Category: North Macedonia

On 6 March 2025, the European Payments Council officially accepted North Macedonia’s application and included North Macedonia in the Single Euro Payments Area (“SEPA”). With this, North Macedonia became the 39^th member of SEPA.

North Macedonia’s acceptance to SEPA will have the following implications:

1. Reduction of costs for international payments: North Macedonia’s access to SEPA means that transactions with European Union (“EU”) countries will become faster and cheaper. The majority of international payments will have lower costs with the reduction of remittance fees. This reduction is expected to result in savings of over half a billion EUR for the entire Western Balkans region;
2. Support for the digitalisation of the financial sector: SEPA membership will contribute to accelerating the digitalisation process of North Macedonia’s financial institutions. Promoting electronic payments and reducing reliance on cash transactions will enhance the security and efficiency of the entire financial sector, creating a more flexible and inclusive economic ecosystem;
3. Improvement of international trust and trade relations: By joining SEPA, North Macedonia strengthens its integration with the European Economic Area, which will enable easier and more efficient operation of financial services and transactions with EU countries. This will improve the credibility of Macedonian financial institutions and deepen trade relations with EU countries.

The integration of North Macedonia’s financial institutions into SEPA will begin in April 2025, with complete operational readiness expected by October 2025.

The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.

By Ljupka Noveska Andonova, Partner, and Ana Kashirska Ilievska, Senior Associate, Karanovic & Partners

Unfair trade practices refer to deceptive, unethical, or manipulative actions carried out by businesses, that violate consumer protection laws and harm the consumers. These practices contradict professional conduct and significantly distort the economic interests and decision-making of the average consumer, often targeting vulnerable groups.

Companies often unknowingly engage in such practices, most commonly misleading advertising, deceptive marketing, and aggressive sales techniques. Such violations may occur due to various reasons. The most typical are employee recklessness, inadequate internal oversight, and poor marketing techniques. Nevertheless, even when made unintentionally, it can lead to financial penalties and damage to the reputation of the company.

What measures can the company take in order to avoid these consequences? The “gold standard” for every company, while structuring its marketing strategy, should be hiring a professional law firm. Preferably a law firm specialized in commercial law. In this way, the company can be sure that its trade practices are in accordance with the positive legal provisions.

On the other hand, the company itself can take precautions in order to avoid engaging in unfair trade practices.

First, the company must ensure that employees are well-versed in unfair trade practices, in light of the Consumer protection law. The marketing, sales, and customer service teams should undergo department-specific training and education. The training must go beyond simply informing employees about the legal framework. It needs to be scenario-based, ensuring that the employees will have ethical decision-making skills in future operations. Additionally, the training should be based on real-world case studies to illustrate practical ways in which unfair practices are committed. Most importantly, the training and education must be repeated periodically. This will ensure that the employees are up to date with the newest regulations.

The company also needs to ensure that internal oversight is adequate to the complexity and scale of its operations. This means implementing mechanisms that systematically monitor consumer interactions and marketing efforts, focusing on identifying potential violations and their compliance with the law. To achieve this, companies should organize specialized compliance departments, with clear responsibilities, supervisory powers, and the ability to audit operations. This will ensure comprehensive control of the overall company operations, but also the responsibility of each employee individually. But, beyond internal measures, the departments should engage with regulatory authorities and consumer advocacy groups. This will help the company to stay ahead of the new legal developments. Ensuring that the company operations are in line with the innovations as the laws come into force.

The most important segment of company marketing, in the context of unfair trade practices, is the advertising standards. Meaning that it must be accurate, transparent, and free from misleading claims. The company needs to make sure that the products that are advertised are:

• With quality as claimed and that the products have all the certifications, seals of quality, and endorsements as advertised;
• In sufficient stock to be able to objectively deliver what is offered in the advertisements;
• With transparent and clear pricing, avoiding misleading discounts.

Furthermore, the company needs to respect consumer autonomy. This means it must avoid high-pressure sales tactics which involve forced persuasion of the customers. Also, while advertising, the company can’t prey on the customer’s feeling of security.

