Discusses distribution network from how products enter to final destination, including reliability of distribution systems, distribution centers, ports, etc.
Many local importers are also wholesalers, distributors, and retailers. Locally-owned supermarket chains ETC, Meridian Express, and Viva Fresh all operate large stores in key cities, supplementing and replacing traditional family-owned businesses in these areas. Foreign companies have successfully partnered with local businesses to open large furniture stores, such as JYSK and Lesna, and supermarkets, such as Interex and Conad. Because Kosovo is land-locked, all goods arrive by road, limited rail service from North Macedonia, or air. Goods usually arrive at border crossing points and are then taken to customs terminals for clearance. The closest seaports are Durres, Albania and Thessaloniki, Greece (about 130 miles and 170 miles from Pristina, respectively). Modern highways connect Pristina to Durres (4 hours) and Skopje (90 minutes).
Using an Agent or Distributor
Foreign companies doing business in Kosovo are not required to have a local agent, but it is advisable to retain one to gain insight into local economic and market conditions. Kosovo does not have laws regulating local agent and distributor agreements, except for dental products, where a contract with a licensed distributor is required. Any local agent or distributorship relationship should be clearly defined, stipulated by contract, and contain an alternative dispute resolution clause. Agreements should also be registered with local courts in case of a legal disagreement.
U.S. Embassy Pristina is a Department of State Commercial Partnership Post, and we provide business facilitation and Commercial Services to interested U.S. and U.S.-affiliated businesses. Some of the typical services the U.S. Embassy Pristina Commercial Team can provide include initial market checks, international company profiles, international partner searches, single company promotions, trade show representation, and virtual introductions. Many of these services are being offered virtually during the COVID-19 pandemic.
Establishing an Office
The procedure for business registration is the same for local and foreign owners. There is a single procedure to file and obtain a unified registration, fiscal and VAT number through registration centers operating in 36 municipalities. The steps to establish an LLC are: (i) register with the Kosovo Business Registration Agency (KBRA); (ii) design a company seal; and (iii) register future local employees for the pension scheme with the Tax Administration. While a company seal is not required by law, it is generally expected in customary practice. Business registration takes approximately four to five days. Registration can be as an individual business, a general partnership, a partnership, a limited-liability company, a foreign company, or a joint-stock company.
Registration forms vary by type of business and can be found on the KBRA’s website.
There is no limitation on foreign ownership of local companies and foreign investors face no restrictions on moving capital and profits outside of Kosovo.
There are no legal requirements for franchising. With improved legal and physical infrastructure, the Kosovo market is receptive to franchising opportunities, especially in the hotel, restaurant, and hospitality industries. Kosovo opened its first U.S. food franchise in 2016 to much fanfare, and significant demand remains for other U.S. brands.
Current U.S. franchisees and licensees operating in Kosovo include Apple (branch of Apple Premium Reseller in Croatia), Century 21, Coca-Cola, Enterprise, Hertz Rent-a-Car, KFC, Domino’s, Pizza Famiglia, Burger King, Marriott, Best Western, Nike (distribution license for Kosovo), and RC Cola (bottling license in Kosovo, distribution rights for Serbia, North Macedonia, Albania, and Montenegro). Recently, a new Four Points by Sheraton opened in Pristina, and a new Courtyard by Marriott is expected to open in 2022.
Many foreign companies actively market their products and services in Kosovo. Internet advertising is common, but more traditional means of advertising, such as television and radio, are generally more effective. Social media marketing has gained significant prevalence during the pandemic, particularly via Facebook and Instagram.
The Foreign Investment Law (Kosovo Assembly Law 04/L-220) allows foreign investors to wholly own businesses in all sectors of the economy, with the exception of the manufacturing or distribution of military products, where their equity is limited to 49 percent. Foreign investors in all other areas are subject to the same licensing requirements as local investors. Licensing is done by the economic regulator in the respective sector. Foreign investors may be required to file a statement with local authorities identifying principal stakeholders and types of investment. No other filing requirements in excess of those required for similar domestic businesses are required for foreign investors.
FedEx, DHL, and UPS operate in Kosovo. It normally takes two days for express delivery to arrive from major U.S. cities, and the service is generally reliable. While the COVID-19 pandemic initially resulted in express delivery delays, most delivery services report that express deliveries have returned to their usual expected timeframes. Goods arriving via express delivery undergo the same customs procedures as goods arriving through other channels. The de minimis amount for customs duty purposes is applied to goods worth less than €22 per delivery.
No credit rating agencies in Kosovo cover private-sector actors. All U.S. businesses are advised to perform their own due diligence prior to developing relationships with local firms. U.S. companies are strongly encouraged to perform due diligence checks on private firms to ensure that the local company:
- is not facing any bribery or corruption charges;
- maintains a certain level of financial stability that will enable it to meet financial obligations; and
- holds, along with its owners, a solid professional reputation in Kosovo.
Businesses are also encouraged to consult the chambers of commerce (American, Kosovo, Turkish, and German).
In addition, the U.S. Embassy’s Economic/Commercial team offers fee-based International Company Profile (ICP) services containing limited background checks on local companies.