The chargeable event shall occur and VAT shall become chargeable when the goods or
the services are supplied.

2. Specific rules in the case of successive statement s of accounts or succcessive
payments:

2.1.Where it give s rise to successive statements of account or successive
payments, the supply of goods, other than that consisting in the hire of goods for a
certain period or the sale of goods on deferred terms, a s referred to sub – paragraph
2 of paragraph 2 of A rticle 10, or the supply of services shall be regarded as being
completed on expiry of the periods to which such statements of account or
payments relate.

2.2.The continuous supply of goods or services ove r a period of time is to be
regarded as being completed at intervals of one month.

2.3.Long term contracts including long term construction contracts and long term
installation contracts shall be regarded as completed at regular intervals but at
least at the end of each calendar year.

3. Payment on account before the goods or services, are supplied:

3.1.Where a payment is to be made or made on account before the goods or
services are supplied, VAT shall become chargeable on receipt of the paymen t
and on the amount received.

3.2.Invoice issued before the goods or services are supplied:

Where an invoice is issued before the goods or services are supplied, VAT shall
become chargeable when the invoice was issued.

4. Special cases:

23
4.1. In th e cases of supplies of goods or services referred to in the articles 11, 12,
15 and 16 of this Law, VAT shall become chargeable in the tax period in which
the chargeable event has occurred.

4.2.The Minister of Economy and Finance shall issue a sub -legal a ct in order to
provide that VAT is to become chargeable from the date of the chargeable event
in respect of certain transactions or certain categories of taxable persons, where
the time limit imposed for the issuance of the invoice as ref erred to in para graph 4
of A rticle 44 o f this Law is not respected.

Article 23
Chargeable event and chargeability of VAT in respect of importation of goods

1. General rule:

The chargeable event shall occur and VAT shall become chargeable when the goods are
imported.

2. Special rules:

2.1.Where, on entry into Kosovo, goods which are not in free circulation are
placed under one of the arrangements or situations referred to in Article 35 of this
Law, the Customs trans it procedure or under temporary importation arrange ments
with total exemp tion from import duty, or nder external transit arrangements, the
chargeable event shall occur and VAT shall become chargeable only when the
goods cease to be covered by those arrangements or situations.

2.2. Wher e imported goods ar e subject to customs duties, the chargeable event
shall occur and VAT shall become chargeable when the chargeable event in
respect of those duties occurs and those duties become chargeable.

2.3. The provision s in force regulating Cu stoms duties applies a s regards the
chargeable event and the moment when VAT is chargeab le,where imported goods
are not subject to Customs duties in Kosovo.

CHAPTER VI

TAXABLE AMOUNT

Article 24
Taxable amount in respect of supply of goods and services

1. General rule:

24
1.1.In respect of the supply of goods or services, other than as referred to in the
paragraphs 2 and 3 of this Article, the taxable amount shall include everything
which constitutes consideration obtained or to be obtained by the supplier, in
return for the supply, from the customer or a third party, including subsidies
directly linked to the price of the supply;

1.2.i f the supply is for a consideration in money, its value shall be taken to be
such amount a s is equal to the consideration;

1.3.If the su pply is for a consideration not consisting or not wholly consisting of
money, its value shall be taken to the open market value of the supply.

2. For the purpose of this Law “ open market value ” shall mean the full amount that, in
order to obtain the goods or services in question at that time, a customer at the same
market level at which the supply of goods or services takes place, would have to pay,
under conditions of fair competition, to a supplier at arm’s length within Kosovo in
which the supply takes plac e.

3. Where no comparable supply of goods or services can be ascertained, “open market
value” shall mean the following:

3.1.In respect of goods, an amount that is no less than the purchase price of the
goods or of similar goods or, in the absence of a p urchase price, the cost price,
determined at the time of the supply;

3.2.In respect of services, an amount that is not less than the full cost to the
taxable person of providing the service.

4.The taxable amount includes the following factors:

4.1.Taxes , duties, levies and charges, excluding the VAT itself,

4.2.Incidental expenses, such as commission, packing, transport and insurance
costs, charged by the supplier to the customer.

4.3.For the purposes of sub -paragraph 2 of paragraph 4 of this A rticle, incidental
expenses may be covered by a separate agreement .

5. Returnable packing costs are excluded from the taxable amount but this amount shall
be adjusted if the packing is not returned.

6.The taxable amount shall not include the following factors:

6.1.Price red uctions by way of discount of early payment,

25
6.2.Price discounts and rebates granted to the customer and obtained by him at the
time of the supply,

6.3.Amounts received by a taxable person from the customer, as repayment of
expenditur e incurred in the name and on behalf if the customer, and entered in his
books in a suspense account.

7. Special rules:

7.1.Where a taxable person applies or dispose s of goods forming part of his
business assets, or where goods are retained by a t axable person, or by his
successors, when his taxable economic activity ceases, as referred to in Articles
11 and 12 of this Law the taxable amount shall be the purchase price of the goods
or of similar goods o r, in the absence of a purchase price, the cos t price,
determined at the time when the application, disposal or retention takes place.

7.2.In respec t of the supply of services, as referred to in Article 15 where goods
forming part of the assets of a business are used for private purpo ses or services
are carried out free of charge and paragraph 2 of Article 16 with respect of
certain self -supplied services , the taxable amount shall be the full cost to the
taxable person of providing the services.

7.3.In respect of the supply by a taxable person of a service for the purposes of his
business, as referred to in paragraph 1 of Article 16 of this Law, the taxable
amount shall be the open market value of the service supplied.

8. Measures to avoid tax evasion or tax avoidance:

To prevent tax evasion or av oidance, the taxable amount is to be the open market value in
any of the following cases in respect of the supply of goods and services involving family
or other close personal ties, management, ownership, membership, financial or legal ties:

8.1.Where th e consideration is lower than the open market value and the recipient
of the supply does not have a full right of deduction under article 36 of this Law;

8.2.Where the consideration is lower than the open market value and the supplier
does not have a full righ t of deduction under article 36 of this Law and the supply
is an exempt supply as referred to in paragraph 1 of article 27 and paragraph s 1
and 3 of article 28 of this Law.

8.3.Where the consideration is higher th an the open market value and the
“su pplier” does not have a full right of deduction under article 36 of this Law.

9.The Minister of Economy and Finance shall issue a sub -legal act for the
implementation of this article. This act shall in particular include the proof required from

26
the taxa ble person of the actual amount of the repaid expendit ure referred to sub –
paragraph 3 of paragraph 6 of A rticle 24 of this Law.

Article 25
Taxable amount in respect of importation of goods. Converting the value of foreign
currency into Euro

1. The taxa ble amount in respect of importation of goods:

1.1.In respect of the importation of goods, the taxable amount shall be the value
for customs purposes, determined in accordance with the Customs legislation in
force in Kosovo.

1.2.The t axable amount shall include the following factors, in so far as they are
not already included:

1.2.1.Taxes, d uties, levies and other charges due outside Kosovo, and
those due by reason of importation, excluding the VAT to be levied,

1.2.2.Incidental expenses, suc h as commission, packing, transport and
insurance costs, incurred up to the first place of destination within the
territory of Kosovo as well as those resulting from transport to another
pla ce of destination within Kosovo if that other place is known when the
chargeable event occurs.

1.2.3.For the purposes of 1.2.2. of this A rticle, “first place of destination"
means the pla ce mentioned on the consignment note or on any other
document under which the goods are imported into Kosovo. If no such
mention is made, the first place of destination shall be deemed to be the
place of the first transfer of cargo in Kosovo.

1.3.The taxable amount shall not include the following factors:

1.3.1.Pric e reductions by way of discount for early p ayment,

1.3.2.Price discounts and rebates granted to the customer and obtained by
him at the time of importation.

1.4.Where goods temporarily exported from Kosovo, are re -imported in Kosovo
after having undergone outside Kosovo, repair, processing, adapt ation, making up
or re -working outside of Kosovo, the taxable amount shall be the value of the
repair, processing adaptation, making up or re -working, as determined in
accordance with the Customs legislation.

27
2.The Conversion of foreign currency into Euro:

2.1.Wher e the value and factors used to determine the taxable amount on
importation are expressed in a foreign currency, the conversion of this amount
into euro shall be made by applying the exchange rate determined in accordance
with the Customs re gulations governing the calculation of the value for customs
purposes.

2.2.Wher e the value and factors used to determine the taxable amount of a
qtransaction other than the importation of goods are expressed in a foreign
currency,the conversion of t his am ount into the domestic currency Euro shall be
the latest selling rate as defined by the Central Bank of Kosovo recorded at the
time VAT becomes chargeable.

CHAPTER VII

RATES

Article 26
The Rate

1. Standard rate:

1.1.The VAT is charged at the rate of sixteen percent (16% ).

2.The Minister of Economy and Finance may,upon decision of the Government of
Kosovo after the approval of the Assembly, issue a sub -legal act for introducing a
reduced rate not lower than five percent (5 % ) for designated supplies of goods and
services.Subject to the same procedure and as deemed necessary, the Minister may also
introduce a temporary higher rate of VAT not higher than twenty -one (21 %) to be
applied against designated supplies of goods and services. The reduced and i ncreased
rates may only apply to supplies of goods and services as listed in Annex III.

CHAPTER VIII

EXEMPTIONS WITHOUT RIGHT OF DEDUCTION OF INPUT VAT

Article 27
Exemptions for certain activities in the public interest

1. The following transact ions are exempted:

1.1.Hospital services and medical care and closely related activities undertaken by
bodies governed by Kosovo law in force or, under social conditions , in particular

28
charging prices comparable with those applicable to bodies governed b y Kosovo
law in force, by hospitals, centres for medical treatment or diagnosis and other
duly recognised est ablishments of a similar nature;

1.2.The p rovision of medical care in the exercise of the medical and paramedical
professions as defined by Ko sovo laws into force and the supply of medicines,
pharmaceutical products and medical and surgical instruments and apparatus,

1.3.The supply of huma n organs, blood and mother milk.

1.4.The supply of services by dental technicians in their pro fessional capacity and
the supply of dental prostheses by dentists and dental technicians,

1.5.The su pply of services by independent groups of persons, who are carrying on
an activity which is exempt from VAT or in relation to which they are not t axable
persons, for the purpose of rendering their members the services directly
necessary for the exercise of that activity, where those groups merely claim from
their members exact reimbursement of their share of the joint expenses, provided
that such ex emption is not likely to cause distortion of competition,

1.6.The supply of services and of goods closely linked to welfare and social
security work, i ncluding those supplied to old people’s homes, by competent
bodies of Kosovo or by other bodies recognis ed by the competent Authority of
Kosovo as being devoted to social wellfare and become at comparable prices,

1.7.The supply of services and of goods closely linked to the protection of
children and youn g persons by bodies governed by Kosovo law s or by oth er
organisations recognised by the competent Authority of Kosovo as being devoted
to social wellbeing and become at comparable prices,

1.8.The provision of children’s or young people’s education, school or university
education, vocational trainin g or retraining, including the supply of services and
of goods closely related thereto, by bodies governed by Kosovo law having such
as their aim or by other organisations recognised by the competent Authority of
Kosovo as having similar objects and become at comparable prices,

1.9.Tuition given privately by teachers and covering school or university
education within the context of schools or universities a s referred to in sub –
paragraph 8 of paragraph 1 of this A rticle.

1.10.The supply of staff by religi ous or philosophical institutions for the purpose
of the activities referred to in sub -paragraphs 1, 6, 7, and 8 of paragraph 1 of this
Article and with a view to spiritual welfare;

29
1.11.The supply of services, and the supply of goods closely linked ther eto, to
their members in their common interest in return for a subscription fixed in
accordance with their rules by non -profit -making organisations with aims of a
political, trade -union, religious, patriotic, philosophical, philanthropic or civic
nature, p rovided that this exemption is not likely to cause distortion of
competiti on;

1.12.The supply of certain services closely linked to sport or physical education by
non -profit -making organisations to persons taking part in sport or physical
education where the purpose of those services is directly necessary for that
education,

1.13.The supply of certain cultural services, and the supply of goods closely linked
thereto, by bodies governed by Kosovo law or by other cultural bodies recognised
in Kosova where the aim of such services is to promote the cultural events and
potentials of Kosovo inside and outside its territory,

1.14.The supply of services and goods, by organisations whose activities are
exempt pursuant to sub -paragraphs 1, 6. 7, 8, 9, 12, 13 of paragraph 1 of this
Article, in connection with fund -raising events organised exclusively for their
own benefit, provided that exemption is not likely to cause distortion of
competition However the supply of goods is not granted exemption in the
following cases:

1.14.1.Where the supply is not essential to transactions exempted,

1.14.2 .Where the basic purpose of the supply is to obtain additional
income for the body in question through transactions which are in direct
competition with thos e of commercial enterprises subject to VAT.