            Finally, the advertising needs to be done with clearly defined terms and avoid hidden conditions. This is particularly in relation to customer support and after-sales services. The company must not mislead customers into thinking that they have more rights than they actually do. If a product requires paid maintenance or additional cost, it must be disclosed upfront. Also, regarding the use of customer support, there must be no additional conditions for use or hidden aggravating circumstances.

            In conclusion, preventing companies from engaging in unfair trade practices is an ongoing process that requires a strong commitment. Good intentions alone are not enough. The company should go beyond merely following the letter of the law. It must strive to build a culture of responsibility and ethics. Meaning that businesses should view consumers not just as a revenue source, but as partners who deserve fairness and loyalty. Companies that invest time and resources in the aforementioned measures, will not only avoid financial penalties and reputational damage. They will strengthen the consumer trust, giving them a long-term competitive advantage over the companies who focus solely on maximizing short-term profits.

By Bogdan Sarovic, Associate, JPM & Partners North Macedonia

Polenak Law Firm founder Nikola Polenak has passed away.

“It is with a sad and heavy heart that we announce the passing of our founder, mentor, and well-esteemed colleague Nikola Polenak,” the firm stated. “Beyond being an outstanding lawyer, Nikola was highly respected by the local legal community and a distinguished figure in both professional and social circles. He embodied the highest ideals of private legal practice – integrity, unparalleled knowledge, and a strong moral compass interwoven with professional ethics.”

The firm added: “Nikola will be remembered as a visionary who, in 1976, established the first partnership functioning as a law firm in North Macedonia during the era of ex-Yugoslavia. As noted by the President of the Macedonian Bar Association, he was always accessible and open to cooperation, maintaining professional relationships with the entire legal community and being greatly appreciated and welcomed by all. He has mentored and inspired generations of lawyers, raising the level and quality of legal service throughout his career. Nikola is survived by his wife Zoja, his two sons, and three grandchildren. He will be dearly missed.”

The Commission for Protection of the Competition of North Macedonia (CPC) has significantly intensified its enforcement activities in the food retail sector, signalling a stricter regulatory approach toward potential anti-competitive behaviour.

Following concerns over rising food prices, the CPC has undertaken dawn raids and launched formal proceedings against major retail chains suspected of violating the Protection of the Competition Act (“Competition Act”) and Unfair Trading Practices in the Agricultural and Food Supply Chain Act (“UTP”).

Antitrust dawn raids at retail chains

In February 2025, the CPC conducted dawn raids at four supermarket chains and one business chamber. The raids were prompted by suspicions that the retailers were engaging in coordinated practices restricting market competition. Specifically, the investigation focused on whether retailers collectively agreed not to source products from suppliers introducing new price lists, potentially constituting a restrictive agreement under the Competition Act.

As part of the investigation process, the CPC reviewed internal documents and electronic communications, uncovering evidence of a concerted decision to restrict product procurement, which led to the initiation of misdemeanour proceedings.

UTP enforcement against two retail chains

On 10 March 2025, the CPC announced the initiation of legal proceedings against two supermarket chains for failing to comply with the UTP. The proceedings were initiated based on collected data indicating that the companies, which operate retail networks for agricultural and food products in North Macedonia, had violated the law. If the violations are confirmed, significant fines could be imposed on both the companies and their responsible executives in accordance with applicable legal provisions.

A sector-wide investigation on the horizon?

With these recent developments, the regulatory scrutiny is expected to expand beyond the retail sector. Given the CPC’s recent actions, the investigations could potentially extend beyond retail chains to cover the entire food supply chain, including suppliers and wholesalers. Additionally, the authorities may consider launching a sector inquiry, like those conducted in the wider region, to comprehensively assess market practices and identify potential systemic violations.

What companies should do now

In light of the CPC’s intensified enforcement efforts, all companies operating within the food supply chain – including retailers, wholesalers and suppliers – should proactively review their commercial policies to ensure compliance with competition regulations. Key steps include:

• conducting internal compliance audits to identify and mitigate potential competition risks;
   
• reviewing agreements and pricing policies to ensure compliance with the Competition Act and the UTP; and
   
• training employees and executives on fair competition practices to avoid inadvertent breaches and to prepare them for potential dawn raids by the CPC.

