Social security contributions
Social security contributions are imposed on employment income.
Employees pay social security contributions at the rate of 11.2%. The employee contributions are composed of 9.5% social insurance contribution and 1.7% health insurance contribution. Employers are liable to pay social security contributions for their employees at the rate of 16.7%. The employer contribution is made up of 15% social insurance contribution and 1.7% health insurance contribution.
The monthly minimum and maximum salaries for social contributions are ALL 34,000 and ALL 149,953, respectively.
The social security contributions are withheld and paid by the employer.
The submission of monthly payrolls and tax returns, including the declaration and payment of PIT and social and health contribution (SHC), must be done electronically within the 20th day of the consecutive month.
The self-employed, the self-employed in a partnership, and the self-employed that hire third parties (excluding self-employed in agriculture) are liable to pay for themselves a mandatory SHC made up of social insurance contribution of no less than 23% of the monthly minimum salary of ALL 32,000 and health insurance contribution of 3.4% on no less than the double minimum salary, i.e. ALL 68,000.
For purposes of SHCs, a company’s shareholders who also have administrative roles in the company are considered to be employees. The company is required to calculate and pay SHCs for such individuals at the same rates applicable for all other employees.
In case an employee is employed in two entities, they pay SHCs in both entities but not more than the maximum SHC salary. In case the employee pays SHCs on the maximum salary in one entity, then the salary received by the second entity will not be subject to SHCs. In case both salaries do not exceed the maximum salary for SHCs, then the contributions will be paid in full by the entity paying the highest salary and only for the difference with the maximum salary from the second entity.
The law states that all registered entities should electronically submit to the tax authorities a declaration for every newly hired staff 24 hours before the employment start date and a declaration for every employee leaving the entity within ten days after the employment relationship ends. In addition, entities are required to electronically submit a list of their existing employees.
Foreign individuals working in Albania under a local employment contract are required to pay SHCs in the same manner as local employees. However, foreign employees working under a foreign employment contract in Albania (with some exemptions) have the right to choose between the Albanian Social and Health Insurance scheme and another scheme in their home country, whichever is more favourable for them.
Value-added tax (VAT)
The standard VAT rate is 20%. See Other taxes in the Corporate tax summary for reduced rates and more information.
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:
- Residential property: 0.05% of property value.
- Commercial properties: 0.2% of property value.
- Construction sites for which building has not been finalised within the deadline outlined in the construction permit: 30% of property value.
Luxury and excise taxes
Any individual or legal entity (including their fiscal representatives) that either produces or imports into Albania any commercial goods defined to be subject to excise tax, is subject to excise tax in Albania.
Albania levies excise tax on beer, wine, other alcoholic drinks, tobacco and its by-products, liquid by-products of petroleum, solid by-products of petroleum, fireworks, pneumatic tyres, incandescent lamps, and plastic, glass, and mixed packages. See Other taxes in the Corporate tax summary for rates and more information.