1.15.The supply of transport services for sick or injured persons in vehicles
specially designed for the purpose, by the authorised body,

1.16.The activities, other than those of a commercial nature, c arried out by public
radio and television bodies.

1.17.The activities carried out by institutions of religious communities which are
having as direct and exclusive purpose the realization of religious convictions or
beliefs including welfare and c haritable objectives and the seminaries or other
establishments for the training of religious ministers or teachers of religious
education .

1.18. The supply of materials of the printing industri as defined hereafter in the
course of retail trade, made to a final user, provided that such supply occurs to a
person without VAT input right of deduction.

30
These materials are the materials with the following Customes nomenclature codes
TARIC:

1.18.1 Code 4901:Printed boks, brochures, leaflets and smilar printe d
matter, whether or not in single sheets;

1.18.2. Code 4903: Children’s picture,drawing or colouring boks.

1.18.3 Code 4904: Music, printed or in manuscript, whether or not bound
or illustrated.

For the purposes of this pargraph, “supply to a person wi thout right of deduction” means
supply to a person who is using the printed material for private use or for application for
purposes other than those of business. This exemption does not include the supply of
pornographic or other printed materials conside red to be of a pornographic nature.

2. Exemptions other than those provided for in the sub -paragraphs 1, 6, 7, 8, 9, 12 and 13
of paragraph 1 of this A rticle, may be granted to other bodies than those governed by
Kosovo law in force. Such exemptions may b e granted by sub -legal act and shall not be
granted where the supply is not essential to the transactions exempted and where the
basic purpose is to obtain additional income for the body in question through transactions
which are in direct competition with those of commercial enterprises subject to VAT.

3. The Minister of Economy and Finance shall issue a sub -legal act with the rules and
conditions for implemention of the paragraphs 1 and 2 of this A rticle and may limit the
scope of these exemptions during a tran sitional period referred to in A rticle 64 of this
Law. The Minister may as well impose measures needed to prevent distortion of
competition to the disadvantage of taxable persons subject to VAT. He shall also define
the competent authorities and bod ies of Kosovo mentioned in this article and the manner
in which non -public bodies or organizations will be recognized by the public authorities
for making exempt supplies or to which exempt supplies can be made.

Article 28
Exemptions for other activities

1. The following other activities are exempted:

1.1.Insurance and reinsurance transactions, including related services performed
by insurance brokers and insurance agents,

1.2.The granting and the negotiation of credit and the management of credit by
the person granting it,

31
1.3.The negotiation of or any dealings in credit guarantees or any other security
for money and the management of credit guarantees by the person who is granting
the credit,

1.4.Transactions, including neg otiation, concerni ng deposit , current accounts,
payments, tran sfers, debts, cheques and other negotiable instruments, but
excluding debt collection,

1.5.Trans actions, including negotiation, concerning currency, bank notes and
coins used as legal tender, with the except ion of collectors’ items, that is to say,
gold, silver or other metal coins or bank notes which are not normally used as
legal tender or coins of numismatic interest,

1.6.Transactions, including negotiation but not management or safekeeping, in
shar es, interests in companies or associations, debentures and other securities, but
excluding documents establishing title to goods, and the rights or securities
referred to in sub -paragraph 2 of paragraph of A rticle 10 of this Law,

1.7.The m anagement of sp ecial investment funds as defined by the competent
Authorities of Kosovo,

1.8.The supply at face value of postage stamps valid for use for postal services
within Kosovo , fiscal stamps and other similar stamps,

1.9.Betting, lotteries and other for ms of gambling, subject to the conditions and
limitations laid down by the competent Authorities of Kosovo.

1.10.The supply of land or land on which a building or house stands.

1.11.The supply of houses, appartments or other accomod ation used for a relevant
residential purpose.

1.12.The leasing or letting of immovable property.

2. The following shall be excluded from the exemption provided for in sub -paragraph 11
of paragraph 1 of this A rticle:

2.1.The provision o f accommodation, as defined in the legislation of Kosovo, in
the hotel sector or in sectors with a similar function, including the provision of
accommodation in holiday camps or on sites developed for use as camping sites.

2.2.The letting o f premises and sites for the parking of vehicles.

2.3.The letting of permanently installed equipment and machinery.

2.4.The hire of safes.

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2.5.The leasing or letting of immovable property for commercial purposes with
the exclusion of land.

3. Special exemptions granted to eligible religions of Kosovo in conformity with the Law
No. 02/L – 31 on Freedom of Religion in Kosovo and other applicable Laws:

3.1.Supplies of goods and services to eligible religions of Kosovo for exercising
economic a ctivities specific to their self -sustainability, such as the production of
embroidery and clerical vestments, candles, icon painting, woodcarving and
carpentry, and traditional agricultural products, shall be exempted.

3.2.For the purpose of this sub -arti cle: “Religion” shall mean the Islamic
Community of Kosovo, the Serbian Orthodox Church, the Roman Catholic
Church, the Jewish Religious Community and the Evangelical Church,

3.3.“Eligible r eligion” shall mean every religion which is entitled to have the
benefit of the exemption as defined in this paragraph.

3.4.The exemption also covers relevant products, materials, machinery, tools and
livestock for excerc ising the economic activities referred to in sub -paragraph 3 of
paragraph 1 of this A rtic le.

3.5.The Minister of Economy and Finance shall, in respect of each eligible
religion as defined in the Law No. 02/L_31 or other apllicable law, issue a sub –
legal act in which, the keeping of records and journals, the submission of an
annual statement f or tax purposes and an agreed verification procedure in respect
of the sub -paragraphs 1 and 2 of paragraph 3 of this A rticle, shall be defined.

CHAPTER IX

EXEMPTIONS ON IMPORTATION AND OTHER SPECIAL EXEMPTIONS IN
RESPECT OF IMPORTATION

Article 29
Exemp tion on importation

1.The following shall be exempted from VAT:

1.1.The release of goods for free circulation, if the supply of such goods effected
on the territory of Kosovo by a taxable person were in all circumstances exempt
from VAT.

33
1.2.The reimp ortation by the person who exported them, of goods in an
unchanged condition in which they were exported, provided that such goods are
exempt from customs duties in accordance with Customs legislation,

1.3.Imported goods exempt from customs duties and intended for:

1.3.1.Official use of diplomatic and consular offices and special missions
accredited to Kosovo. For consular offices headed by honorary consular
officials an exemption in accordance with this sub -point sh all only apply
to goods sent by the dispatching state, other than means of t ransport,
provided the Ministry responsible for Foreign Affairs issues approval for
these goods,

1.3.2.Official use of international organisations, if these are laid down by
interna tional treaties or agreements which apply to Kosovo,

1.3.3.Personal use of the foreign staff of diplomatic and consular special
missions accredited to Kosovo, including their family members,

1.3.4.Perso nal use of the foreign staff of international organi sations,
including their family m embers, if this is laid down by international
treaties which apply to Kosovo,

1.3.5.Armed Forces of the North Atlantic Treaty Organization and KFOR,
for the use of such forces or the foreign civilian staff acco mpanying them
or for the supply of their messes or canteens.

1.3.6 Personal use of the foreign staff of contractors of internacional
organizations or foreign governments and their organizations, including
their family members, if thi sis laid down in bil ateral agreements which
apply to Kosovo.

1.4.Exemptions under 1.3.1. and 1.3.4 of this Article, shall not be exercised by
nationals of Kosovo or foreign nationals with permanent address in Kosovo .
Exemption under this sub -paragraph shall be implemented o n the basis of
certificates issued by the Ministry of for Foreign Affairs. Goods exempt from
VAT in accordance with this sub -paragraph shall not be alienated. They may be
alienated only on condition that VAT is paid or after termination of a three -year
period from the day of the import of goods.

1.5.If, in a ccordance with an internacional treaty, exemption could be
implemented only under condition of reciprocity, the Ministry responsible for
foreign affairs shall confirm such reciprocity.

1.6.The d etailed conditions and the method for exercising a VAT exemption and
setting of the quantitative restrictions for particular types of goods for which

34
en titled beneficiaries under of this A rticle, may claim exemption from VAT, shall
be prescribed by sub -leg al act issued the Minister of Econmy and Finance,

1.7.Import of catches of fishing vessels and fishing boats used for the purpose of
carrying out a fishing activity into a port, provided that the catch is either
unprocessed or subject to only those proced ures that are necessary to preserve its
quality and that, prior to the importation, no supply was performed in accordance
with this Law,

1.8.Services related to the import of goods, provided that the value of such
services is included in the taxable amo unt in accordance with sub -paragraph 1.2
of Article 25 of this Law,

1.9.Gold and other precious metals, bank notes and coins imported by the Central
Bank of Kosovo,

1.10.Im port of gas through natural gas distribution systems or import o f
electricity.

2.The import of the goods listed in the Annex IV of this Law are exempted during the
transitional period referred to in A rticle 64 of this Law.

Article 30
Other special exemptions in respect of importation

1. In respect of imported goo ds and their release into free circulation, the following shall
be exempted from VAT in accordance with the conditions and time limits set out in the
Customs legislation:

1.1.Consignme nts of insignificant value sent directly from abroad. This
exemption shall not apply to tobacco and tobacco products, alcohol and alcoholic
beverages, perfumes and toilet water. The total value of goods in an individual
consignment deemed to be insignificant shall not exceed an amount determined
by sub -legal act issued by the Minister of Economy and Finance,

1.2.Used personal property belonging to a natural person who has lived abroad for
an uninterrupted period of at least twelve ( 12 ) months and who moves to Kosovo.
This exemption shall not apply to alcoholic beverages, tobacco and tobacco
products, motor vehicles and equipment for the performance of an economic
activity,

1.3.Items belonging to a person who has lived abroad for an uninterrupted period
of at least twelve ( 12 ) months and who moves to Kosovo. This exempti on shall
not apply to alcoholic beverages , tobacco and tobacco products, motor vehicles
and equipment for the performance of an economic activity,

35

1.4. Items acquired on the basis of inheritance by a natural person who lives
permanently in Kosovo. Th is e xemption shall not apply to alcoholic beverages,
tobacco and tobacco products, means of transport, equipment, stocks of raw
materials, semi -products and finished products, livestock and agricultural
products exceeding normal family needs,

1.5.Stu dy aids brought for their own requirements by pupils and students coming
to Kosovo for the purpose of study,

1.6.Goods in the personal luggage of a traveller which are imported for non –
commercial purposes and which are exempted from payment of cu stoms duties in
accordance with Customs Legislation,

1.7.Goods in small consignments of a non -commercial character which are sent
by a natural person residing abroad free of charge to a natural person on the
customs territory of Kosovo up to the value, and for tobacco and tobacco
products, alcohol and alcoholic beverages, perfumes and toilet water up to
quantities, prescribed by sub -lega l act issued by the Minister of Economy and
Finance,

1.8.Honorary decoratio ns and prizes if their natur e or individual value indicates
that they are not being imported for commercial purposes, occasional gifts
received within the framework of international relations, provided they do not
reflect a commercial purpose, on the condition of reciprocity, items intended for
foreign heads of state or their representatives for their requirements during an
official visit to Kosovo. This exemption shall not apply to alcoholic beverages,
tobacco and tobacco products,

1.9.Therapeutic substances of human origin and r eagents for determining blood
groups and tissue types that are used for non -commercial medical or scientific
purposes, pharmaceutical products for health care or veterinary use at
international sporting events, laboratory animals, animal, biological and ch emical
substance s sent free of charge which are intended for scientific research, and
samples of reference substances intended for quality control of medical products
approved by the World Health Organisation,

1.10.Goods acquired free of charge b y state bodies, charitable and philanthropic
organisations intended f or free distribution to persons in need of help, or goods
sent free of charge and without any commercial intent for the purpose of being
used exclusively for meeting their work needs or for carrying out their tasks. This
exemption shall not apply to alcoholic beverages, tobacco and tobacco products,
coffee and tea, and motor vehicles (except for rescue vehicles). This exemption
shall apply only to organisations that keep appropr iate accounts and enable the
competent bodies to supervise their operations and which, where necessary, offer
insurance of VAT payment,

36

1.11.Goods imported by state bodies and organisations, charitable and
philanthropic organisations inten ded for free distribucion to victims of natural and
other disasters and wars, or goods which remain the property of these
organisations but are made available to the aforementioned victims. This
exemption shall not apply to material and equipment for the r enovation of areas
affected by natural and other disasters. This exemption shall apply only to
organisations that keep appropriate accounts and enable the competent bodies to
supervise their operations and which, where necessary, offer insurance of VAT
pay ment,

1.12.Items that are specially made for the education, training or employment of
the blind and deaf or other physically or mentally handicapped persons if they
were acquired free of charge and imported by institutions or organisations whose
activit y is education or assistance to these persons and provided no
commercial intent is expressed by the donors.