The CPC’s recent enforcement actions signal a shift in approach following the appointment of its new composition. They reflect an increased focus on detecting and sanctioning Competition Act and UTP violations. As a result, businesses should expect heightened regulatory scrutiny and stricter enforcement, marking a departure from the previously more lenient oversight.

By Zoran Soljaga, Partner, and Filip Zafirovski, Attorney at Law, Schoenherr

On 5 February 2025, the Constitutional Court of the Republic of North Macedonia (“Court”) annulled the Solidarity Tax Law (“Law”), ruling that it violated several key constitutional principles.

In 2023, the Law introduced a one-time solidarity tax on companies with realised total revenue of over EUR 10 million in 2022, intended to fund crisis mitigation efforts.

The Court ruled that the Law violated the fundamental constitutional principle of legal certainty by retroactively undermining companies’ legitimate tax expectations. It also found that the Law created inequality, infringing on companies’ property rights and market freedoms.

Companies that have paid the solidarity tax can investigate available legal remedies, including requesting a refund of the amount paid.

The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.

By Veton Qoku, Partner, and Ana Kashirskaa, Senior Associate, Karanovic & Partners

In recent years, it has become increasingly common for companies in North Macedonia to choose arbitration as the method for resolving disputes in cooperation agreements, instead of judicial proceedings, which usually take considerably longer. However, the Macedonian legislature has not fully regulated all the legal aspects related to arbitration procedures.

One key issue that remains unaddressed is the impact of an open bankruptcy proceeding against the debtor registered in North Macedonia on an ongoing arbitration process where the debtor is a respondent.

How Does the Macedonian Bankruptcy Law Regulate the Relationship Between Bankruptcy and Other Legal Proceedings?

Under Macedonian Bankruptcy Law, the treatment of creditor claims is clear-cut: every claim must be registered in the bankruptcy proceedings, and the failure to do so forfeits the creditor’s right to the claim.

The law further governs two options once the claim is registered:

• If the claim is part of an ongoing litigation, the litigation is stayed from the day of the opening of the bankruptcy proceedings and the creditor shall file for continuation;
• If the claim is not a part of an ongoing litigation, but the bankruptcy trustee disputes the claim, the creditor must file a lawsuit and prove the right to the claim in proceedings before the bankruptcy court.

However, a significant gap in the legislation emerges regarding claims involved in ongoing arbitration proceedings. While the law addresses the continuation of litigation during bankruptcy, it provides no explicit guidance on how arbitration is to be treated.

By analogy, one might argue that the creditor should be required to seek the continuation of the arbitration process in the same way they would for litigation. However, on the other hand,  the law stipulates that in order for the creditor to preserve their right to the claim, they must file a lawsuit with the bankruptcy court (unless they have previously initiated litigation, which they may continue).

The Need for Legal Reform: Clarifying the Intersection of Bankruptcy and Arbitration

The absence of clear legal provisions for arbitration under the Macedonian Bankruptcy Law not only creates confusion but also highlights the challenges posed by the intersection of national insolvency frameworks and dispute resolution mechanisms. As arbitration continues to gain prominence, it is increasingly vital for lawmakers to address this gap, ensuring that creditors and debtors alike understand their rights and obligations when arbitration is pending at the time of bankruptcy.

The legislator must give careful consideration to the intentions of both parties involved in the dispute, as they have deliberately chosen the forum in which they wish their dispute to be resolved when entering into their agreement. Respecting and upholding the parties’ expressed choice of authority is a fundamental principle of contract law, reflecting the core value of party autonomy in the contractual relationship.

Conclusion

The unresolved question of how to treat ongoing arbitration proceedings under Macedonian bankruptcy law requires immediate attention. Clarity must be provided to prevent the erosion of creditor rights and ensure consistency in how disputes are resolved, particularly in the face of insolvency. Until then, stakeholders must navigate this legal uncertainty with caution, weighing their options carefully in the pursuit of justice.

By Elena Kuzmanovska, Senior Associate, JPM North Macedonia

Recovering trade debts in North Macedonia can be challenging, especially when maintaining ongoing commercial relationships with local debtors. The recovery process entails a business creditor attempting to collect payment for an unpaid invoice for goods or services provided to a local customer who is legally obligated to pay what they owe.

