Albania

Value-added tax (VAT)

The standard VAT rate is 20%, and the standard VAT period is the calendar month.

Taxable transactions include goods and services supplied domestically as well as goods imported into Albania by a taxable person. The following transactions are also taxable:

• Transactions performed for no consideration or for a consideration less than market value (the latter applies if the parties included in the transaction are considered as related parties).
• Barter transactions.
• The private use of taxable goods by a taxable person (self-supply).

Determination of VAT payers

‘Taxable person’ shall mean any person who, despite the legal form of organisation, independently carries out any economic activity, whatever the place and the purpose or results of that activity.

The VAT registration threshold in Albania is annual turnover over ALL 10 million. Any person providing taxable supplies and whose annual turnover does not exceed ALL 10 million is not required to register, although voluntary registration is possible.

VAT obligations for non-resident entities

For a non-taxable person, the place of supply shall be in Albania if the supplier of the non-taxable person has established their business or a fixed establishment there.

For a taxable person, the place of supply of services shall be in Albania if the taxable person who receives the service has established their business or a fixed establishment there.

Reduced VAT rate

The reduced VAT rate of 6% is applied to the following:

• Accommodation services.
• Services certified as 'agritourism'.
• Advertising services by audio-visual media.
• Supply of books.
• Supply of electric engine buses licensed for public transportation, with capacity of nine or more people.

The reduced VAT rate of 10 % is applied for the supply of agricultural inputs, including chemical fertilisers, pesticides, seeds, and seedlings.

Zero-rated goods and services

The following goods and services are subject to 0% VAT in Albania:

• Exports.
• The supply of goods transported in the personal luggage of travellers.
• International transport.
• Supply of gold for the Bank of Albania.

VAT-exempt goods and services

The VAT Law provides a list of supplies that are considered as VAT-exempt:

• The supply by the public postal services of services, and the supply of goods incidental thereto.
• Hospital and medical care and closely related activities.
• The provision of medical care in the exercise of the medical and paramedical professions.
• The supply of human organs, blood, and milk.
• The supply of services by dental technicians in their professional capacity.
• The supply of services by independent groups of persons who are carrying on an activity that is exempt from VAT.
• The supply of services and of goods closely linked to welfare and social security work.
• The supply of services and of goods closely linked to the protection of children and young persons.
• The provision of children's or young people's school or university education.
• Tuition given privately by teachers and covering school or university education.
• The supply of agricultural machines.
• The supply of veterinary services, except for veterinary services for pets.
• The supply of auto vehicles, only with electric engines, new, with zero mileage, and not previously registered in any other country, other than those that are 6% rated.

VAT calculation

The amount of VAT to be paid is calculated as the difference between the VAT applied to purchases (input VAT) and the VAT applied to sales (output VAT). If the input is higher than the output, then the difference is a VAT credit that can be carried forward to subsequent months. Otherwise, if the output VAT is higher than the input VAT, the difference represents VAT payable to the state.

Taxpayers who carry out taxable VAT activities, as well as VAT-exempt activities, can credit only that portion of their input VAT that corresponds to the taxable activities. To determine the amount of input VAT that can be claimed from the state, the taxpayer should estimate a VAT credit coefficient (i.e. the rate of the taxable VAT activities over total activities).

VAT reimbursement

Taxable entities have the right to claim VAT reimbursement if the period in which VAT credits are carried forward exceeds three consecutive months and the total amount of accumulated VAT credit is equal to or above ALL 400,000.

Following the request for VAT reimbursement, taxable entities have the right to obtain the reimbursement of VAT credit within 60 days after the request is submitted. For all taxable persons who are considered as exporters based on the criteria established by the Instruction of Council of Ministers, the deadline for tax authority approval, or not, of VAT reimbursement requests is within 30 days.

VAT returns

The submission of VAT returns and sales and purchase books must be done electronically by all taxpayers, including VAT representatives.

Electronic submission deadlines fall on the dates below:

• For VAT books, the deadline is the tenth day of the following month.
• For VAT returns and for the payment of the related VAT liability, the deadline is the 14th day of the following month.

Customs duties

Albania uses the Harmonized Code System for tariff classification.

The customs duty rates range from 0% to 15%, depending on the type of goods.

Import of machinery and equipment for use in the taxpayer's business activity are generally subject to customs duties at the zero rate.

Import of vehicles are subject to customs duties at a rate of 0%.

Excise duties

Excise duty is a tax applicable to certain goods consumed in Albania, whether imported or produced in the country.

Albanian excise legislation is based on EU Council Directive 2008/118/EC, which defines common provisions applicable for all excisable goods. It also integrates specific provisions applicable for each category of excise products.

Categories of products subject to excise duty in Albania are:

• Energy products (e.g. petroleum, gasoil, gas).
• Tobacco products (e.g. tobacco, cigarettes).
• Alcohol and alcoholic beverages (e.g. beer, wine, spirits).
• Other products (e.g. baked coffee, fireworks).

Excise duty is usually calculated as an amount per quantitative measuring unit defined for that product (e.g. per litre, per kilogram, per hectolitre, per 1,000 pieces).

Reimbursement of excise tax can be obtained on:

• Goods that are used in a process previously approved by the customs authorities.
• Exported products that have previously been subject to excise duty in Albania.
• Fuel used by companies involved in the construction of electric energy resources, with an installed power of not less than five MW per source.
• Fuel used in greenhouses, for the production of industrial and agri-industrial products.
• Biodiesel used in transportation.

The reimbursement procedure is subject to special provisions and pre-defined criteria on the basis of which the amount to be reimbursed is calculated.

Real estate tax

Entities that own real estate property in Albania are subject to real estate tax.

Real estate tax on buildings

Real estate tax on buildings is calculated based on the type of activity the business entity owning the building carries out. The basis for this tax is the value of the building.

Tax due is calculated on a yearly basis as a percentage of the value of the building, depending on the use of the latter, as outlined below:

* The tax rate for construction sites not yet finalised is 30% of the corresponding tax rate for the entire construction area, for which the developer has been provided with a construction permit and has not managed to complete it according to the deadline defined in the act of approving the request for a construction permit.

Real estate tax on agricultural land

Real estate tax on agricultural land is levied on each hectare and varies depending on the district where the agricultural land is located and on the land productivity categorisation.

Real estate tax on land (non-agricultural)

Real estate tax on land (non-agricultural) is levied per square metre and varies depending on the district where the land is located.

Stamp duties and notary taxes

There are no stamp duties on the sale contract of land or other properties. There are, however, notary taxes that are, in nature, similar to stamp duties. The notary tax on sales contracts that relate to change in ownership of immovable properties is ALL 1,000. The notary tax on sales contracts that relate to change in ownership of movable properties is ALL 700.

Depending on the agreement reached between the seller and the buyer, the notary tax can be paid either by the seller, or by the buyer, or shared between both of them.

Registration taxes

The fee for the registration of a business entity is ALL 120; however, it can be reduced to ALL 0 if the registration is made online.

Payroll-related taxes

Entities shall withhold personal income tax (PIT) from the gross salaries of their employees.

Social and health contributions (SHC)

Employers shall pay SHC to the tax authorities at a rate of 15% and 1.7%, respectively. The social contributions are paid between the minimum and maximum gross salary for SHC purposes, which are ALL 40,000 from 1 April 2023 (previously ALL 34,000) and ALL 176,416 from 1 April 2023 (previously ALL 149,953), respectively. The health contributions are calculated on the total gross salary.