How does it sound to start a business or scale up in a country where locals do their best to make you feel at home? If we add here the fact that Skopje is not only home to a close-knit startup community but also ranks first for cost-effectiveness in the fDi’s 2020/21 ‘Tech cities of the future’ ranking, the prospect of starting up in North Macedonia becomes even more inviting.
In this article I will provide you with local knowledge about the country’s business environment, including the necessary steps for setting up and running a company.
Macedonian business culture in a nut shell
The booming startup community nurtures values which speak for empowerment, support, learning, and fast growth.
Macedonians are warm, polite, and welcoming to foreigners. In their communications, they are usually direct, and don’t hesitate to speak up. At a business meeting, you will be welcomed with a smile and a strong handshake (unless it’s a pandemic). In most circumstances, they are proud of their country and will do their best to represent it in the brightest way. Local partners, collaborators, and employees will usually invest their time and effort not to only deliver high-end services but to show you around and help you immerse in the Macedonian culture.
Moreover, an increasing number of big companies and startups are seeing the importance of social impact, and Skopje has witnessed an expansion of environmentally and pet-friendly initiatives and apps. Moreover, businesses are becoming more socially responsible than ever before and help vulnerable groups in various innovative ways.
The rise of startups in the country is dictating new trends, where flexible working hours, casual dress code, and working environments with many perks are available. Moreover, working remotely or from the comfort of a co-working space is becoming the new-normal and many founders say that they plan to stay remote even after the pandemic is over. The minimum number of paid vacation days is 20. There are 11 national holidays and a certain number of religious holidays applying to members of different religions.
Speaking of punctuality, Macedonians cannot brag about being punctual like the Germans or the Swiss, although many people are trying to change this. You shouldn’t be surprised if a meeting or an event is 15-20 minutes late. Buses and trains are rarely on time either. Luckily, more and more young people start to rely on bikes and e-scooters.
Team buildings are quite popular among startups and IT companies, which have ‘exploring North Macedonia’ as a task on their to-do list.
Conditions and benefits of opening a company in North Macedonia
Ease of doing business
In the World Bank’s latest rankings, North Macedonia is ranked 17th in the world for the ease of doing business. This high ranking reflects that the regulatory environment is more conducive to the opening and operation of a local firm. The country scores over 80/100 for trading across borders (93.9), starting a business (88.6), paying taxes (84.7), dealing with construction permits (83.5), protecting minority investors (82), and getting electricity (81). Moreover, for its ease of doing business, North Macedonia holds the best position in the Balkans and exceeds countries such as Estonia (18th place), Finland (20th place), and Germany (22nd place).
Multilingual and highly-skilled affordable talent
Even though North Macedonia is a small country with a population of only 2 million, it has a large pool of educated and highly-skilled professionals, with a satisfactory number in the field of ICT. The country is awash with various learning, networking, and career growth initiatives and events, which only show the aspirations of the country’s talent to keep on track with the most developed European startup communities. Moreover, there is a growing number of private education centres, in addition to the existing universities, which are teaching and training staff on the newest skills required by tech companies and startups. In terms of the English language, North Macedonia is known to have a high rate of English proficiency. If we add to the bargain the fact that there is a great quality-price ratio, it’s no wonder that many foreigners decide to run their businesses from this sunny country.
One of the main challenges though is hiring senior developers. On one hand, there has been a boom of IT outsourcing companies and, on the other, the trend of brain draining is present. As a result, the companies try to offer as many perks and benefits to the software engineers as possible to attract and keep them. Luckily, the number of students in the field has been enormously increasing and the situation is changing.
Low cost of living
North Macedonia is extremely attractive to international entrepreneurs due to its low cost of living. Take Skopje, for example; this capital doesn’t lag behind other European cities in terms of the lifestyle and high-quality commodities it offers, and yet, all is affordable for much less than in almost all other European startup hubs. Other cities such as Bitola and Ohrid, which are abound in cultural heritage and natural beauties, are even cheaper. To provide some numbers, you can rent a modern apartment in the Skopje city centre from €250 a month and, as one German visitor once said to me, you can get the “best meal ever” for only €10.
