Tax is computed separately on each category of income. The following categories are subject to income tax:
- Salaries and other remuneration in connection with current employment.
- Dividends and profit shares of partnerships.
- Interest, except interest received on treasury bonds and other securities issued by the government before 21 January 1999.
- Licence fees and other royalties.
- Rental income.
- Proceeds from the transfer of immovable property.
- Income from copyrights and intellectual property (IP).
- Gross income from lottery or other games of chance.
- Capital gains resulting from investment in securities or immovable property.
- Gross income realised outside the territory of Albania.
- Other gross income not mentioned above.
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.
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.
The following incomes are exempt when determining taxable income for PIT purposes:
- Benefits in kind earned by employment relationships (which are taxed via payroll).
- 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.
- Remunerations received in case of diseases or misfortunes.
- Compensation received as a result of expropriation.
- Income exempted according to international agreements.
- Compensation received from ex-proprietors or political prisoners.
- Payment of contributions made by any member of a voluntary pension fund, as well as payments of contributions made by the employer or any other contributor up to the limits provided by the Law ‘On Voluntary Pension Funds’.
- Income resulting from the return on investment, including capital gains from investments to the pension fund.
- Income from pensions and other similar remuneration of foreign citizens of Albanian origin or those of the European Union.