1.13.Equipment which is used by the owner for the performance of his economic
activity where he is moving that activity to Kosovo. This exempt ion shall not
apply to means of transport, fuel, stocks of goods, products and semi -products,
and livestock owned by traders.

1.14.Plant and livestock products obtained by farmers who are Kosovo nationals
on their property within the border region of a neighbouring country and young
animals and other products obtained from livestock which they have on this
property for the purposes of farm labour, pasture or wintering, seeds, fertiliser
and similar products for cultivation of the soil used by farmers wh o are foreign
nationals on their property in Kosovo,

1.15.Samples of goods of insignificant value intended for obtaining orders for
goods of the same type and which, with regard to their appearance and quantity,
are not usable for any other purposes.

1.16.Printed matter and advertising material of no commercial value and with a
destination for promotion, sent by a person who established his business outside
Kosovo.

1.17. Goods intended for use at a trade fair, exhibition or similar event. This
exemp tion shall not apply to alcoholic beverages, tobacco and tobacco products
and fuels,

1.18.Goods wh ich in order to determine their composition, quality or other
technical characteristics are intended for examination, analysis and testing and
which are com pletely used or destroyed. This exemption shall not apply to goods
used in examination, analysis or testing in order to promote sales.

37
1.19.Items and accompanying documents which in connection with the
acquisition or protection of trademarks, patents an d models are sent to
organisations for protection of intellectual property rights.

1.20.Tourist informational documentation intended for distribution free of charge
and whose main purpose is to present foreign tourist products and services.

1.21.Documents sent to state bodies, the publications of foreign state bodies and
international bodies and organisations, forms for exercising the powers of state
bodies, items of evidence in court procedures, printed circulars sent as part of the
normal exchange of information between public services or banking institutions,
official printed matter received by the Central Bank of Kosovo, documents,
archives and forms for use at international meetings, conferences or
congresses, plans, technical drawi ngs, models and similar documents for purposes
of participation in an international competition organised in Kosovo, printed
forms used in accordance with international conventions as official documents in
international trade in vehicles and goods, photo graphs and slides sent to press
agencies or newspaper companies, collectors’ items and works of art not intended
for sale which are imported free of charge by museums, galleries and other
institutions and which are intended for viewing free of charge, wall maps, films
(other than cinematographic films) and other audio -visual products of an
educational natureproduced by the United Nations or its specialised agencies.

1.22.Material necessary for loading and securing goods during transport, lit ter and
fodder for animals during transport, loaded onto a means of transport, which is
used for the transportation of animals from a foreign country into Kosovo or
through Kosovo,

1.23.Fuels and lubricants in the factory preinstalled tanks of m otor vehicles.

1.24.Material for erecting, maintaining or decorating monuments, graves or the
burial grounds of war victims from other countries, coffins containing the mortal
remains and urns containing the ashes of deceased person and the funeral items
that normally a ccompany coffins and urns.

1.25.Medicines, pharmaceutical products, medical and surgical instruments and
apparatus.

2. Special exemptions which apply during the tran sitional period referred to in A rticle 64
of this Law:

2.1.Imports funded from the proceeds of grants made to the budget or through the
budget of Kosovo or under the supervison of competent bodies or directly
financed by contracts for the benefit of Ministries, local authorities and other
bodies governed b y law, by international inter -governmental organizations and
their agencies, governments, government agencies, governmental or non –

38
governmental organizations in support of humanitarian and reconstruction
programs and other projects including European int egration projects in
Kosovo.

2.2.Imports made by the United Nations or any of its agencies, the World Bank
and international inter -governmental organizations.

3. Special exemptions granted to the religions of Kosovo in conformity with the L aw No.
02/L_31 on Freedom of Religion in Kosovo or other applicable laws.
Th e provisions of paragraph 3 of A rticle 28 of this Law shall also apply to imports in
respect of this special exemption by replacing “supply of goods and services” with
“imports”.

CHAPTER X

EXEMPTIONS ON EXPORTATION

Article 31
Exemptions on exportation

1. The following transactions are exempted:

1.1.Th e supply of goods dispatched or transported to a destination outside Kosovo
by or on behalf of the vendor,

1.2.The supp ly of goods dispatched or transported to a destination outside Kosovo
by or on behalf of a customer not established within the territory of Kosovo, with
the exception of goods transported by the customer himself for the equipping,
fuelling and provision ing of pleasure boats and private aircraft or any other
means of transport for private use,

1.3.The supply of goods to bodies recognized by the competent Kosovo Authority
which export them out of Kosovo as part of their humanitarian, charitable or
teach ing activities outside Kosovo.

1.4.The supply of services consisting in work on movable property acquired or
imported for the purpose of undergoing such work within Kosovo, and dispatched
or transported out of Kosovo by the supplier, by the customer if n ot established
within Kosovo or on behalf of either of them,

1.5.The supply of services, including transport and ancillary transactions, but
excluding the services exempted in accordance with article 27 related to certain
activities in the public inter est and excluding the services meant by article 28
related to certain other activities, where these services are directly connected

39
with the exportation or importation of goods covered by paragraph 2 of Article 21
of this Law.

2. Goods to be c arried in the personal luggage of travelers:

2.1.Where the supply of goods refer red to in sub -paragraph 1.2 of A rticle 31 of
this Law relates to goods to be carried in the personal luggage of travellers, the
exemption shall apply only if the following co nditions are met:

2.1.1.The traveller is not established within Kosovo,

2.1.2.The goods are transported out of Kosovo before the end of the third
month following that in which the supply takes place,

2.1.3.The total value of the supply, including VAT , is more than one
hundred and seventy -five ( 175 ) €.

A traveller who is not established within Kosovo shall mean a traveller whose permanent
address or habitual residence is not located within Kosovo. In that case “permanent
address or habitual residence’ s means the place entered as such in a passport, identity
card or other document recognised as an identity document by the country within whose
territory the supply takes place.
Proof of exportation shall be furnished by means of the invoice or other docu ment in lieu
thereof, endorsed by the customs office of exit of Kosovo.

2.2.The reimbursement of VAT paid under sub -paragraph 1 of paragraph 2 of
Article 31 of this Law, shall be defined by sub -legal act to be issued by the
Minister of Economy and Finan ce which shall also define the date from which the
reimbursement shall begin.

CHAPTER XI

EXEMPTIONS RELATED TO INTERNATIONAL TRANSPORT

Article 32
Exemptions related to international transport

1. The following transactions shall be exempted:

1.1.The s upply of goods for the fuelling and provisioning of vessels used for
navigation on the high seas and carrying passengers for reward or used for the
purpose of commercial, industrial or fishing activities, or for rescue or assistance
at sea, or for inshore fishing, with the exception, in the case of vessels used for
inshore fishing, of ships’ provisions,

40
1.2.The supply of goods for the fuelling and provisioning of fighting ships, falling
within the combined nomenclature (CN) code 8906 10 00, leaving their te rritory
and bound for ports or anchorages outside Kosovo,

1.3.The supply, modification, repair, maintenance, chartering and hiring of the
vessels referred to in sub -paragraph 1.1. of this A rticle, and the supply, hiring,
repair and maintenance of e quipment, including fishing equipment, incorporated
or used therein,

1.4.The supply of services other than those referre d to in sub -paragraph 1.3 of this
Article, to meet the direct needs of the vessels referred t o in sub -paragraph 1.1 of
this A rticle or of their cargoes,

1.5.The supply of goods for the fuelling and provisioning of aircraft used by
airlines operating for consideration chiefly on international routes,

1.6.The supply, modification, repair, maintenance, chartering and hiring of the
aircraft referred t o in sub -paragraph 1.5 of this A rticle, and the supply, hiring,
repair and maintenance of equipment incorporated or used therein,

2. The supply of services, other than those referred to in sub -paragraph 6 of paragraph 1
of this A rticle , to meet the direct needs of the aircraft referred to in sub -paragraph 5 of
paragraph 1 of this a rticle or of their cargoes.

CHAPTER XII

EXEMPTIONS RELATING TO CERTAIN TRANSACTIONS TREATED AS
EXPORTS, EXEMPTIONS FOR THE SUPPLY OF SERVICES BY
INTERMEDIA RIES, AND EXEMPTIONS RELATING TO CUSTOMS AND
SIMILAR ARRANGEMENTS

Article 33
Exemptions relating to certain transactions treated as exports

1.The following transactions treated as exports are exempted:

1.1.the supply of goods or services under dip lomatic and consular arrangements;

1.2.The supply of goods or services to international and inter -governmental
bodies recognised as such by the public authorities of Kosovo, and to the
members of such bodies, within the limits and under the conditions lai d down by
the international conventions establishing the bodies or by the competent
Authority;

41
1.3.the supply of goods or services to NATO and KFOR, intended either for the
armed forces of NATO and KFOR for the use of those forces, or the civilian staff
accompanying them, or for their messes or canteens when such forces take part in
the common defence and peace keeping effort;

1.4.The supply of gold to the Central Bank of Kosovo.

2. The irrigation of faring land and the supplies of the goods liste in th e Annex IV of this
Law are exempted during the tran sitional period referred to in A rticle 64 of this Law.

3. Special exemptions which apply during the tran sitional period referred to in A rticle 64
of this Law.

3.1.The supply of goods or services funded from the proceeds of grants made to
the budget or through the budget of Kosovo or under the supervision of competent
bodies or directly financed by contracts for the benefit of Ministries, local
authorithies and other bodies governed by law, by internation al inter –
governmental organizations and their agencies, by governments, government
agencies, governmental or non -governmental organizations in support of
humanitarian and reconstruction programs and other projects including European
integration projects in Kosovo;

3.2.Supplies of goods and services made to the United Nations or any of its
agencies, the World Bank and international inter -governmental organizations.

4. In cases where the goods are dispatched or transported out of Kosovo in which th e
supply takes place, and in the case of services, the exemption may be granted by means
of a refund of the VAT.

Article 34
Exemptions for the supply of services by intermediaries

The supply of services by intermediaries acting in the name and on behalf of another
person, where they take part in the transactions referred to in Chapter s 10 and 11 and the
transactions treated as exports of this Chapter 12, or of transactions carried out outside of
Kosovo.

Article 35
Customs warehouses and similar arrangem ents

1. Imports of goods shall be exempt from VAT if they are intended to be:

1.1.Presented to customs and, when allowed under custom legislation, placed in
temporary strage;

42
1.2.Placed into a free zone;

1.3.Placed under customs warehousin g arrangements or inward processing
arrangements under suspension regime.

2. Exemption is also applicable to the supplies of services relating to the supplies of
goods under paragraph 1 of A rticle 35 of this Law and to the supplies of goods and
services carried out in free zones and customs warehouses.

3. Transactions under this paragraph 1 of A rticle 35 are exempt from VAT provided that
goods are not released for free circulation or are not aimed at final consumption and that
the amount of VAT due on c essation of the arrangements corresponds to the amount of
VAT which would have been due had each of these transactions been taxed within
Kosovo.

4. Goods intended for sale in “duty free shops” at an airport open to international air
traffic or a port op en to international traffic, are also exempt from VAT, on condition that
travellers carry such goods as personal luggage in permitted quantities to another country
by aircraft or ship.
A traveller refe rred to in paragraph 4 of this A rticle is deemed to be a traveller who has a
ticket on which the destination airport or port of another country is stated.

5. Goods intended for sale to travellers on board of an aircraft in the course of a flight are
are exempt where the place of arrival is situated outside o f Kosovo.

CHAPTER XIII
DEDUCTIONS

Article 36
The right to deduct VAT

1.The right to deduct input VAT shall arise at the time when the VAT becomes
chargeable.

A taxable person cannot deduct input VAT before the tax period in which he received
invoices for goods or services supplied to him or in which he received customs
declarations for imported goods.