Debtors may fail to honor their debts according to the agreed payment schedule, may not respond to reminder calls, emails, or letters, or may be difficult to reach. In some cases, debtors might evade payment by making excuses, such as raising complaints about the quality of the goods or services delivered by the creditor under the contract. Additionally, Macedonian customers may be hesitant to engage with creditors known for an aggressive approach to debt recovery, which can cause the creditor to lose goodwill in the market. However, creditors cannot allow their long-overdue debts to accumulate and potentially turn into bad debts, so decisive action is often necessary.

In North Macedonia, the only option for recovering uncontested trade debt from local debtors is summary debt collection proceedings. These proceedings are overseen by public notaries, who, as trustees of the courts, are authorized to receive proposals for summary debt collection from creditors and issue payment orders to local debtors. The payment orders issued by public notaries are equivalent to court payment orders.

The proceedings are set in motion by a proposal from a creditor for the issuance of a payment order against a particular debtor. The proposal must be submitted to the public notary who is competent to act as a trustee of the court, which has territorial jurisdiction where the debtor has its registered office. The proposal must be detailed and include the relevant corporate details of the creditor and the debtor, i.e. their company names, identification numbers, registered seats, authorized representatives and official e-mail addresses for court correspondence, accompanied with their recent trade excerpts from the Central Company register of North Macedonia. Furthermore, the creditor must enclose along with the proposal a document substantiating its claim. These documents include invoices, bills of exchange, accounts receivable ledger, interest calculation and others. The creditor must include expert witness reports, if applicable, or a letter from an expert witness stating that they have been engaged by the creditor to prepare an expert witness report. Otherwise, the creditor will not be permitted to present expert witness reports in court proceedings if the debtor objects to the payment order.

The creditor also must substantiate any claims for interest. Commercial parties usually make express contractual provisions for the payment of interest on overdue invoices. If parties have agreed on an interest rate for late payments in their contract, the creditor should include a claim for interest in the proposal. However, such a contractual interest rate agreed between the parties cannot be higher than the established statutory penalty interest, increased by a maximum of 50%. Upon receipt of the proposal from the creditor, the notary public will review it to ensure it is complete. If all formal requirements are met, the notary public will issue a payment order, ordering the debtor to settle the outstanding debt within three days of receipt of the proposal. The notary public will serve the payment order to the debtor, who has 8 days to either settle the outstanding debt in full or contest the payment order.

If the debtor fails to contest the payment order by the legal deadline, it becomes enforceable, the same as a court judgment. This allows the creditor to enforce it directly against the debtor’s assets. Enforcement proceedings commence with filing an enforcement request by the creditor to the competent enforcement agent, accompanied by the enforceable court judgment, which will issue an enforcement order to block the debtor’s bank accounts. If any funds are transferred to the debtor’s accounts, they will be confiscated and transferred to the creditor via the Enforcement agent’s bank account. If no funds are available in the debtor’s bank accounts, the creditor may request that enforcement be carried out by other enforcement methods, such as seizure and sale of the debtor’s movable and immovable property.

If the debtor files a complaint against the payment order, the notary public must refer the case to the court which has territorial jurisdiction based on the debtor’s registered office. Particular attention should be given when the creditor and the debtor have agreed to arbitration in their contract. The consensus of the Macedonian courts is that when a creditor launches summary debt proceedings, it has repudiated the arbitration clause in the contract. The Macedonian courts tend to view the commencement of summary debt proceedings as a rejection of the contractual obligation to resolve disputes through arbitration. Hence, unless the debtor raises a jurisdictional objection based on the arbitration clause in the contract, the Macedonian courts will generally uphold their jurisdiction over the dispute.

The court’s review of a complaint against a payment order is confined to examining the facts concerning the disputed part of the claim. If the debtor files a counterclaim alongside their complaint, the court is not allowed to consider it within the proceedings related to the payment order. A final decision on the creditors’ claim results in a court judgment that completely supersedes the notarial payment order. The statutory time limits for completion of the proceedings before the court are relatively short. The first instance court must issue a judgment within six months upon the receipt of the case from the public notary. In case of an appeal by either party, the appeals court must issue a decision within thirty days following the receipt of the appeal. In practice, however, the courts often exceed the statutory deadlines, and the proceedings might take several years to be completed.

