Albania

Taxable income of the individual (subject to personal income tax) is composed of three categories: 

a) Income from employment;

b) Business income;

c) Income from investments.

Income is taxable regardless of whether it is paid in cash or in kind. Income in kind is assessed at the market value, as far as it is not defined otherwise in this law or in the by-laws issued in its implementation. 

a) Taxable income from employment is taxed at the following progressive rates (applicable from 1 January 2025):

Annual tax base                        Tax rate

0 - 2 040 000 ALL                      13%

Over 2,040,000 ALL                   23%

b) Net taxable income (taxable profit) from business for commercial individuals and the self-employed is taxed at the following progressive rates:

Annual tax base                          Tax rate

0 - 14 000 000 ALL                      15%

Over 14,000,000 ALL                   23%

NOTE: Natural persons, individual traders or self-employed individuals, with an annual turnover of up to ALL 10,000,000, have the right to choose a special regime, which allows for an automatic deduction of the business expenses up to a specific percentage, depending on their business activity. Once chosen, this regime can not be changed for three consecutive years.   
 

c) Investment income is taxed at the following rates:

- Income from dividends 8%;

- Any other item of investment income 15%.

Capital gains

Capital gains on the sale of shares are taxable at rate of 15%. The taxable base is the difference between the sale price and the purchase price of the shares (or the nominal value).

The transfer of ownership of real estate, either land or buildings, is subject to 15% tax on the capital gain realised from the sale transaction.

Partnership income

Partnerships are treated as separate taxable persons, which mean that an individual participating in more than one partnership should report separately for each of the partnerships they participate in.

Exempt income

The following incomes are exempt when determining taxable income for PIT purposes:

• Lump-sum allowances for business travel, according to the amounts determined by the fiscal legislation.
• Income received from social and health insurance schemes.
• Student scholarships.
• Compensation received as a result of expropriation.
• Income exempted according to international agreements.
• Compensation received from ex-proprietors or political prisoners.
• Economic aid from public budgets for individuals with no income or with low income, according to the provisions in the relevant legislation in force;
• Rewards and prizes given by state institutions for achievements in science, sports, culture;
• Income from support with grants and subsidies in agriculture and animal husbandry with funds from the state budget or other sources.