2. Unless otherwise stipulated by this Law, a taxable person may deduct from his VAT
liability, the VAT due or VAT paid in respect of purchases of goo ds or services –
hereinafter indicated as input VAT – provided he used or will use such goods or services
for the purposes of his taxable transactions:

2.1.The input VAT due or paid within the territory of Kosovo in respect of goods
or services supplied or to be supplied to him by another taxable person;

43

2.2.The input VAT due or paid within the territory of Kosovo in respect of
importation of goods;

2.3.The input VAT due in accordance with paragraph 1 of Article 12 and Article
16 of this Law.

3. I n addition to the deduction referred to in paragraph 2 of this A rticle, every taxable
person shall also have the right to deduct the input VAT referred to therein in so far as the
goods and services are used for the purposes of the following:

3.1.Transac tions relating to th e activity from paragraph 1 of A rticle 4 of this Law
carried out outside Kosovo in which that tax is due or paid, in respect of which
VAT would be deductible if they had been carried out in Kosovo;

3.2.Transactio ns which are exempt pu rsuant to Chapter 10 (Exemptions on
exportation), Chapter 11 (Exemptions related to international transport) and
Chapter 12 (Exemptions relating to transactions treated as exports, supply of
services by intermediaries and exemptions relating to Customs and similar
arrangements) of this Law.

3.3.Any of the transactions exempt in a ccordance with sub -paragraph 1 till 6 of
paragraph 1 of Article 28 of this Law, if the customer is established outside
Kosovo or if such transactions are directly linked to goods intended for export to
a country outside
Kosovo.

4. As regards goods and services used or to be used by a taxable person both for
transactions covere d by the paragraphs 2 and 3 of A rticle 36 of this law which VAT may
be deducted, and for transact ions, for which VAT shall not be deducted, only such a
proportion of the VAT may be deducted as is attributable to the first transactions. Such
proportion of input VAT shall be determined in accordance with Article 39 of this Law
for all transactions carri ed out by the taxable person.

5. A taxable person shall not deduct input VAT on:

5.1.Yachts and boats intended for sport and recreation, private aircraft, cars and
motorcycles only used for non business purposes, fuels and lubricants and spare
parts an d services closely linked thereto, other than vessels or vehicles used for
leasing and renting and for resale, and vehicles used in driving schools for the
provision of the driver’s training programme in accordance with the regulations in
force and combine d vehicles for carrying out an activity of a public line and
special line transport. If a vehicle is not used exclusively for carrying out an
activity of a public and special line transport, a taxable person can claim a VAT
deduction only in the part, rela ted to carrying out of this activity;

44
5.2. The total purchase costs and current expenditures as regards cars used for
both private and business purposes. In such case, the right to deduct input VAT is
only allowed to a maximum of fifty percent ( 50% );

5.3 .Costs for representation which shall include only costs for entertainment and
amusement during business or social contacts, food costs including drinks and
ccommodation costs exception made for those costs which are made for the
personnel charged with su pply of goods and serviles;

.4.The Minister of Economy and Finance shall issue a sub -legal act to determine
the implementation and the costs which are subject to restrictions.

Article 37
Exercise of the right of deduction

The right of deduction arises at the time the deductible tax becomes chargeable.

2. To exercise his right to deduct input VAT, a taxable person must at least:

2.1.In respect of all deductions referred to in Chapter 13, hold an invoice or a
document serving as an invoice in accordan ce with Chapter 15 of this Law. In
respect of deductions pursuant to sub -paragraph 2.2 of article 36 of this Law, hold
an import document “SAD document” on which he is stated as the consignee or
importer and which states the amount or enables calculation o f the amount of tax
due,

3. The Minister of Economy and Finance shall issue a sub -legal act to determine
additional rules and documents for proving the input VAT, in particular in respect of:

3.1.The dedu ctions of sub -paragraph 2.3 of A rticle 36 o f this Law;

3.2.The deductions pursuant to sub – paragraphs 2.1 and 2.2 of A rticle 37 of this
Law;

3.3.The deductions related to the transactions described in the Chapter s 10, 11
and 12 of this Law;

3.4.The cases referred to in Artic le 53 of this Law where a person is liable to pay
VAT as a customer or purchaser;

3.5.The deductions in respect of the application of the special schemes of Chapter
19 of this Law.

45
Article 38
The manner to exercise the right to deduct input VAT

1. Taxable persons shall effect the deduction by subtracting from the total amount of
VAT due for a given tax period the total amount of VAT in respect of which, during the
same period, the right to deduct has arisen in accordance with paragrap h 1 of A rticle 37
of this Law.

2. If a taxable person does not deduct input VAT in this tax period, he may deduct this
amount of input VAT at any time after this tax period, but not later than in the last tax
period of the calendar year following the yea r in which he was entitled to deduct input
VAT. The taxable person shall notify in advance the Head of the Regional Tax Office of
such late deduction.

3. If a taxable person receives an invoice showing VAT from a person who is not entitled
to claim VAT u nder this Law, he shall not deduct the VAT shown as input VAT,
irrespective of whether he pays that VAT.

4. If a taxable person receives an invoice showing an amount of VAT which exceeds the
amount of VAT that should be charged according to this Law, the taxable person shall
not deduct this excess amount as input VAT, even though the VAT has been paid.

Article 39
Calculation of the deductible proportion of input VAT

1. In the case of goods and services used by a taxable person both for realizing
trans actions in respect of which VAT is deductible for the used goods and services, and
for realizing transactions in respect of which VAT is not deductible for the used goods
and services, only such proportion of the VAT is deductible as is attributable to tho se
transactions in respect of which VAT is deductible. The taxable person may be authorised
by TAK to make the deduction on basis of the real use made if he provides in his
accounting records, data on the input VAT for which he is entitled and is not entit led to
deduct input VAT for all used goods and services.

2. The deductible proportion shall be made up of a fraction comprising the following
amounts:

2.1.as a numerator: the total amount, exclusive of VAT, of annual turnover
attributable to transactio ns on which the taxable person has the right to deduct
input VAT,

2.2.as a denominator: the amount included in the numerator and the amount of
total annual turnover on which the taxable person does not have the right to
deduct VAT, including subsidies o ther than those directly linked to the price of

46
supplies of goods and services as referred to in parag raph 1 of A rticle 24 of this
Law.

3. The calculation of the deductible proportion shall not include:

3.1.The amount of turnover attributable to suppli es of capital goods used by the
taxable person for the purposes of his business;

3.2.The amount of supply of financial services as referred to in paragraph 1 of
Article 28 of this Law, if they are performed incidentally.

4. The deductible proportion of VAT shall be determined on an annual basis as a
percentage, and shall be rounded up to the next whole number.

5. Provisional deductible proportion and actual deductible proportion:

5.1.The deductible proportion for the current year shall be determin ed
provisionally on the basis of the data on preceding year’s transactions –
hereinafter referred to as “provisional deductible proportion”. In the absence of
data on transactions in the preceding year, or where they were insignificant in
amount, the pr ovisional deductible proportion shall be determined by TAK on the
basis of the taxable person’s own forecasts;

5.2.The deductible proportion shall be finally fixed when the actual volume of
transactions in the year for which the deductible proportion is b eing determined –
hereinafter referred to as “actual deductible proportion” – is known;

5.3.If it is established that the deduction of input VAT on the basis of the
provisional deductible proportion was higher or lower than it should have been
wit h respect to the actual data on volume of transactions, the input VAT
deduction shall be adjusted accordingly in the tax return of the tax period of
January of the following year, being the year in which the actual deductible
proportion is established.

6. Notwi thstanding paragraph 2 of this A rticle, a taxable person may determine the
deductible proportion for each individual area of his activity separately, provided he
maintains separate accounts for each individual area of his activity and provided he
notifies TAK on the method of defining the deductible proportion. If TAK receives the
notification at least fifteen ( 15 ) days before the start of the new tax period, the taxable
person may start to calculate the deductible proportion pursuant to this sub -article in the
first tax period following the tax period in which he informed the tax authority about his
decision, otherwise with the beginning of the next tax period. The taxable person shall
calculate a deductible proportion, chosen pursuant to this sub -article for at least twelve
(12 ) months. If a taxable person wishes to change the method of calculating the
deductible proportion again, he must notify again this change to TAK fifteen ( 15 ) days
before the start of the tax period in which the new method is going to be used.

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7.1.Following the notification made in acc ordance in paragraph 6 of this A rticle,
prohibit the taxable person from using the chosen method for determining a
deductible proportion if the chosen method does not allow TAK to control
adequat ely the deduction of input VAT.

7.2.Authorize or require the taxable person to make the deduction on the basis of
the real use made of all or part of the goods and services.

Article 40
VAT refund claims

1. A taxable person may either carry forward th e excess VAT credit to the following tax
period or submit a VAT refund claim, where, for a given tax period which is the last tax
period of quarter of a calendar year, the VAT return of a taxable person reflects an
amount of deductions that exceeds the amo unt of VAT due for that period. The excess
VAT credit carried forward may be applied against the VAT liability in the succeeding
tax periods.

2. VAT Refund claims:
Without prejudice to article 24 of the Law No 2004/48 on the Tax Administration
Procedures and for the purpose of ensuring the correct and straightforward application of
this sub -article, the following shall apply in respect of VAT refund claims:

2.1.A taxable person may claim a VAT refund if the VAT return for the last
month of a quarter of ca lendar year reflects an amount of VAT credit that exceeds
five thousand ( 5,000 ) € and provided that the taxable person was in credit status at
the end of each tax period of such quarter and that all VAT returns and all other
tax returns for all past tax pe riods have been submitted;

2.2.For exports, a refund may be claimed after each tax period, provided that the
following conditions are met:

2.2.1.The export transactions represents at lesat twenty -five percent ( 25% )
of the total transactions wit h entitlement of VAT input deduction and the
amount of VAT credit exceeds five thousand ( 5000 ) € at the end of the tax
period;

2.2.2.The taxable person complies with all applicable customs and VAT
provisions, and

2.2.3.All VAT returns and other tax returns for all past periods are
submitted.

3. Proof in respect of VAT refund claims:

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3.1.At the moment of making a refund claim, the taxable person must be in the
possession of all evidences and documents defined in the sub -legal act to be
issued by the Minister of Economy and Finance as referred to in paragraph 4 of
this article;

3.2.TAK shall ret ain the refund where the evidences and documents are not in the
possession of the taxable person or if there are indications that the reported data in
the VAT return in which the amount of the VAT refund is reported and previous
VAT returns, are not correc t. Such indications must be documeted in an official –
procès -verbal, established by a TAK officer or Customs officer. Such tax report
provides evidence till the taxable person proves otherwise .TAK shall notify the
taxable person that the refund will be retained and provide an explanation of the
reasons for retaining the refund with a motivated decision;

3.3.The refund shall be retained until the competent TAK office receives the
necessary missing evidences, documents and tax returns.If the do cumentation is
not provided within the required timeframes established by TAK ,the control of
the VAT refund claim will be closed and a final report will be issued and
provided to the taxpayer explaining the reasons for not approving the refund
claim;

3.4 . No interests for late refund as referred to in sub -paragraph 3 of paragraph 3 of
this A rticle are incurred during the period that the VAT refund is retained;

4.The Minister of Economy and Finance shall issue a sub -legal act to determine:

4.1.The proced ure and conditions in respect of VAT refunds related to periodic
VAT returns; and

4.2.Alternative procedures for refunding VAT to persons not required to submit
VAT returns; returns, to persons who are stopping their economic activity and to
taxable persons and customers not established in Kosovo.

Article 41
Adjustment of deductions

1. The initial deduction shall be adjusted where it is higher or lower than the deduction to
which the taxable person was entitled. In particular, adjustment shall be made where:

1.1.It is subsequently determined that the deduction of input VAT has been
calculated at a higher or lower amount than the amount to which the taxable
person has been entitled;

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1.2.After the VAT return is submitted, changes occur in the factors used to
calculate the deductible amount of input VAT, where for example purchases are
cancelled or price reductions are obtained after the supply takes place.

2. In the case changes occur within five years from the calendar year of the beginning of
use of capital goods, changes occur in the conditions, which were decisive during that
year for the deduction of input VAT, a correction of the input VAT shall be made for the
period following the change.

For immovable property, the period of twenty years instead of five years shall be
applicable.

3. The tax period in which the deduction of input VAT was made or was not made shall
be considered as the beginning of use of the capital good or immovable property
menti oned under paragraph 2 of this A rti cle.

