Lump-Sum Taxation in Macedonia: Requirements and Limits

What is lump-sum taxation?

Lump-sum taxation is a simplified tax regime that allows small businesses and self-employed individuals to pay a fixed tax without the need for complete double-entry bookkeeping. The tax is calculated based on normalized expenses — UJP assumes that a certain percentage of your revenue consists of expenses, and the tax is calculated only on the remainder. This system is ideal for small service businesses, freelancers, craftspeople, and traders with low turnover.

Eligibility criteria

To use the lump-sum regime, you must meet the following conditions:

• Annual revenue up to 3,000,000 MKD (approximately EUR 48,800) — this is the absolute threshold. If you exceed it, you automatically switch to regular taxation.
• Not a VAT taxpayer — lump-sum taxpayers cannot be registered for VAT. If your annual turnover exceeds 2,000,000 MKD, you must register for VAT and automatically lose lump-sum status.
• Activity is not excluded — certain activities cannot use lump-sum taxation: lawyers, notaries, enforcement agents, accountants, tax advisors, doctors with private practice, and other liberal professions.
• Registered as a TP (sole trader) or self-employed — legal entities (DOOEL, DOO) cannot be lump-sum taxpayers.
• Application submitted to UJP — the status is not automatic. You must submit a lump-sum taxation application by January 31 for the current year.

How the tax is calculated

1. 1

   Determine total annual revenue

   All income from the business activity is summed for the calendar year. This includes invoiced services, product sales, and other activity-related income.

2. 2

   Apply normalized expenses

   UJP recognizes normalized expenses of 50% to 80% of revenue, depending on the activity. For example, craft services get 80% recognized expenses, while consulting services get 50%.

3. 3

   Calculate the tax base

   The normalized expenses are subtracted from total revenue. The remainder is the tax base.

4. 4

   Apply the tax rate

   A personal income tax rate of 10% is applied to the tax base. Additionally, pension and health insurance contributions must be paid.

Advantages and disadvantages

Lump-sum taxation has its advantages, but also limitations you should consider before choosing this regime.

• Advantage: Simplified administration — no need for double-entry bookkeeping, just revenue records.
• Advantage: Lower accounting costs — you do not need a full accounting service.
• Advantage: Predictable tax — you know in advance how much you will pay.
• Disadvantage: Cannot deduct actual expenses — if you have high actual costs, you may pay more tax than with the regular regime.
• Disadvantage: Limited growth — once you exceed the 3M MKD threshold, you must switch to regular taxation.
• Disadvantage: No VAT deduction — you cannot reclaim VAT on purchases, which is a problem if you have significant input costs.

Facturino and lump-sum taxpayers

Although lump-sum taxpayers have simplified obligations, they still must issue invoices and keep revenue records. Facturino is the perfect tool for lump-sum taxpayers too — quickly and easily issue invoices, track revenue, and get automatic reports. The system warns you when you are approaching the 3M MKD threshold, so you can make a timely decision about switching to regular taxation.

• Simple invoice issuance without accounting knowledge required.
• Automatic annual revenue tracking with threshold proximity warnings.
• Reports compatible with UJP requirements for lump-sum taxpayers.
• Overview of all issued invoices in one place.
• Easy transition to regular taxation when the time comes.