During the court proceedings, the creditor may propose interim remedies, including prohibiting the debtor from the alienation of his movable property; the alienation or encumbering of his immovable property, selling securities and shares; receiving a claim from the debtor’s debtor or ordering the debtor’s payment service provider not to allow any payments from his bank accounts. Interim remedies may be allowed if the creditor makes it probable that the claim exists and that there is a danger that, without such a measure, the debtor will significantly impede the collection of the claim by alienating, concealing or otherwise disposing of his property.

By Gjorgji Georgievski, Partner, and Boban Velickovic, Associate, ODI Law

The Government of North Macedonia adopted an updated version of the National Classification of Activities, NKD Rev. 2.1 (“New Classification”).

The New Classification is aligned with the revised version of the Statistical Classification of Economic Activities in the European Community NACE Rev. 2.1.

The New Classification is especially relevant for:

1. Companies to be established: they will need to choose an appropriate priority activity under the New Classification;
2. Existing companies: when submitting annual accounts, they will need to enter the main income code under the New Classification.

The application for the New Classification started on 1 January 2025.

The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.

By Veton Qoku, Partner, and Ana Kashirskaa, Senior Associate, Karanovic & Partners

Intellectual property is a broad concept that covers several types of legally recognized rights originating from some type of intellectual creativity or that are otherwise related to ideas. Intellectual property rights are rights to intangible things, i.e., ideas as expressed (i.e. copyrights) or as embodied in a practical implementation (i.e. patents). Fundamentally, intellectual property rights are rights in ideal objects, distinguished from the material substance in which they are instantiated. In today’s legal systems, the key forms of intellectual property are (i) copyrights, (ii) trademarks and (iii) patents.

Copyright is a right given to authors of “original works,” such as books, articles, movies, and computer programs. Copyright gives the exclusive right to reproduce the work, prepare derivative works, or perform or present the work publicly. However, copyrights protect only the form or expression of ideas, not the underlying ideas themselves. While registering a copyright with a competent registration authority to obtain specific legal advantages is possible, such registration is not a prerequisite for a copyright to exist. A copyright comes into existence immediately upon the production of the work in a “tangible medium of expression” and lasts for the life of the author plus an additional period (depending on country-specific intellectual property regulations) in which the employer exclusively owns the copyright.

A trademark is a word, phrase, symbol, or design used to identify the “producer”, i.e., the source of goods or services sold, and to distinguish them from the goods or services of others, i.e. market competitors. For example, Apple Inc.’s “bitten apple” mark on their products identifies them as that company’s products, distinguishing them from competitors such as, e.g., Samsung. Trademark law primarily prevents competitors from infringing upon the trademark, i.e., using confusingly similar marks to identify their own goods and services. Unlike copyrights and patents, trademark rights can last indefinitely if the trademark owner continues to use the mark and renews its registration with the competent registration authorities under applicable statutory regulations.

A patent is a property right in inventions, i.e., in devices or processes that perform a “useful” function. A patent effectively grants the inventor a limited monopoly on the production, use, or sale of the invention. However, a patent only grants the patentee the right to prevent others from practising the patented invention – it does not grant the patentee the right to use it. Moreover, not every innovation or discovery is patentable; for example, in the US, three categories of subject matter are non-patentable, i.e. laws of nature, natural phenomena, and abstract ideas.

The legal protection of intellectual property rights on computer programs, i.e. software, has been the subject of much debate. Since computer software is one of the main pillars of the information society, this is truly an issue of global concern. Arguably, the process of writing computer software, i.e. coding, is highly creative, and the software industry is one of the most valuable in today’s knowledge-based economies. Hence, software is expected to enjoy protection under intellectual property laws worldwide. However, the subject that raises a lot of controversy is – what type of protection computer software should enjoy. For intellectual property to be legally protected as a copyright or a patent, it must meet specific requirements, i.e., in, the context of patent protection – it must be an invention which performs a “useful” function. To examine the patentability of computer software, one must examine what it is. Fundamentally, computer software is a collection of coded instructions written in a language that a computer can read (programming language). However, to enable the running of a certain software application, it has to be installed on adequate hardware (PC, laptop, smartphone, set-top box, etc.) equipped with an adequate operating system (a special software application that creates an environment for the installation and running of different software, e.g. Mac OS/X or iOS, Microsoft Windows, Ubuntu, etc.). Therefore, the production of computer software goes beyond coding since, depending on its specific use, it must be functionally integrated within a specific hardware and operating system environment.