4. The annual adjustment shall be made on the variations in the deductions entitlement in
subsequent years in relation to that for the year in which the goods were used for the first
time and shall be made in respect of one -fifth ( 1/5 ), respectivel y one -twentieth ( 1/20 ), in
accordance with the type of capital asset, of the corresponding annual deduction
originally made. However, if supplied during the adjustment period, capital goods shall
be treated as if they had been applied to an economic activi ty of the taxable person up
until expiry of the adjustment period.

5. An adjustment to the deduction of input VAT shall not be made if the difference of
deducted VAT is less than twenty ( 20 ) € .

6. The Minister of Economy and Finance shall work out practi cal rules to record the VAT
adjustments and to determine the deductible and non -deductible VAT in respect of these
adjustments.

Article 42
Deduction of input VAT on commencement of economic activity as VAT registered
taxable person.

1. On the day that the registration for VAT purposes becomes valid, a taxable person
shall acquire the right to a deduction of input VAT for goods which he has in stock on the
day before such registration becomes valid on b asis of what is defined in the A rticles 6, 7
and 8 of this Law. The deduction of input VAT may be verified by TAK on the basis of
the accounting information of the taxable person and data of stocks of goods.

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2. A taxable person subject to implementation of this article, may deduct input VAT in
proportion to the supply performed in so far as that right of deduction exists, but shall not
have the right to a VAT refund on this basis.

3. The Minister of Economy and Finance shall determine practical rules for the
implementation of this article.

CHAPTER XIV
BAD DEBTS

Article 43
Bad debt for VAT purposes

1. Where the whole or part of the payment for a taxable supply is not received by a
taxable person -supplier, he may consider the amount of non payment a bad debt for VAT
purposes. Such taxable person may ap ply to TAK for written permission to reduce the
amount of output tax due from him by the amount of VAT paid in respect of the supply
that is attributable to the whole or part of the payment for the taxable supply that has not
been received. The application shall be accompanied by sufficient evidence of the taxable
person to prove that the VAT on the debt has been paid to TAK and that the whole or part
of the payment for the taxable supply has not been received.

2. An applica tion under paragraph 1 of this A rticle, shall not be made less than six
months after the end of the tax period in which the VAT on the whole or part of the
payment for a taxable supply, which has not been received, was paid to TAK.

3. The Director or the authorised person may refuse an application made under paragraph
1 of this A rticle, where he considers that the evidence of the taxpayer is insufficient that
the taxable person has paid the VAT on the taxable supply to TAK and that he has not
received the whole or part of the payment fo r that taxable supply.

4. Where the Director or the authorised person is satisfied that the taxable person has paid
the VAT on the taxable supply and has not received the whole or part of the payment for
that taxable supply, he shall give written permissi on for the taxable person to deduct from
the amount of output tax due from him for his next tax period, the amount of VAT on the
whole or part of the payment that has not been received.

5. Where a taxable person who made an application under paragraph 1 o f this article,
receives written permission from the Director to reduce his output tax in respect of a bad
debt, he shall:

5.1.Create a bad debt invoice and include this in his records, with the letter from
the Director attached to that invoice;

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5.2.Send copies of that bad debt invoice and the Director’s letter to the person to
whom the taxable supply was made;

5.3.Send copies of that bad debt invoice and the Director’s letter to the competent
regional Tax Office.

6. Where the person to whom the taxab le supply was made and who is bad debtor,
receives a copy of the bad debt invoice and the Director’s or authorized person’s letter, he
shall increase the amount of output tax shown on his next VAT return by the amount
shown on the bad debt invoice.

7. Whe re the output tax of a taxable person has been reduced as a result of an application
made under paragraph 2 of this article and the whole or part of that debt is subsequently
paid, the taxable person shall treat as further output tax due for the tax period in which
the subsequent payment was made the part of the output tax reduced that is attributable to
the part of the bad debt subsequently paid.
8. The Minister of Economy and Finance may authorise by sub -legal act a special scheme
for the enterprises of p ublic interest.

CHAPTER XV
INVOICING AND ISSUANCE OF OTHER TAX DOCUMENTS

Article 44
Issuance of invoices and other documents serving as invoices by a taxable person

1. A taxable person shall ensure that, in respect of the following cases, an invoice is
issued, either by himself or by his customer or, in his name and on his behalf, by a third
party:
1.1.Supplies of goods or services which he has made to another taxable person,

1.2.Any payment made on account to him before a supply of goods ref erred to in
sub -paragraph 1 of this Article , was carried out,

1.3.Any payment on account made to him by another taxable person before the
provision of services was effected or completed.

2. A summary invoice may be issued if a taxable person carries out several separate
supplies of goods or services during a tax period.

3. If an invoice is issued to another taxable person, it must contain the data prescribed in
Article 45 of this Law, or if it is issued to other persons, it must at least contain the data
defined in Article 46 of this Law.

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4. An invoice shall be issued before the fifteenth ( 15th ) day of the month following the
month in which the chargeable event occurs. Invoices need to be signed in accordance
with Kosovo practice during the transitional period defined in A rticle 64 of this Law.

5. Invoices drawn up by customers in respect of supplies made to him:

5.1. Invoices may be drawn up by the customer -taxable person in respect of
thesupply made to him, by a taxable person, of goods and services. Invoices may
as well be issued in the name and on behalf of the taxable person -supplier;

5.2.TAK may impose conditions for such procedures and may also impose
specific conditions on taxable persons with no establishment in Kosovo supplying
goods or servi ces in Kosovo.

Article 45
Content of invoices issued by taxable persons to taxable persons

1. A taxable person who issues an invoice to a taxable person shall indicate the following
data on the invoice:

1.1.The date of issue;

1.2.A sequent ial number enabling the identification of the invoice;

1.3.The VAT registration number as well as the fiscal number of the taxable
person under which he supplies the goods or serviles;

1.4.The VAT registration number as well as fiscal number of the cust omer or the
purchaser, if the customer or the purchaser is liable to pay VAT on goods or
services supplied to him;
1.5.The full name and address of the taxable person and his customer;

1.6.The quantity and nature of goods supplied, or the extent a nd nature of the
services performed;

1.7.The date on which the supply of goods or of services was made or completed,
or the date of receipt of the payment on account, in so far as that date can be
determined and differs from the date of the issue of the i nvoice;

1.8.The taxable amount on which VAT is charged for each individual rate or for
which the individual exemption applies, the unit price exclusive of VAT for the
goods or services, and any price reductions and discounts not included in the unit
pri ce;

1.9.The VAT rate applied;

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1.10.The amount of VAT, except where a special arrangement is applied under
which, in accordance with this Law, such a detail, is excluded;

1.11.In the case a taxable person supplies goods or services for which a VA T
exemption is prescribed, the invoice must indicate the provision of this Law that
stipulates such exemption;

1.12.If a taxable person supplies goods or services where the customer is liable
for payment of VAT, reference to the applicable provision of t his Law or any
other reference indicating that the supply of goods or service is subject to the
reverse charge procedure as referred to sub -paragraph 4 of paragraph 1 of Article
52 of this Law;

1.13.A taxable person who charges VAT on the margin scheme for t ravel agents
as referred to in A rticle 58 of this Law, must state on the invoice the provision of
this Law pursuant to which VAT on the price difference is charged;

1.14.Where one of the special arrangements applicable to second -hand goods,
works o f art, collectors’ items and antiques as referred to in part A and part B of
Article 59 of this Law, is applied, reference must be made to the relevant articles
of these arrangements;

1.15.Where the person who issues the invoice is liable to pay VAT as a tax
representat ive in terms of paragraph 5 of A rticle 52 of this Law, the fiscal number
and the VAT registration number and his full name and address are obligatory
details to be mentioned.

Article 46
Content of an invoice issued by taxable persons t o other persons

1. A taxable person, who issues an invoice to persons others than those mentioned under
Article 45 of this Law, shall at least indicate the following data on the invoice:

1.1.The date of issuance;

1.2. The time of the supply;

1.3.A sequential number enabling the identification of the invoice;

1.4.The VAT registration number and the fiscal number under which the taxable
person supplies the goods or serviles;

1.5.The full name and address of the taxable person;

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1.6.T he full name and address of “the other person” and tax identification
numbers of this person as defined by TAK;

1.7.The total amount to pay including VAT;

1.8.The sales value of the goods or services excluding VAT;

1.9.The amount of VAT.

2. If a taxable person supplies goods and services at different tax rates, he must show the
sales value including VAT separately for each tax rate and also show the value of VAT
separately.

3. If a taxable person supplies goods or services for w hich VAT exemption is prescribed,
the invoice must indicate the provisions of this Law which stipulate the exemption.

4. In any case, a recipient of goods or services who is a non -taxable person, carrying out
eco nomic activity in the sense of A rticle 4 o f this Law, shall request that the taxable
person issues an invoice to him. The time limit relating to the issuance of such invoice is
the same as the time l imit defined in paragraph 4 of A rticle 44 of this Law.

Article 47
Debit and Credit Notes

1. Whe re the taxable amount and the VAT on a tax invoice has to b e corrected in
accordance with A rticle 41 of this Law, the supplier shall issue a debit note or a credit
note and shall treat that note as if it were a tax invoice.

2. Debit and Credit notes must at least contain the following information:

2.1.Date of issuance;

2.2.Sequence number;

2.3.Reference to the original invoice;

2.4.Identification of the supplier and the purchaser, namely the name, address and
their fiscal numbers, and i f applicable, their VAT registation numbers;

2.5.The reason of correction, and

2.6.The corrected taxable amount and the corrected VAT.

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Article 48
Bad Debt invoice

1. The content of a bad debt invoice as referred to in A rticle 43, must c ontain the
following information :

1.1.Date of issuance;

1.2.Sequence number;

1.3.Reference to the original invoice and the letter of approval of the Director or
the authorized person;

1.4.Identification of the supplier and the purchaser -ba d debitor, their fiscal
numbers and their VAT registration numbers if existing;

1.5.Taxable amounts and VAT of the original invoice and the corrected amounts
of taxable amounts and VAT.

Article 49
Requirement to Provide Simplified Invoices and fiscal receipts

1. Any person who is not required to register for VAT but who is carrying out econo mic
activity as referred to in A rticle 4 of this Law, issues to the recipient of the supply, the
following:

1.1.A simplified invoice as meant by A rticle 46 of this Law where the supply has
a value of five hundred ( 500 ) € or more, or where the person receiving the supply
is required to request such invoice in accordance with paragraph 4 of A rticle 46;

1.2. “Fiscal receipts” which:

1.2.1. Are automatic ally produced through the use of authorised Fiscal
electronic devices (FED’s) giving details of the goods or services
supplied at premises, units or locations accessible for the general public
such as in retail trade or wholesale trade or more general whe re no invoice
has to be issued in a systematic manner to clients who are paying in cash
or with other equivalent payment instrument;

1.2.2 Must have the following content:

1.2.2.1. The Header of the receipt:

1.2.2.1.1.The name, address of the supplier a nd the Fiscal
Number and VAT registration number if applicable. This

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must allow a programmable header consisting of the name
or trade name of the person, the business address, the Fiscal
and VAT Registration + Number + Telephone/Mobile
Phone;

1.2.2.1.2.T he cash register identification number. The
receipt must include the serial number of the fiscal cash
register and internal POS identification if used by the user;

1.2.2.1.3. The identification on the network, i.e. if different
sites of trade exist which are connected through one
network;

1.2.2.1.4.The date and time of supply. The fiscal receipt
must include the date and time of receipt issuance;

1.2.2.1.5.The serial number of the transaction with the
customer/client which is the cumulative number of i ssued
receipts;

1.2.2.1.6.The operator that has server.

1.2.2.2. The article details of the receipt:

1.2.2.1.1.A number indication per article of the goods or
services supplied or other article indication as allowed by
the Tax Administration;

1.2.2.1.2.An abbreviated description of each article of
goods or services supplied and followed by the reference
code if computerized product list is maintained;

1.2.2.1.3.The quantity and nature of the goods supplied or
the extent and nature of the servic es rendered multiplied by
the unit price;

1.2.2.1.4.Amount of rebates, discounts, refunds and cash
backs indicated with minus sign and amount;

1.2.2.1.5.VAT rate with a specific code for each rate and
per item;

1.2.2.1.6.The price inclusive of VAT fo r the items sold
having the same quality inclusive of VAT if applicable
(thus a total price for items sold of the same quality);

57
1.2.2.1.7.The price exclusive of VAT for the items sold of
the same quality but without VAT for each item line;

1.2.2.1. 8.The total, exclusive of VAT for the supplies of the
transaction per rate to the klient;

1.2.2.1.9.The total of VAT per rate if applicable

1.2.2.3. At the bottom:

The wording “Fiscal Receipt” and The Fiscal Logo and form

1.2.2.3.1.The fiscal log o is the identification mark that is placed at
the bottom of each tax receipt that certifies that sales are registered
into the fiscal memory and into the electronic journal/ control band
of the FED’s;

1.2.2.3.2. The graphic form of the fiscal logo is:

Republic of Kosovo MEF & TAK

The fiscal logo may be changed by Governmental decision.

