Year-end closing — the checklist

Who this guide is for

This guide is written for business owners and for whoever keeps the paperwork inside the company — not for accountants. For an LLC, a sole proprietorship or an NGO in Kosovo, the year-end close is the period in which twelve months of books turn into financial statements and an annual tax return. How we organise the flow of documents through the year is set out under how we work.

Four terms recur throughout. Year-end closing is the verification and adjustment of the accounts for the period 1 January – 31 December. Financial statements are the summary reports for that period: the balance sheet, the statement of income and expenses, the cash flow statement and the explanatory notes. The annual CD return is the corporate income tax return that corporations file with the Kosovo Tax Administration (TAK); individual businesses make their annual filing on form PD, within the same deadline. The KCFR is the Kosovo Council for Financial Reporting, where the annual statements are filed.

The most common mistake is not arithmetic but timing: the close is started in March, by which point the stock held on 31 December can no longer be counted. That is why the calendar below begins in November.

1. November–December: the review before the year closes

Ask for provisional figures covering the first eleven months and read them with a critical eye. At this stage there is still time to act.

• Match bank payments against recorded invoices and chase suppliers for the ones that never arrived.
• Identify work already performed that should be recognised as income of the current year, even if it has not been invoiced.
• Clear or explain the advances that have been sitting open for months.
• Verify that transactions above €300 with other parties engaged in economic activity were settled through a bank account or another electronic means of payment, as required by Article 6 of the Law on Tax Procedures (08/L-257).

2. The stocktake on 31 December

A stocktake is the physical count of what you hold on the closing date: goods, raw materials, work in progress, cash on hand and business assets. The result is compared against the balances shown in the books.

• Appoint a count team and a single count date, rather than counts spread out over several weeks.
• Freeze movements: stop receipts and dispatches, or record the last document processed.
• Keep a signed listing showing quantities for every item, not just a single total.
• Record separately any damaged or unsaleable goods, and any third-party goods held on your premises.

Shortages and surpluses are explained in a written record before they are posted.

3. Reconciling the accounts and confirming balances with counterparties

Reconciliation means proving that every figure in the books agrees with an independent source.

• The bank — the balance of every account at 31 December against the bank statement; the usual differences are payments in transit and unrecorded charges.
• Suppliers and customers — send the account statement and ask for written confirmation of the balance. This is how you find invoices that one party has recorded and the other has not.
• TAK — compare the VAT declared with the sales and purchase ledgers, and the wages declared by the 15th of each month with the payroll.
• Loans and leases — the outstanding balance, the interest and the 9% withholding tax if you are a business tenant; you can check the calculation with the rental tax calculator.

One easily forgotten VAT deadline belongs here too: under Article 38 of Law 05/L-037, the deductible VAT on an invoice must be claimed no later than the final tax period of the year following the year of the invoice.

4. Depreciation, provisions and adjustments

Depreciation (amortisation) spreads the cost of a long-lived asset — machinery, a vehicle, a building, equipment — over the years in which it is used, instead of recognising the whole amount in the year of purchase. Three things are checked: whether new acquisitions have been recorded, whether assets that were sold have been removed from the books, and whether depreciation has been calculated for the full period. The categories and rates for tax purposes differ from those used for accounting.

Provisions are amounts set aside for expected obligations whose amount or timing is not yet fixed. A provision recorded in the books is not automatically recognised as a deductible expense. Documentation of the efforts made to collect old debts is assembled before the close.

5. Deductible and non-deductible expenses

Not every expense recorded in the accounts is deducted from taxable profit. The Law on Corporate Income Tax (06/L-105) divides them into deductible, partly deductible and non-deductible. This is the step at which accounting profit becomes taxable profit.

• Expenses without supporting documentation, or backed by an irregular invoice, are not recognised.
• The owner's personal expenses, run through the business, are not recognised.
• Representation, donations and mixed business-private use of vehicles are recognised only up to the statutory limits and only with documentation.
• Fines and penalties are not a deductible expense.
• Expenses belonging to another year must be carried to the correct period.

The output is a schedule of adjustments, kept with the return, that explains the difference between the profit in the financial statements and the profit in the return. More on this in the corporate income tax questions.

6. Reconciling the instalments with the annual liability

During the year, corporate income tax is paid in four advance instalments: 15 April, 15 July, 15 October and 15 January. From the second tax period onwards, each instalment must be at least one quarter of 110% of the tax liability of the preceding period; in the first year of activity — and where the preceding year closed with a loss — the instalment is computed as one quarter of the estimated liability for the current year. At the close, the actual liability is computed and compared with the amount already paid.

If the instalments fall short, the difference is paid with the annual return by 31 March; if they exceed the liability, the balance stands as an overpayment, which must be claimed within three years. The corporate income tax rate is 10%. Small businesses that are neither required to keep full books nor choose to do so are taxed on turnover: 3% for trade, transport and agriculture, 9% for services, crafts and professions, with a minimum of €37.50 per quarter. The threshold for this regime is €30,000 of gross annual income for corporations (Law 06/L-105) and €50,000 for individual businesses (Law 05/L-028). The full calendar is set out under tax deadlines.

7. Financial statements and the CD return by 31 March

The annual financial statements are then drawn up and the annual CD return prepared — form PD for individual businesses — and filed with TAK through the EDI electronic system by 31 March of the following year. For the 2026 financial year, the deadline is 31 March 2027.

Three agreements are checked before filing: the profit in the return against the profit in the statements plus the adjustments, annual turnover against the sum of the monthly VAT returns, and payroll cost against the monthly payroll returns.

8. Filing with the KCFR by 30 April

The Law on Accounting, Financial Reporting and Auditing (06/L-032) classifies enterprises as micro, small, medium and large, by balance sheet total, annual turnover and average number of employees. An enterprise falls into a category when it does not exceed at least two of the three limits. You can check your own classification with the KCFR company size calculator.

• Micro — the statements are simply signed, with no external engagement.
• Small and medium, with turnover up to €4,000,000 — a review of the statements (ISRE) is required, a more limited engagement than an audit.
• Small and medium above that turnover — a full audit is required.
• Large enterprises and public interest entities — an audit by a firm licensed by the KCFR, with a compliance statement and a management report.

The deadline is 30 April, and 30 June for consolidated statements. Under Article 36 of Law 06/L-032, late filing carries a fixed fine by category — €500 for small enterprises, €1,500 for medium and €4,500 for large — while failure to file carries a fine of €1,000 to €20,000, rising to €5,000 to €10,000 where audited statements are not filed. If a review or an audit is required of you, the engagement starts before March — for what it covers, see our audit service.