Albania

There is no group taxation in Albania.

Transfer pricing

The law on transfer pricing in Albania emphasises the following:

• The general rule provides the application of the arm’s-length principle.
• The taxpayer is subject to transfer pricing rules if the taxpayer performs controlled transactions with its related parties where:
  • Controlled transactions are considered the cross-border transactions only.
  • Related parties are considered the situations where:
    • one person participates, directly or indirectly, in the management, control, or capital of the other person, and
    • the same person or persons participate(s), directly or indirectly, in the management, control, or capital of both persons.

The taxpayer subject to transfer pricing rules must have in place the following information:

• Documented information and analysis to verify that its controlled transactions are performed in consistency with the arm’s-length principle. Transfer pricing documentation shall be provided to the tax administration upon its request within 30 days of receiving the tax administration’s request. The content and form of the transfer pricing documentation is specified by instruction of the Minister of Finance.
• Taxpayers engaged in controlled transactions above ALL 50 million are required to submit an annual controlled transactions template by 31 March of the year following the year subject to documentation.
• The consistency of a controlled transaction(s) with the arm’s-length principle shall be determined by applying the most appropriate transfer pricing method from the methods provided below:
  • Comparable uncontrolled price method.
  • Resale price method.
  • Cost plus method.
  • Transactional net margin method.
  • Transactional profit split method.
  • Other methods.

Taxpayers with a total value of related-party transactions of over 30 million euros (EUR) in a five-year period can enter into an Advance Pricing Agreement (APA) with the tax authority.

Thin capitalisation

The interest paid on outstanding loans and prepayments exceeding four times the amount of net assets is not deductible. This rule does not apply to banks and insurance companies.

Controlled foreign companies (CFCs)

There is no CFC regime in Albania.