Supportive startup community
Skopje is the biggest startup hub in the country, with several other cities showing great potential too. However, regardless of whether you are in Skopje or Bitola, the startup community is extremely supportive and moves at a fast speed. New co-working spaces, associations, hubs, and accelerations emerge continually and, most importantly, new founders are welcomed with the warmness of the existing players who clearly understand the importance of empowerment. For entrepreneurs who want to test the waters first, there are programmes such as Entrepreneurs in Residence, which have enabled a number of foreign entrepreneurs to get a first-hand experience of the business climate.
Favourable tax environment
One of the biggest advantages of running a business in North Macedonia is the favourable tax environment. The country has one of the lowest corporate income tax rates in the world which is only 10%. The personal tax is also 10%, while the General Income Tax is 18%. Moreover, the government offers a 10-year tax-free operation for investments made in the Free Economic Zones where highly productive clean manufacturing activities are concentrated and new technologies are developed.
The growth of ICT and its key verticals
ICT is the fastest-growing sector and it plays an important role in the economy as a provider of jobs and generator of exports. Hence, North Macedonia has a solid ground for startupers interested in launching a business and conquering the world from a small but supportive country.
Verticals such as e-commerce, digital media, fintech, gaming, blockchain, IoT, tech in agriculture, and edtech are evermore present in the country.
Favourable geographical location and time zone
As a country located in the heart of the Balkan peninsula, North Macedonia benefits from a strategic geographical position at the crossroads of two main European transport corridors linking Central Europe to the Aegean and the Black Sea. The country has two airports, one in Skopje and other in Ohrid, and it is a 2-hour flight away from most of the European cities. Furthermore, Skopje is just a 2-hour drive from Thessaloniki, which is the main port hub for the Balkans and Southeast Europe and connects Europe with Asia and China.
North Macedonia falls within the Central European Time zone (GMT + 1) along with cities such as Berlin, Paris, Barcelona, and Amsterdam.
A downside here is the lack of good transport infrastructure which often impedes the businesses from networking and distribution of products and makes the travelling less pleasant.
Leisure opportunities: great travel destinations and outdoor activities
It is not unusual for foreign founders who run businesses in North Macedonia to combine their business trips with some leisure. In addition to the lively nightlife, people don’t miss the opportunity to visit Ohrid, a lake city which once had 365 churches and has been referred to as a “Jerusalem of the Balkans”. Alongside its attractive beaches and medieval heritage, people often jump on different tours such as riding horses in the mountainous village of Lazaropole, paragliding in Krusevo, skiing in Mavrovo, or cave exploring in Makedonski Brod. If you are here for business, don’t hesitate to ask a local to show you around (they will gladly be your guide), or just check this local startup for more ideas.
Setting up a company in North Macedonia
Open a company in 1 day
Just like in most European countries, the limited liability company (LLC) is a preferred business structure, especially when it comes to startups. The process requires only one day for completion and you don’t need to be present in the country. All you need is to find an authorised agent. The agent submits the required documents signed by you in the Central Registry and the company is established. A North Macedonia LLC can be entirely foreign-owned, with no restrictions on foreign shareholders.
One should bear in mind that the minimum share capital for this entity is set at €5K and can be deposited in a Macedonian bank account.
First steps for registering a company
- Pick up a name
- Choose an address – you can use the address of a rented/owned office or you can obtain an address from companies that offer virtual office services
- Choose a CEO and split the equity
- Choose an authorized agent of the Central Trade Registry (attorney at law or accountant) to submit your application
- Get all necessary documents ready and signed
Before you start any activities with your company you need to apply for a company seal, activate a bank account, register for VAT, and apply for registration of the foreign investment within the Central Registry. Additional administrative activities may be required as well, and it is always a good idea to request a list with all required documents and steps from your agent. Most of the banks offer online banking, so before you make the choice make sure to do your research and see which bank would best fit your requirements. And, finding a good accountant or accounting company is a must.
If you want to get a work or residence permit, the procedure takes up to 15 days and you can consult your agent about all the requested documents.
Just bear in mind that although the Macedonian government is working on digitalising its services, many of them are still not online.
If you decide to start or expand your business in North Macedonia, these are some of the supporting organisations you may want to check.
Another tip is to search LinkedIn for like-minded professionals based in Skopje – they will undoubtedly give you a heads up. For more information, check out our article North Macedonia: Skopje’s startup ecosystem at a glance.