Currently, the legal protection of computer software varies significantly across jurisdictions, reflecting divergent approaches to intellectual property rights. In the United States, courts have recognized that software can qualify for patent protection through the “article of manufacture” doctrine. This approach considers software stored on a computer-readable medium, such as a USB or CD/DVD, as a patentable invention if it contains instructions that enable a computer to perform a specific process. In contrast, the European Union applies a stricter standard to software patentability. Under EU law, software cannot be patented unless it demonstrates a “further technical effect” beyond the normal interactions between hardware and software. This means that a computer-implemented invention must satisfy the general patentability criteria applicable to other fields: it must (i) exhibit technical character and address a technical problem, (ii) be novel, and (iii) involve an inventive technical contribution to the existing body of knowledge (prior art). Consequently, software that fails to meet these requirements cannot be patented in Europe. The same is true for North Macedonia since its laws are harmonized with EU standards.

While some countries have adopted the broader U.S. approach, allowing more expansive patent protection for software, many jurisdictions continue to restrict software protection to copyright. In such systems, software is classified as a “literary work,” granting automatic copyright protection without the possibility of obtaining a patent. Thus, the current global landscape for software protection relies on a mix of copyright and patent mechanisms, with the applicable framework varying significantly depending on the jurisdiction.

Copyright protection for software is automatic upon its creation and fixation in a tangible medium, classifying it as a “literary work” under copyright law. This protection safeguards against unauthorized copying, requiring others to obtain the author’s consent, typically in exchange for monetary compensation. However, copyright protects only the expression of ideas, not the ideas themselves, and does not shield against the independent creation of similar works. Patents, in contrast, provide broader protection by granting exclusive rights to prevent others from making, using, selling, or offering to sell the patented invention, regardless of whether the infringement was intentional or independently created. While patents are generally more robust, they require rigorous examination processes, including a demonstration of the invention’s novelty, inventive step, and in many jurisdictions—such as the EU—a “further technical effect” in the case of computer-implemented inventions. These requirements make obtaining a patent for software both costly and time-consuming, which may not align with the rapid pace of technological advancements and software obsolescence.

Although copyright offers a longer duration of protection (life of the author plus 70 years in many jurisdictions) compared to patents (typically 20 years), this advantage is less significant in the fast-evolving software industry. Additionally, the lack of registration requirements makes copyright more accessible and cost-effective, whereas patents necessitate substantial financial and administrative resources, often creating barriers for smaller enterprises.

Given the distinct strengths and weaknesses of each framework, both copyrights and patents play vital roles in protecting software. However, the limitations of copyright, especially its inability to address independent creation and technological piracy, lead many companies to prioritize patents. Yet, the fragmented global patent regime remains a significant hurdle. A universally harmonized legal framework for patenting software could address cross-border enforcement challenges and create a more predictable environment for innovation.

By Gjorgji Georgievski, Partner, ODI Law

On 27 December 2024, the Parliament of North Macedonia adopted the new Law on Minimum Global Corporate Income Tax (“Law”).

This legislation aims to align local laws with the EU’s Global Minimum Tax Directive 2022/2523 implementing Pillar 2 of OECD’s Global Anti-Base Erosion Model Rules. The Law is part of a broader effort to implement a global minimum tax rate of 15% for multinational enterprises (“MNEs”).

The 15% minimum tax rules will apply to MNEs and large domestic groups that have an annual income of at least EUR 750 million in the consolidated financial statements of the ultimate parent company for at least two of the four years preceding the fiscal year under review.

The Law’s provisions will apply starting with the 2024 fiscal year, with certain exceptions.

The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.

By Veton Qoku, Partner, and Ana Kashirskaa, Senior Associate, Karanovic & Partners