1.2.2.4. The fiscal receipt may include the identification data of the
customer if required by tax legislation.

1.3.Automatically produced tax information including turnover and VAT paid by
customers, which can be made “on line” available to TAK for administering VAT
and other taxes which are due by taxpayers or certain categories of taxpayers.

2. A taxable perso n who supplies goods and services to persons for Non -business
purposes, issues to the recipient of the supply, the same simplified invoices and fiscal
receipt as refe rred to in paragraph 1 of this A rticle.

Article 50
Issuance and Sending invoices by ele ctronic means and documents serving as
invoices

1. Invoices and other documents issued pursuant to this Chapter, may be sent on paper or,
subject to acceptance by the recipient, may be sent or may be made available by
electronic means. The authenticity of the origin and the integrity of their content must be
guaranteed by means of an advanced electronic signature or by means of electronic data
interchange EDI as defined by European arrangements and recommendations

58

2. The specific obligations or formalitie s relating to the issuance, the sending or making
available of invoices or similar documents by electronic means and the electronic
signature which are in accordance with the European Union arrangements and
recommendations, shall be defined in the sub -lega l act to be issued by the Minister of
Economy and Finance.

3. Any document or message that amends and refers specifically and clearly to the initial
invoice is treated as an invoice.

Article 51
Special provisions

1. The taxable amount and the amount of VAT on invoices must be expressed in euro.

2. TAK may require invoices or documents serving as invoices in respect of supplies of
goods or services in Kosovo or to other countries, to be translated into an official
language of Kosovo.

3. The Minister o f Economy and Finance shall issue a sub -legal act to determine detailed
explanations and obligations as to respect the implementation of Chapter 15 of this Law.
Minister may as well impose in accordance with European Union arrangements and in
addition to t he common used trade documents in Kosovo, other documents such as
delivery notes, freight bills, transport documents, detailed accounts and records such as
registers for contract and process work and other means of proof with respect of
transactions and th e movement of the goods in order to ensure the correct assessment and
collection of VAT.

CHAPTER XVI
PERSONS LIABLE FOR PAYMENT OF VAT

Article 52
Persons liable for payment of VAT to TAK

1. Persons liable to pay VAT are:

1.1.Any taxable person carry ing out taxable supply of goods and services, except
where VAT has to be paid by another person in the cases referred t o in sub –
paragraphs 2 and 3 of paragraph 1 of this A rticle;

1.2.Any person who is registered for VAT purposes in Kosovo to whom good s
and services are supplied by a taxable person not established in Kosovo;

59
1.3.Any person who is identified for VAT purposes of VAT in Kosovo in which
the VAT is due and to whom goods are supplied through distribution systems
referred to in paragraph 4 of A rticle 19 of this Law, if the supplies are carried out
by a taxable person not established within Kosovo;

1.4.The Minister of Economy and Finance may issue a sub -legal act to provide
the person liable for payment of VAT is the taxable person to whom a ny of the
following supplies are made:

1.4.1.The supply of construction work, including repair, cleaning,
maintenance, alteration and demolition services in relation to immovable
property;

1.4.2.The supply if staff engaged in activities covered by 1.4.1 . of this
Article;

1.4.3.The supply of used material, used material which cannot be re -used
in the same state, scrap, industrial and non industrial waste, recyclable
waste, part processed waste and certain goods and serviles;

1.4.4. The supply of goods provided as security by one taxable person to
another in execution of that security;

1.4.5.The supply of goods following the cession of a reservation of
ownership to an assignee and the excercising of this right by the assignee;

1.4.6.The supply of immov able property sold by a judgement debtor in a
compulsory sale procedure.
The Minister of Economy and Finance may, in the above mentioned sub -legal act,
specify as well other supplies of goods and services and categories of suppliers or
recipi ents to whom these measures may apply.

2. VAT shall be payable by any person who enters the VAT on an invoice.

3. On importation, VAT shall be payable by any person or persons designated or
recognised as liable in accordance with the Kosovo Customs legis lation.

The Minister of Economy and Finance may, by sub -legal act, determine the conditions
that in the case of the importation of goods by taxable persons or certain categories
thereof or by persons liable for payment of VAT or certain categories thereof , the
payment of VAT due by reason of the importation may be deferred for a period of
maximum six months or need not to be paid at the time of importation, on condition that
it is entered as such in the VAT return to b e submitted in accordance with A rticle 54 of
this Law.

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4. VAT shall be payable by any person who causes goods to cease to be covered by
customs warehouses, other warehouses and similar arrangements.

5. A taxable person who is not established in Kosovo shall appoint a tax representative as
the person liable for payment of the VAT, except for the c ases defined by sub -paragraph
4 of paragraph 1 of this A rticle and for exercising all his rights.

CHAPTER XVII

TAX PERIODS AND VAT RETURNS

Article 53
Tax Periods

1. Subject to the paragraphs 2 an d 3 of this A rticle, the tax period of all taxable persons
shall be each calendar month.

2. Where a person is:

2.1.Registered for VAT on a date which is not the first day of a calendar month,
the firot taxable period for that person shall begin on t he date of his registration
and shall last until the last day of that month, and

2.2.Deregistered for VAT on a date which is not the last day of a calendar month,
the last taxable period for that person shall end on the date of his deregistration,
having begun on the first day of that month.

3. Liquidation and bankruptcy:

3.1.For a taxable person against whom a liquidation or bankruptcy procedure is
iniated, the tax period shall begin on the day of the opening of the liquidation or
bankruptcy p roceeding. This taxable period shall end on the date of the decision
on the conclusion of the liquidation or bankruptcy procedure;

3.2.VAT returns must be submitted on a monthly basis if the business activities
are pursued by the liquidator or curator be ing nominated or appointed
administering the liquidation or bankruptcy procedureaccording to Kosovo
legislation.

3.3.The Minister of Economy and Finance shall regulate by sub -legal act practical
implementation of this article. He may determine a tax period which is different
from one month and may require advanced payments for such period for any
category of taxable persons.

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Article 54
VAT returns, remittance and payments

1.A taxable person shall submit a tax declaration and remit the related payment not later
than the 20th of the calendar month following the end of each tax period.
The tax declaration shall contain:

1.1. The amount of all taxable and exempt supplies, exportations and supplies
treated as exportations as well as the output tax due on taxable supplies made by
him during that period;

1.2. The amount of all purchases and importation as well as input tax for that tax
period that the person is entitled to deduct;

1.3. The amount of purchases with VAT which is charged on the reci pient as
referred to in sub -paragraph 1.4 of A rticle 52 of this Law;

1.4. Any increase or decrease in respect of the amount mentioned under the sub –
paragraphs 1, 2 and 3 of paragraph 1 of this A rticle, as a result of any adjustment
of the taxable amount on basis of debit and credit notes, the adjustments of
deduction of input VAT including capital goods or any adjustment as a result of
bad debt invoices;

1.5. The net amount of VAT to be paid to TAK or the net amount in excess for the
tax period.

2. The form of the declaration, the information to be declared, the place where the
declaration shall be submitted and the place and manner of payment of the value added
tax due shall be specified by the Minister of Economy and Finance in a sub -legal act.

CHAPTER XVIII

BOOKKEEPING AND STORAGE OF VAT BOOKS, RECORDS AND RELATED
DOCUMENTATION

Article 55
Requirement to record information, retaining records and providing access

1. A taxable person shall retain:

1.1.All the information contained in invoice s, coupons, debit or credit note or in
other documents serving for the same purposes, issued by him. Such information
shall be recorded in the books and records to be kept by the taxpayer;

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1.2.Copies of any tax invoice and bad debt invoice, debit or cre dit note and any
other document serving the same purpose, issued by him;

1.3.The originals of any tax invoice and bad debt invoice, debit or credit note and
any other document serving the same purpose, issued to him;

1.4.All cash payment records and evid ence, bank accounts and credit card records
which relate to any economic activity carried on by him;

1.5.Copies of any contract for: Any importation, any supply of goods and services
whether or not VAT was charged and any supply of goods and services whic h are
treated for the purposes of the present law as having taken place outside of
Kosovo;

1.6.Any Single Administrative Document or any other Customs document
relevant to the importation, exportation or any other Customs arrangement.

2. All documents m enti oned under paragraph 1 of this A rticle shall be kept in
chronological order with cross reference to each other when having the same taxable
event.

3. Retain copies of the Information Technology programs which are used or being used
for the administr ation of the accounting and tax records, books and all other related
documents and provide paper copies of these programs which allow reading.
Producing and storing invoices and all other tax documents. books and records referred to
in this Law in a suitab le electronic format or similar system such as microfilms,
microfiches and scanned formats, shall only be authorized by the Director General of
TAK after receiving a written request thereto from the taxable person. Such request must
be accompagnied by a d etailed description of the system and must contain the necessary
evidence that all security in respect of producing and storage requirements for
invoice,book and record keeping are met. The agreement between the taxable person and
an outsourcing specialist must as well be added if this the supply of these services are
outsourced, The taxable person and the outsourcing specialist are jointly and severally
shall be severally liable for the payment of the tax.

4. Provide access within reasonable delay to all information as referred to in the
paragraphs 1, 2 and 3 of this A rticle and in particular to the Information Technology
systems used for the accounting and tax purposes and to provide all technical assistance
for the reading and the understanding of the IT system and programs refe rred to in
paragraph 3 of this A rticle.

5. The Minister of Economy and Finance shall issue a sub -legal act for the
implementation of this article.

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Article 56
Storage of invoices, bad debt invoices, credit an d debit notes, simplified invoices,
coupons and documents serving as invoices, books and records

1. Every person having obligations and rights imposed by this Law, shall ensure that
copies of the invoices, bad debt invoices, credit and debit notes, simpl ified invoices,
coupons and documents serving as invoices issued by himself, or by his customer or, in
his name and on his behalf, and all the invoices which he has received as well as all
books and records, registers and all other imposed proof documents. are stored for at least
a period of six years wich starts on the first of January after the year in which the taxable
event took place.
The same rules are valid in respect of electronic storage of such documents, books,
records and registers.

2. Every person having obligations and rights imposed by this Law, shall keep the
documents refe rred to in paragraph 1 of this A rticle in ranking order of a sequential
number. That sequential number shall figure as well on the original document issued to
his custom er.

3. Place of storage:

3.1.Every person, having obligations and rights imposed by this Law, may decide
the place of storage of all the documents referred to in paragraph 1of this article.
The taxable person shall inform TAK of that place;

3.2.TAK sha ll have access to that place and all documents must as well be made
available to TAK at the place where he has his business or has his fixed
establishment, or, in the absence of such a place, the place where he has his
permanent address or usually resides in Kosova, without undue delay whenever
TAK so request.

Article 57
Period of storage of books and all VAT records

1. By way of dero gation from what is defined in A rticle 12 of the amended Law No.
2004/48 On Tax Administration and Procedures a taxable person shall:

1.1.Keep his books required by this Law for a period of at least six (6) years
which starts after the year in which such books are closed;

1.2.Keep all other records an d documents as required by the A rticles 55 and 5 6 of
this Law, for a period for at least six (6) years which starts after the year in which
the VAT liability arose, the VAT deduction or the VAT adjustment occurred;

64
1.3.Respect the same rules in respect of electronic storage of such books, records
and r egisters.

2. The Minister of Economy and Finance shall issue a sub -legal act for the
implementation of this Article.

CHAPTER XIX

SPECIAL SCHEMES

Article 58
Special schemes for travel agents

1. Principle:

1.1.The Minister of Economy and Finance, by a sub -legal act, provide for a
special scheme for travel agents;

1.2.Such special scheme may be applied to transactions carried out by travel
agents who deal with customers in their own name and use supplies of goods or
services provided by other taxable persons, in the provision of travel facilities;

1.3.The application of the special scheme shall not apply to travel agents where
they act solely as intermediar ies and to whom sub -paragraph 3 of paragraph 6 of
Article 24 of this Law applies for the purpos es of calculating the taxable amount.

