Albania Tax Rates
Albania personal income tax rate is a flat 10%.
These categories of taxpayers are not required to file the Annual Tax Return:
- self-employed individuals that realize an annual turnover up to Leke 2,000,000 (approximately EUR 14,800);
- individual taxpayers that realize an annual income up to Leke 200,000 (approximately EUR 1,480).
However, the Annual Tax Return may be voluntarily filed by the above indicated persons, as well as by other taxpayers who do not have the obligation to file it. The persons that undertake to file the Annual Tax Return will benefit from the deductible expenses scheme provided by the Draft Law.
According to the deductible expenses scheme established by the Draft Law, certain expenses are considered as tax deductible for purposes of calculating the taxable income. Persons realizing an annual income less than Leke 800,000 (approximately EUR 6,000) are entitled to benefit from such scheme.
In Albania, personal and corporate tax rates are both 10%. Now there are no progressive taxes as before, which were going up to 30%. Albania residents are taxed on income generated both in Albania and outside Albania. Nonresident taxpayers are subject to Albania tax only on their activities in Albania, income generated out of Albania is not subject to Albania income tax.
If a resident has a house in Albania, or he/she has stayed in Albania for more than 183 days in a calendar year then he/she has to pay Albania tax. Joint tax filing is not permitted in Albania, each individual must file taxes separately.
Albania Tax Year - Albania Tax year is the calendar year.
Wealth Tax in Albania - Albanian taxpayers are not subject to a wealth tax.
Albania Capital Gains Tax - Capital gains in Albania are taxed at the standard tax rates of 10%.
Albania Inheritance Tax - Gifts and inheritance are subject to the same 10% flat tax rate in Albania.
Net Worth Tax - There is no net worth tax in Albania.
Real Property Tax in Albania
Tax on real estate in Albania differs from city to city. New construction projects, real estate, also land used for agricultural activities are subject to real property tax in Albania. New construction jobs are taxed between 1% - 4%, the rate is relatively high in capital Tirana (between 2-4%), and it's 1-3% in other cities. Depending their form of use, land used for agricultural activities are taxed per hectare, the tax varies according the usage type of the land. Certain projects are exempt from tax.
Albania Corporate Tax Rate
Albania corporate tax rate is a flat 10%.
Taxpayers subject to local tax on small businesses with an annual turnover between ALL 2 million and ALL 5 million are subject to personal income tax of 10% on net profit. If a company is effectively managed in Albania, then the business is accepted as resident and pays Albanian company tax. A legal entity or a partnership who has a permanent establishment are also considered tax payers and they pay Albania corporate tax.
Albania Tax on Capital Gains
Capital gains deriving from the sale of immovable property are treated as business income and taxed accordingly at 10%. Where after the sale of immovable property there is a loss, it can be carried forward for three years, unless 25% or more of the selling company's share capital has been transferred.
The donation of Albanian property is treated the same as sale of the property, and is taxed accordingly at 10% of the difference between the fiscal price of the donated property and the purchase price. In both cases, the seller/donor of the property will be liable to pay the property transfer tax before transferring it to the buyer and registering it at the respective offices.
The transfer tax payable is about €7 ($9.27) a square metre for residential buildings and €14 for commercial buildings in Tirana while it is less for other cities.
Tax Credits
A tax relief may be allowed under an applicable tax treaty.
Withholding Tax on Dividends
If there is no tax treaty which can reduce the rate, dividends which are paid to nonresidents are subject to a 10% dividend withholding tax.
Withholding Tax on Interest Payments
If made to a nonresident, an interest payment is taxable in Albania, and is taxed at 10% unless the tax rate is reduced under a tax treaty.
Withholding Tax on Royalty Payments
If made to nonresidents, royalty payments are also subject to the same 10% tax rate, if there is no applicable tax treaty between the two countries. Certain payments and fees are subject to withholding tax, including rental payments, certain service fees and fees paid for management.
Dividend Tax
Taxation of dividends in Albania is the same as other taxable income at the standard 10% tax rate, unless there is a tax treaty. Some exemptions exist on the payment of dividend tax:
If the party distributing the dividend or earnings are subject to Albanian corporate tax and if the other party hold at least the 25% of the paying party, then the tax is waived. This tax exemption is available only for the resident company or partnerships. Holdings in foreign countries cannot take advantage of this tax exemption.
Property tax
The taxpayer of immovable property in Albania may be a legal or physical person, who owns land and buildings in Albania. Real estate taxation is applicable to buildings and to agricultural land at a variable rates subject to the size in square metres and the municipality that the property is based.
The government introduced a new law recently that entered into force on June 6 2010: "On the right of privatisation of used state-owned land and the tax levied on the right of use of state-owned land", defining the tax payable by resident and non-resident individuals and legal entities for the use of state-owned construction land. Lease payments will no longer be applicable for the use of such land unless it is used for tourism or investment and it has illegally constructed buildings that are in the process of legalisation. The applicable rate is 10% of the value of the land.
Tax Penalties
Employers are now obliged to notify the tax authorities at least 24 hours before the first day of employment of new employees, as opposed to the former 48-hours requirement. Non-compliance lead to penalties of L100,000 and L50,000 for VAT registered and VAT non-registered taxpayers, respectively.
Moreover, higher penalties are provided for where there is non-compliance in administrative matters and more specifically related to the use of fiscal equipment and the issue of fiscal coupons. The penalties for each category are listed in the tables.
Equally, the tax authorities reserve the right to confiscate tax documentation and data storage equipment from taxpayers where they have reliable and trustworthy information relating to tax avoidance by the taxpayer.
Albania VAT (Value Added Tax) Rate
Albania VAT rate is 20%. The export of goods and services is exempt from VAT, while the import of goods is taxed based on the reference list (a minimum pricelist approved by government and subject to change from time to time).
At the beginning of 2011, custom duties with EU countries will be eliminated, though they will continue to exist, at variable percentages, with other countries
On January 1 2010, the provisions on the decrease of the value added tax (VAT) registration threshold in Albania came into effect, after a decision of the Council of Ministers on October 21 2009. Physical or legal persons carrying out commercial activity in Albania are obliged to register for VAT purposes where their annual turnover in a calendar year is more than L5 million. Formerly, the VAT registration threshold was L8 million.
The general VAT rate for the taxable supply of goods and services or imports is 20%. All individuals and legal entities required to be registered or registered for VAT are taxable.
Those subject to VAT payments are:
- Every physical person or legal entity providing services, which are more than L2 million (as of April 2010)
- Every physical person or legal entity, which exceeds an annual turnover of L5million (as of January 2010)
- Every physical person or legal entity which imports goods (independently from the annual turnover)
Albania
Income Tax Rate
Albania
Corporate Tax Rate
Albania
Sales Tax / VAT Rate
10%
10%
20%
Last Update: Nov 2010
(This page may show previous year's tax rates. Always check last update time)
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