Albania

There is no group taxation in Albania.

Transfer pricing

The law on transfer pricing in Albania emphasises the following:

• The general rule provides the application of the arm’s-length principle.
• The taxpayer is subject to transfer pricing rules if the taxpayer performs controlled transactions with its related parties where:
  • Controlled transactions are considered the cross-border transactions only.
  • Related parties are considered the situations where:
    • one person participates, directly or indirectly, in the management, control, or capital of the other person, and
    • the same person or persons participate(s), directly or indirectly, in the management, control, or capital of both persons.

The taxpayer subject to transfer pricing rules must have in place the following information:

• Documented information and analysis to verify that its controlled transactions are performed in consistency with the arm’s-length principle. Transfer pricing documentation shall be provided to the tax administration upon its request within 45 days of receiving the tax administration’s request. The content and form of the transfer pricing documentation is specified by instruction of the Minister of Finance.
• Taxpayers engaged in controlled transactions above ALL 50 million are required to submit an annual controlled transactions template by 31 March of the year following the year subject to documentation.
• The consistency of a controlled transaction(s) with the arm’s-length principle shall be determined by applying the most appropriate transfer pricing method from the methods provided below:
  • Comparable uncontrolled price method.
  • Resale price method.
  • Cost plus method.
  • Transactional net margin method.
  • Transactional profit split method.
  • Other methods.

Taxpayers with a total value of related-party transactions of over 30 million euros (EUR) for the period of the agreement, can enter into an Advance Pricing Agreement (APA) with the tax authority.

Controlled foreign companies (CFCs)

There is a CFC rule in Albania, introduced with Law No. 29/2023 "On Income Tax", applicable to natural persons only. According to this law, when a natural person has an interest in a controlled foreign entity, the profits of which are not subject to tax or are exempt from tax in the Republic of Albania, any undistributed profits, which derive from passive income, must to be included in the taxable income from the investment of the natural person, provided that this passive income exceeds 30 percent of the total profit of the controlled foreign entity.