2. Definitions:

2.1.Tour operator means a person who acts in his own name and who organizes
package tours with own means for travellers;

2.2.Travel agent means a person who acts as an intermediary and arranges
tran sportation, accomodations, and tours for travellers;

2.3.For the purposes of this article, tour operators shall be regarded as travel
agents.

3. Single service:

3.1.The transactions made, in accordance with the conditions of paragraph 1 of
this article , by the travel agent in respect of a journey, shall be regarded as a
single service supplied by the travel agent to the traveller;

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3.2.The single service is taxable in Kosovo if the travel agent has established his
business or has a fixed establishment i n Kosovo from which he carries out the
supply of serviles;

3.3.The taxable amount and the price exclusive of VAT in respect of the single
service provided by the travel agent shall be the travel agent’s margin, being the
difference between the total amoun t, exclusive of VAT, to be paid by the traveller
and the actual cost to the travel agent of supplies of goods or services provided by
other taxable persons, where those transactions are for the direct benefit of the
traveller;

3.4.If transactions entruste d by the taravel agent to other taxable persons are
performed by such persons outside Kosovo, the supply carried out by the travel
agent shall be regarded as an intermediary activity exempted pursuant article 34
of this Law;

3.5.If the transactions are pe rformed both inside and outside Kosovo, only that
part of the travel agent’s service relating to the transactions outside of Kosovo
may be exempted;

3.6.VAT charged to the travel agent by ther taxable persons in respect of
transactions which are referred to in paragraph.3 of this Article and which are for
the direct benefit ofthe traveller shall not be deductible or refundable.

Article 59
Special arrangements applicable to second -hand goods, works of art, collectors’
items and anti ques: Profit margin scheme and special arrangements for sales by
public auction

Part A: Profit margin scheme

1. Principle: The Minister of Economy and Finance may, by sub -legal act, provide for
special arrangements for taxing the profit margin of taxable dealers in respect of the
supply of second -hand goods, works of art, collectors’s items and antiques, as well as for
simplifying the procedure for collecting the tax.

2. For the purposes of this arrangement, a taxable dealer means any taxable person who,
in the course of his economic activity and with a view to resale, purchases, or applies for
the purposes of his business, or imports, second -hand goods, works of art, collector’s
items or antiques, whether that taxable person is acting for himself or on b ehalf of
another person pursuant to a contract under which commission is payable on purchase or
sale.
“Second hand goods”, “works of art”, “collector’s items”,“antiques” and other specific
terms used in the special scheme such as “selling price” and “purch ase price” will be
defined in the sub -legal act as referred to in paragraph 1 of this article.

66

3. The margin scheme applies to the supply by a taxable dealer of second -hand goods,
work of art, collector’s items or antiques where those goods have been supp lied to him
within Kosovo by one of the following persons:

3.1. A non -taxable person;

3.2. Another taxable person, in so far as the supply of goods by that other taxable
person is exempt pursuant to the A rticles 27 and 28 of this Law;

3.3. Another taxable dealer, in so far as VAT has been applied to the supply of
goods by that other taxable dealer in accordance with this margin scheme.

4.The profit margin of the taxable dealer shall be equal to the difference between the
selling price ch arged by the taxable dealer for the goods and the purchase price of these
goods. The taxable amount in respect of the supply of second -hand goods, works of art,
collector’s items and antiques shall be the profit margin made by the taxable dealer, less
the amount of VAT relating to the profit margin.

5. The taxable dealers shall be granted the right to opt for application of the margin
scheme for the following transactions:

5.1.The supply of works of art, collectors’ items and antiques, which the taxab le
dealer has imported himself,
5.2.The supply of works of art supplied to the taxable dealer by their creators or
their successors in title;

5.3.If a taxable dealer exercises the option under paragraph 5 of this article, the
taxable amount shall be deter mined in accordance with paragraph 4 of this article.

6. In the case of import of work of art, collectors’ items or antiques by the taxable dealer
himself, the purchase price to be taken into account in calculating the profit margin shall
be equal to the taxable amount on importation plus the VAT paid on importation.

7. The chargeabibilty for VAT, the entitlement of input VAT deduction in respect of
supplies second -hand goods, works of art, collectors’item or antiques subject to the
margin scheme and the records and accounts to be kept, shall be specified in the sub –
legal act refe rred to in paragraph 1 of this A rticle.

8. Simplified procedures for collecting the VAT:

8.1.The Minister of Economy and Finance may also apply simplified procedures
for colle cting the VAT for certain transactions or for certain categories of taxable
dealers, in particular in respect of the taxable amount of supplies of goods subject
to the margin sheme;

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8.2.The taxable dealer may also opt for the application of the normal VAT
arrangements to any supply covered by the margin scheme with entitlement to
deduct from the VAT for which he is liable, the VAT due or paid on the import
or the VAT due or paid in respect of the work of art supplied to him by its creator,
or the creator’ s successors intitle, or by a taxable person other than a taxable
dealer;

8.3.The right of deduction of input VAT shall arise at the time when the VAT due
on the supply in respect of which the taxable dealer opts for application of the
normal VAT arrangem ents, becomes chargeable.

Part B: Special arrangements for sales by public auction .

9. Principle: The Minister of Economy and Finance may apply special provisons diff erent
from paragraph 4 of this A rticle in respect of the determination of the taxable am ount of
supplies of second -hand goods, works of art, collectors’items or antiques effected by an
organiser of sales by public auction, acting in his own name, pursuant to a contract under
which commission is payable on the sale of those goods by public auc tion, on behalf of
persons as will be determined by the Minister of Economy and Finance.

10. Special obligations shall be imposed on the organiser of the sale by public auction in
respect of the issue of an invoice or a document in lieu to the purchaser a s well as in
respect of the content of such documents.

Article 60
Flat rate scheme for farmers

1.Principle: The Minister of Economy and Finance may, by a sub -legal act provide for
the application to farmers whose activities are carried out in an agricul tural, forestry or
fisheries undertaking, a flat -rate scheme in order to offset VAT charged on purchases of
goods and services made by the flat -rate farmers,

2. The application for a flat -rate farmer who is entitled to flat -rate compensation, the flat –
rate compensation percentages to be applied to the prices exclusive of VAT, of the
following goods and services:

2.1.Agricultural products supplied by flat -rate farmers to taxable persons not
covered in Kosovo by the flat -rate sheme;

2.2.Agricultural servi ces supplied by flat -rate farmers to taxable persons not
covered in Kosovo by the flat -rate sheme;

2.3.The flat -rate compensation percentages may vary for forestry, for the different
sub -sectors of agriculture and for fisheries.

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3. Certain categories o f farmers may be excluded from the flat -rate scheme as well as
farmers for whom application of the normal arrangements is not likely to give rise to
administrative difficulties.

4. Every flat -rate farmer may opt, subject to the rules and conditions laid d own in the
sub -legal act referred to in paragraph 1 of this article, for the normal VAT arrangements.

5. The sub -legal act to be issued by the Minister of Economy and Finance shall as well
define:

5.1.Farmer, agricultural, forestry or fisheries unde rtakings, flat -rate farmer,
agricultural products, agricultural services, input VAT charged, flat -rate
compensation;

5.2.The flat -rate compensation percentages; and

5.3.The deduction of input VAT charged on capital goods.

Article 61
Sp ecial scheme for electronically supplied services

1. Principle: The Minister of Economy and Finance may permit by sub -legal act any non –
established taxable person in Kosovo supplying electronic services to a non -taxable
person who is established in Kosovo or who has his permanent address or usually resides
in Kosovo, to use the special scheme for all electronic supplied services as meant by sub –
pargraph 3.2.8 of A rticle 20 of this Law and enumerated in Annex II of this Law.

2. The non -established taxable person shall state to TAK when he commences or ceases
his activity as a taxable person, or changes that activity in such a way that he no longer
meets the conditions necessary for use of this special scheme. He shall communicate that
information electroni cally and shall request a read receipt for this message.

3. The information that the non -established taxable person must provide to TAK when he
starts taxable activity, shall contain the following details:

3.1.Name;

3.2.Postal address;

3.3.Electronic addresses, including websites;

3.4.National tax number, if any;

3.5. A statement that the person is not identified for VAT purposes in Kosovo.

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The non -established taxable person shall notify TAK of any changes in the
informat ion provided.

4. The Minister of Economy and Finance shall, in the sub -legal act referred to paragraph
1 of A rticle 61 of this Law, provide in particular instructions in respect of:

4.1.The registration and the cancellation of the registration;

4.2.The VAT – return to be submitted by electronic means and the payments to be
executed when submitting such VAT return on a quarterly basis;

4.3.The manner how refunds can be made;

4.4.The records to be kept of the transactions covered by this spe cial scheme, how
long the records must be kept and how the records must be made available
electronically on request of TAK .

Article 62
Special scheme for investment gold

1. Principle:
The Minister of Economy and Finance may, by sub -legal act provide for the application
of a special scheme for investment gold:

2. Definitions: For the purposes of this scheme, “investment gold” shall mean:

2.1.Gold in the form of a bar or a wafer of weights accepted by the bullion
markets of a purity equal to or greater than nine hundred and ninety -five ( 995 )
thousand, whether or not represented by securities, except for small bars or wafers
of a weight less than one ( 1) gram ,

2.2.Gold coins which:

2.2.1.Have a purity equal to or greater than nine hundred ( 900 ) thousa nd ;

2.2.2.Were minted after the year 1800;

2.2.3.Are or have been legal tender in the country of orizin; and

2.2.4.Are normally sold at a price which does not exceed the open market value of
the gold contained in the coins by more than eighty percent ( 80% ).

For the purposes of this scheme, such coins shall not be considered to be sold for
numismatic interest.

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3.Exemptions for investment gold transactions.

The following shall be exempt from VAT:

3.1.Supplies and importation of inve stment gold, including investment gold
represented by certificates for allocated or unallocated gold or traded on gold
accounts and ncluding, in particular, gold loans and swaps, involving a right of
ownership or claims in respect of investment gold, as we ll as transaction
oncerning investment gold involving futures and forward contracts leading to a
transfer of right of ownership or claim in respect of investment gold,

3.2.Services of agents who act in the name and for the account of another whe
hey int ervene in supplies of investment gold for their principal.

3.3.Taxation option:

3.3.1.Notwithstanding the pro visions of paragraph 3 of this A rticle,
taxable persons producing investment gold or processing any gold into
investment gold shall have the right to opt to tax investment gold if they
supply it to another taxable person;

3.3.2.Taxable persons who in their trade normally supply gold to another
taxable person for industrial purposes shall also have the right to opt to tax
investment gol d from sub -paragraph 2.1 of this Article. The scope of the
option may be restricted;

3.3.3.If the supplie r from 3.3.1 and 3.3.2 of this A rticle, decides to opt for
taxation, the agent carrying out services as referred to in 3.3.2 of this
Article shall also have the right to opt for taxation.

4. Special rights and obligations for traders in investment gold:

4.1.Where his subsequent supply of investment gold is exempt pursuant to this
article, the taxable person is entitled to deduct the following:

4.1.1.The VAT due or paid in respect of investment gold supplied to him
by a person who opted for taxation in accordance with paragraph 3 of this
Article;

4.1.2.The VAT due or paid in respect of a supply made to him or an
importation of gol d other than investment gold, carried out by him, which
is subsequently transformed by him or on behalf of him, into investment
gold;

4.1.3.The VAT due or paid for the services supplied to him consisting of
change of form, weight or purity of gold includ ing investment gold.

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4.2.A taxable person who produces investment gold or transforms gold into
investmentgold may deduct VAT due or paid by him for the supply or importation
of goods or services linked to the production or transformation of such gold as if
the subsequent supply of the gold exempt under the scheme were taxed.

5. Special obligations for taxable persons trading in investment gold.
Taxable persons shall keep records of investment gold transactions and keep
documentation for ten ( 10 ) years a fter the end of the year to which such documents refer,
regardless of what is defined in the Law No. 2004/48, on Tax Administration and
Procedures.

CHAPTER XX

FINAL PROVISIONS

Article 63
Applicable Law and Tax Authorities

This Law shall, subject to A rticle 64 of this Law, supersede the VAT Law No. 03/L -114
of 18 December 2008

2.Tax Authorities:

2.1.TAK shall have the exclusive responsibility to administer VAT;

2.2.The Customs Service of the Republic of Kosovo shall, on behalf of TAK,
assess , levy and collect VAT on imports, exports and other Customs
arrangements, and undertake as well any other function relating to the
administration of VAT, as may be required.

