Resident companies are subject to corporate income tax on their worldwide income, while non-resident companies are taxed only on their income derived from sources in Albania. Resident companies and sole traders having an annual turnover above ALL 8,000,000 (EUR 64,000) are subject to corporate income tax. Capital gains, dividends, interests, and royalties are included in the income of companies and are taxed as part of corporate income tax. Income tax is assessed on a current-year basis at the rate of:
Exempted from CIT for the first 10 years of their activity any entity who operate in 4-5-star brand name
hotels, that have gained the status of special investor as of December 2024.
The assessment of CIT is based on the FS prepared in accordance with the National Accounting Standards or IFRS, subject to certain adjustments for tax purposes as specified in the Albanian Tax Laws and other supplementary legal acts. Fiscal losses may be carried forward up to three consecutive years. The law does not provide for consolidated tax returns. Each company forming part of a group must file a separate tax return.
|Transfer pricing in Albania|
|Arm’s lenght principle||since 1998|
|Documentation liability||since 2014|
|Master file-local file (OECD BEPS 13) applicable|
|Lack of documentation||~ Documentation submited on delay -EUR 70 / for each month of delay|
|Tax shortage||0.06% on daily bases (not more than 365 days) on tax underpayment + late payment interest|
|Related parties||50% <||direct or indirect control or common managing director|
|Safe harbours||Rational value added service from 5% to15% mark up|
Level of attention paid by Tax Authority:
The gross amount of interest, royalties, dividends, and shares of partnerships’ profits paid to non-resident companies is subject to a withholding tax of 15%, unless a Double Tax Treaty (DTT) provides for a lower rate. Albania has established agreements with 41 countries for avoiding double taxation. 39 of them are ratified and currently in force.
Tax on dividend starting from 2019 has been decreased from 15 to 8%
The new law of VAT entered in force in January 1, 2015 has been harmonized with the “acquis communautaire” in almost all respects. Any person (entity or individual) that makes supplies in the course of the person’s independent economic activity is required to pay VAT. For domestic supplies and for services subject to the reverse-charge mechanism. The obligation to register for VAT purposes and charge VAT is triggered when annual turnover exceeds ALL 2 million (approx. EUR 15,800) Persons involved in import or export activities and taxpayers supplying professional services must register for VAT regardless of the amount of turnover. The applicable VAT regime are: exempted; zero; 6% and 20%.
|VAT Options in Albania||Applicable / limits|
|VAT group registration||N/A|
|Import VAT deferment||N/A|
|Local reverse charge||for all services from non resident entities that are subject to VAT in their country|
|Option for taxation|
|- letting of real estate|
|- supply of used real estate||N/A|
|VAT registration threshold*||EUR 15,800/year**|
* For several types of operations (e.g., construction works; supply of heat, water, gas to individuals or governmental agencies).
* Persons involved in import or export activities and taxpayers who supply professional services must register for VAT regardless of the amount of turnover.
Customs duty in the Republic of Albania is applied by the custom authorities on the import of goods. The liability to pay the duty is always on the importer of goods, but it is added to the cost of goods and in this way, it is finally transferred to the consumers. The customs duty rates range between 0% and 15%, depending on the type of goods and the country of the origin.
Local taxes consist of different categories of taxes
Mandatory social security and health insurance contributions are due on employment income. The social security contribution is calculated on a monthly gross salary, from a minimum amount of ALL 26,000 (approximately EUR 210) to a maximum amount of ALL 114,670 (approximately EUR 910). Social contribution payable by the employer is 15%; while the rate payable by the employee is 9.5%. The health insurance contribution rate is 1.7% for both the employer and the employee.
Employed persons are subject to income tax on remuneration and all benefits received from employment. Entities are required to withhold personal income tax from the gross salaries of their employees. In Albania a progressive rate is applicable; no tax is applicable up to a monthly salary of ALL 30,000; above that 13% applies between ALL 30,000 and 150,000. Above that level ALL 15,600 plus 23% of the amount above ALL 150,000 is payable.
|Wage related taxes in Albania||Minimum wage||Average wage in private sector|
|Exchange rate ALL/ EUR 124||in EUR||in ALL||in EUR||in ALL|
|209,677||26 000||443,548||55 000|
|TOTAL WAGE COST||244,694||116,70%||517,621||116,70%|
|Social contribution tax||31,452||15,00%||66,532||15,00%|
|Health Insurance Contribution||3,565||1,70%||7,54||1,70%|
|Personal income tax*||0||0.00%||26,21||13,00%|
|Employees' Social contributions||19,919||9,50%||42,137||9,50%|
|Employees' Health contributions||3,565||1,70%||7,54||1,70%|
*Salary 0 -30,000 ALL PIT rate 0%.
Salary 30,001 -150,000 ALL PIT rate 13% of the amount over 50,000 ALL.
Salary over 150,001 ALL PIT 15,600 All + 23% of the amount over 150,000 ALL.