Albania

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 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, must be done electronically within the 20^th 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 social and health contribution made up of social insurance contribution of no less than 23% of the monthly minimum salary of ALL 40,000 and health insurance contribution of 3.4% on no less than the double minimum salary, i.e. ALL 80,000.

For purposes of social and health contributions, 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 social and health contributions for such individuals at the same rates applicable for all other employees.

In case an employee is employed in two entities, they pay social insurance contributions in both entities but not more than the maximum social insurance contribution salary. In case the employee pays social insurance contributions on the maximum salary in one entity, then the salary received by the second entity will not be subject to social insurance contributions. In case both salaries do not exceed the maximum salary for social insurance contributions, 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. Regarding health insurance contributions, they arise on the gross salaries of the individual, without limitations. 

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.

Consumption taxes

Value-added tax (VAT)

The standard VAT rate is 20%. See Other taxes in the Corporate tax summary for reduced rates and more information.

Inheritance and gift taxes

The tax rate for inheritances and gifts is 15%, without deduction of any costs. However, the following are exempt from taxation:

• Gifts and inheritance received from/or between the legal heirs in the first and second place, as well as gifts and inheritance between siblings.
• Gifts and inheritances received up to ALL 5 million for taxpayers for immovable assets and up to ALL 1 million for movable assets for taxpayers.
• The transfer of the right of ownership to the legal heirs, namely through gifts and/or relinquishment of property, when the property derives from the compulsory co-ownership acquired on the basis of law no. 7501, dated 19 July 1991, ‘On land’, amended.

Property taxes

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 the tax rates above.

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.