Article 64
Transitional period – Transitional provisions

1. A transitional per iod enables the Kosovo VAT legislation in specific fields to be
gradually adapted to the European Union VAT legislation.

1.1 During the transitional period certain provisions of these specific fields as
referred to in paragraph 3 of this A rticle, will no t be implemented during the
transitional period. This is in particular valid for the move to the exemptions
without right of deduction of i nput VAT as referred to in the A rticles 27 and 28 of
Chapter VIII; for the introduction of the special schemes as ref erred to in Chapter
XIX, except for the special scheme for electronically supplied services as referred
to in article 61; and for the signature obligation on invoices.

72

1.2. during the transitional period, certain provisions relative to import and
supplies as referred to in paragraph 4 of this A rticle ,remain exempted during the
transitional period.These provisions relate primarily to imports and supplies made
within the context of projects and programs for rebuilding Kosovo,as well as
imports and supplies made within the context of the agricultural field.

2. The transitional period starts on 1 January 2010 and ends on 31 D ecember 2012. This
transitional period may be prolonged or reduced on a proprosal made by the Minister of
Economy and Finance,which is approved by the Assembly.Such a proposal must include
an evaluation of the budgetary,economic and social effects of the implementation vis -a –
vis the non -implementation of the provisions in question and fully justify the reasons for
making the cange.

3. The non -implementation on 1 January 2010 during the transitional period is put in
place for:

3.1. The sub -paragraphs 4; 5; 10; 11; 12 of paragraph 1 ;the part of sub -paragraph
14 of paragraph 1 which relates to sub -paragraph 12 of paragraph 1 of Article 2 7
of this Law;

3.2. The paragra ph 2 of A rticle 27 of this Law;

3.3. The part of paragraph 3 of Article 27 which relates to paragraph 2 of A rticle
27 of this Law;

3.4. The part of paragraph 4 of A rticle 44 of this Law which concerns the
signature obliga tion of the invoice;

3.5. The chapter XX in respect of the special schemes except for the special
scheme for electronically supplied services as referr ed to in A rticle 61 of this
Law.

4. The implementation on 1 January 2010 during the transitional perio d of provisions
which have their equivalent in the VAT Regulation No. 2001/11 as amended and in the
VAT Law 03/L -114:

4.1. The paragr aph 2 of A rticle 29 of this Law;

4.2. The paragraph 2 of Article 30 of this Law;

4.3. The paragraph 2 of Article 33 of t his Law;

4.4. The paragraph 3 of Article 33 of this Law.

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5. TAK shall continue to apply the VAT Regulation No. 2001/11 as amended and the
VAT Law No. 03/L -114, when considering any tax issues related to tax periods up to and
including the tax periods bef ore the entry into force of the present VAT Law that might
arise on or after that date.

Article 65
Implementation

1. The Minister of Economy and Finance shall issue the sub -legal acts required by and
referred to in this Law within a period of six months commencing on the date of entry
into force of this Law.

2. The Director may also issue public rulings in accordance with Article 9 of the Law No.
2004/48 on Tax Administration and Procedures for administering this Law and for
providing commentaries and a dditional explanations.

3. The pr esent Law shall be applied from 1 January 2010 .

Article 66
Entry into force

This law enter into force fifteen (15) days after publica tion in the Official Gazette of the
Republic of Kosova .

Law No.03/L – 146
29 Decembe r 2009

President of the Assembly o f the Republic of Kosovo
_________________
Jakup KRASNIQI

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ANNEX I
LIST OF THE ACTIVITIE S REFERRED TO IN THE THIRD PARAGRAPH
OF ARTICLE 4:

1. Telecommunications services;
2. supply of water, gas, electricity and thermal energy;
3. transport of goods;
4. port and airport services;
5. passenger transport;
6. supply of new goods manufactured fo r sale;
7. transactions in respect of agricultural products, carried out by agricultural
intervention agencies pursuant to Regulations on the common organisation of
the market in those products;
8. organisation of trade fairs and exhibitions;
9. warehousin g;
10. activities of commercial publicity bodies;
11. activities of travel agents;
12. running of staff shops, cooperatives and industrial canteens and similar
institutions;
13. activities carried out by radio and television bodies in so far as these are n ot
exempt pursuant to subparagraph 1.16 of Article 27.
14. Service for sewerage,offscourings and soil disposal by the municipal and
public bodies.

ANNEX II
INDICATIVE LIST OF THE ELECTRONICALLY SUPPLIED SERVICES
REFERRED TO IN POINT (K) OF SUB -PARAGRAPH 3.2.9 OF ARTICLE
20

1. Website supply, web -hosting, distance maintenance of programmes and
equipment;
2. supply of software and updating thereof;
3. supply of images, text and information and making available of databases;
4. supply of music, films and g ames, including games of chance and gambling
games, and of political, cultural, artistic, sporting, scientific and entertainment
broadcasts and events;
5. supply of distance teaching.

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ANNEX III:
LIST OF SUPPLIES OF GOODS AND SERVICES TO WHICH THE
REDUCE D RATES REFERRED TO IN ANNEX III OF PARAGRAPH 2 OF
ARTICLE 26 MAY BE APPLIED :

Limited list of items subject to a reduced rate of VAT six percent (6%):

1. Foodstuffs (including beverages but excluding alcoholic beverages) for human
consumption; seeds, pla nts and ingredients normally intended for use in the
preparation of foodstuffs; products normally used to supplement foodstuffs or as a
substitute for foodstuffs;

2. Supply of water; and

3. Supply of services provided in connection with street cleaning, refuse
collection and waste treatment, other than the supply of such services by bodies
referred to in Paragraph 3 of Article 4 of this Law.

Alternative list if there is a desire to further limit the six percent (6%) reduced
rate:
Goods and Services to which a reduced rate is to be applied:
1. Rice, Cereal grains such as barley, corn, maize, oats, rye, and wheat
2. Products made from cereal grains intended for human consumption and
containing at least fifty percent (50%) of the cereal grain, such as flou r, breakfast
cereals, pastas, bread, etc.
3. Soybeans and products intended for human consumption containing at least
twenty -five percent (25%) soybeans or soybean extracts.
4. Sugar, refined and unrefined, including confectioners’ sugar intended for
human consumption
5. Vegetables, raw and processed, frozen or canned, intended for human
consumption, including potatoes and potato products, tomatoes and tomato
products, and similar vegetables and their products which include at least 50% of
the vegetable in the product.

76
6. Fish – frozen, fresh and canned – intended for human consumption
7. Meat, including beef, chicken, lamb, and pork and their products intended for
human consumption, so long as the respective product contains a minimum of
50% of the meat in the product.
8. Cooking oils made from grains or oil seeds intended for use in cooking for
human consumption
9. Milk and milk products intended for human consumption
(10)Beverages, excluding alcoholic and carbonated beverages, intended for
human consumptio n
11. Fruits and fruit products intended for human consumption so long as the fruit
product contains a minimum of 50% of a fruit or fruits

LIST OF SUPPLIES OF GOODS AND SERVICES TO WHICH THE
REDUCED RATES REFERRED TO IN ANNEX III OF THE COUNCIL
DIRECTIVE 2006/112/EC of 28 NOVENBER 2006 PARAGRAPH 2 OF
ARTICLE 26 MAY BE APPLIED

1. Foodstuffs (including beverages but excluding alcoholic beverages) for
human and animal consumption; live animals, seeds, plants and ingredients
normally intended for use in the preparation of foodstuffs; products normally
used to supplement foodstuffs or as a substitute for foodstuffs.

2. Supply of water;

3. Pharmaceutical products of a kind normally used for health care, prevention
of illnesses and as treatment for medical and veterinary purposes, including
products used for contraception and sanitary protection;

4. Medical equipment, aids and other appliances normally intended to alleviate
or treat disability, for the exclusive personal use of the disabled, including the
repa ir of such goods, and supply of children’s car seats;

5. Transport of passengers and their accompanying luggage;

6. Supply, including on loan by libraries, of books (including brochures, leaflets
and similar printed matter, children’s picture, drawing or coloring books, music

77
printed or in manuscript form, maps and hydrographic or similar charts),
newspapers and periodicals, other than material wholly or predominantly
devoted to advertising;

7. Admission to shows, theatres, circuses, fairs, amusement par ks, concerts,
museums, zoos, cinemas, exhibitions and similar cultural events and facilities;

8. Reception of radio and television broadcasting services;
9. Supply of services by writers, composers and performing artists, or of the
royalties due to them;

10. Provision, construction, renovation and alteration of housing, as part of a
social policy;

11. Supply of goods and services of a kind normally intended for use in
agricultural production but excluding capital goods such as machinery or
buildings;

12 . Accommodation provided in hotels and similar establishments, including
the provision of holiday accommodation and the letting of places on camping or
caravan sites;

13. Admission to sporting events;

14. Use of sporting facilities;

15. Supply of goods and services by organizations recognized as being devoted
to social wellbeing by Member States and engaged in welfare or social security
work, in so far as those transactions are not exempt pursuant to Articles 132,
135 and 136;

16. Supply of services by undertakers and cremation services, and the supply of
goods related thereto;

17. Provision of medical and dental care and thermal treatment in so far as
those services are not exempt pursuant to points (b) to (e) of Article 132(1);

18. Supply of services provided in connection with street cleaning, refuse
collection and waste treatment, other than the supply of such services by bodies
referred to in Article 13.

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LIST OF SUPPLIES OF GOODS AND SERVICES TO WHICH THE
INCREASED RATES REFERRED TO IN PARAGRAPH 2 OF ARTICLE 26
MAY BE APPLIED

Goods and Services to which an increased rate it to be applied:

1. Passenger Vehicles sold in Kosovo to the initial user of the vehicle, which are
sold for a price, including all options and normal services performed at t he time of
sale, of 25,000 euros or more;

2. Alcoholic beverages with an alcohol content of 8% (15%) or higher;

3. Tobacco and tobacco products; and

4. Perfumes and Eau de Cologne

ANNEX IV: AGRICULTURAL PRODUCTS

Description

Code

Live bovine anim als, pure -bred breeding
animals
Live swine, pure -bred breeding animals
Live sheep, pure -bred breeding animals
Live goats, pure -bred breeding animals

0102 10

0103 1000
0104 1010
0104 2010

Live poultry, that is to say, fowls of the
species Gallus dom esticus, ducks, geese,
turkeys and guinea fowls, weighing not
more than 185 g

0105 11 to 0105 19

Live trees and other plants; bulbs, roots and
the like, as described within the headings
listed in the following column
Potatoes, seed
Onions, sets

0601 and 0602

0701 1000
0703 1011
Spelt for sowing
Common wheat and meslin, seed
Rye, seed
Barley, seed
Oats, seed
Maize (corn), seed

1001 9010
1001 9091
ex 1002 0000
1003 0010
ex 1004 0000
1005 10

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Soya beans, for sowing
Sunflower seeds, for sowing
Seeds, fruit and spores, of a kind used for
sowing

1201 0010
1206 0010
1209
Residues and waste from the food
industries, as described within the headings
listed in the following column

Preparations of a kind used in animal
feeding (other than dog or cat food, put up
for retail sale)

2301 to 2308

2309 90

Fertilisers, as described within the headings
of the chapter listed in the following
column

Chapter 31
Fungicides

Herbicides, anti -sprouting products and
plant -grow th regulators

Rodenticides

Dryers, for agricultural products.

3808 20

3808 30

3808 9010

8419 3100
Mechanical appliances (whether or not
hand -operated) for projecting, dispersing or
spraying liquids or powders, agricultural
or horticultural.

84 24 8110 to 8424 8199
Pneumatic elevators and conveyors
specially designed for use in agriculture.

8428 2030
Loaders specially designed for use in
agriculture.

8428 9071 and 8428 9079
Agricultural, horticultural or forestry
machinery for soil
prepara tion
or cultivation; lawn or sports -ground rollers

8432
Harvesting or threshing machinery,
including straw or fodder balers;
grass or hay mowers (other than mowers
for lawns, parks or sportsgrounds);
machines for cleaning, sorting or grading
eggs, frui t or other agricultural produce,

8433 20 to 8433 90

80
other than machinery of heading 8437.

Milking machines and dairy machinery.

8434
Other agricultural, horticultural, forestry,
poultry keeping
or bee – keeping machinery, including
germination plant fitted
with mechanical
or thermal equipment; poultry incubators
and brooders.

8436

Pedestrian -controlled tractors. 8701 1000
Agricultural tractors (excluding pedestrian –
controlled
tractors) and
forestry tractors, wheeled

8701 9011 to 8701 9050